Why should one even entertain the thought of developing a new blueprint for the Ad Agency of tomorrow?

Because, given the winds of accelerated change, I've been gazing into a crystal ball, seeking answers to the future prospects of the agency profession in its current avatar - popularly termed 'The Full Service Agency'.

I'm happy to report that finding the answer in these difficult times was easy. Whichever crystal ball I gazed at, gave me the same answer: The Future of the 'Full Service Agency' in its current form is BLEAK !

Every agency head may not agree with my finding, but the writing is up there clearly on the wall.

To be honest, we agency people are more courageous than the average person in other industries. We can calmly absorb the possibility that the future of our industry is bleak, and yet take little proactive action in redefining the fundamentals that are the cornerstones of our profession.

In fact, the alarm signals have been loud and clear to all of us for quite some time:

1) The breakdown of the 15% commission system;
2) The Speculative Presentation strip show;
3) The breakdown of long term relationships;
4) The low cost of switchovers for clients- and the game of musical chairs;
5) The birth of specialists - PR specialists, Direct Marketing Specialists, Web marketing specialists, Media Specialists;
6) The advent of even creative specialists; boutiques, etc.

Yet like, unchangeable rock these signals have not caused any of us unease, except perhaps, when someone at cocktails decides to be unpleasant.

Ad agencies essentially continue to operate exactly the way they have for the last fifty years: Agency focus, agency people, agency structures, agency compensation methods have not changed.

We continue to behave like the balding man, who looks into his mirror every morning, and says to himself that he has almost every hair left today, that he had yesterday.

Some years later, when like him we become totally bald, we are likely to accept our declining status even more smilingly than he probably will. We will amble on providing service as per the new dictates of our clients. We will be of service.

Why would we accept this declining status? Because we have been content to position ourselves as Service Providers.
Consider for a moment the way we project ourselves. From the biggest to the smallest, we pride ourselves on being a 'Full Service Agency'.

Does the very term itself provide signals to you of the mindset of our industry? Does it indicate that we have reconciled ourselves to the role of being service providers? Like travel agencies, courier companies, office maintenance services, security services?

A service role that is necessary, indeed essential, but perhaps not worthy of a seat at the Chairman's Table?

The term implies that not only are we service providers, but that we offer a full range of services.

Let me try to illustrate this range of services, using the example of a special type of cake:

Slice: Service
'A'… Brand analysis & brand strategy;
'B'… Creative strategy & creative ideation,
'C'… Creative execution,
'D'… Media planning & buying,
'E'… PR & promotions,
'F'… Account management.
'G'… Operations & Coordination.

Our worry about our future, if at all, seems to stem from the fact that other business entities have been taking bites out of our traditional cake - offering a part of the services we have traditionally provided, thereby threatening our revenues, our very raison d'être.

Indeed, if we see our role as providers of service, as depicted above, it will only be a matter of time, before we see our business shrinking, as more and more slices are carved out by competing businesses. And the forecast of the crystal ball will come true: Our future will be bleak.

In order to avoid such a dismal scenario, let us examine another cake that presents a slightly different vision of our role as an agency.

The inner circle 'C.T.' represents our role at the Chairman's Table.

It is obvious to even an elementary school student - (that doesn't of course guarantee that it will be obvious to us) - that the larger the area occupied by the inner circle C.T., the more peripheral the other roles (A, B, C, D… etc.) become for us and our clients.

A, B, C, D … remain necessary… but they do not determine the worth of an advertising agency to a client.

But, what is the significance of our role at the Chairman's table? Indeed, why should agencies want a seat at this table at all?

It is vital for agencies to get a seat of honour at this table, because only at this table are decisions taken that affect the future of a client company. People who sit at this table are seen to add value to the client's business.

People who sit at lesser tables are seen as those who smoothen the implementation of decisions taken at the chairman's table. They are seen as service providers.

Let us think for a moment and examine how often our agency people interact with the chairmen of our client companies. Not very often, would be an honest answer.

Well, if not at the Chairman's table, where do our agency people find a welcome seat today? At the brand manager's table. (Sometimes this table is euphemistically called the marketing director's table)

This is where the agency is briefed. This is where most of the agency's actions begin and end. But even this seat is getting uncomfortable for us each day. Brand Managers increasingly want to communicate directly with people who bring with them their own expertise (albeit in the area of operations).

Brand Managers want to cut across agency bureaucracy and brief Creative People directly. They want to interact with Direct Marketing specialists directly, Event Marketers directly, Media specialists directly.

Brand managers are signalling that they want Knowledge People, who bring value rather than Managers who facilitate service.

(My concern is that if the advertising agency business doesn't read these signals quickly and accurately, sooner or later we will find ourselves at par with the courier delivery boy)

Actually, our clients, in more ways than one, have been telling us, that we've got our priorities wrong. Take a head count for yourself and find out how many delegates from the client's side think it worth their while to go to the venues where we agencies celebrate advertising - Cannes, Clio, Abby… and more… You could count them on your fingers!

Yes, it is time for us to take stock, and acknowledge the fact that the conventional priorities that we have set for our business are fast diverging from the visions of our clients.

And so for our own good, if we want to prove our crystal ball wrong, we have to scramble fast and get ourselves a chair at the top table.

However, if we are to contribute at the Chairman's table we would need to know the subjects that are discussed there.

Let us therefore eavesdrop at a dialogue that would be music to any chairman's ears….

"The business you are in is likely to grow faster than any other segment, over the next three years, and this will set the platform for your organisation to exploit the next high growth category, over the subsequent 5 Years.

You are better placed than other major players, to exploit this opportunity in current markets where you operate. We have also examined the potential in new markets, and are confident that they will add to your business strength.

Our analysis shows that you have the financial, technical, infrastructural, and manpower resources to power this growth over the next decade.

Given your key strength areas, we have identified two new products/categories/ businesses/markets that you should enter over the next five years. This will lead to an overall corporate growth of over 25% per annum, profits will grow at healthy 30% and the EPS will be at least 100.

Share price will jump 25% per year, beating the NSE hollow, not to mention the share prices of your competitors.

While you have excellent people internally, who will naturally focus on meeting their quarterly targets, we will help them achieve these.

Over and above, we will be the custodians of your long term perspective, enhancing brand values, and market capitalisation.

By the way, if we achieve this together, the board will be happy to treble your compensation every year."

Bluntly, we agencies do not want to be held accountable for anything of consequence. And therefore, we continue to get hired or sacked by brand managers, for our operational efficiencies or inefficiencies

Any chairman worth his salt is likely to sit up and take notice of such a conversation, because it addresses his key areas of concern:
1. The future health of the business categories his company is engaged in;
2. The potentials for his company's growth in such business categories;
3. Identification of the current status of his brands in their existing markets and their opportunities for growth;
4. Opportunities for growth of his brands in new markets;
5. Understanding of the financial, technical, infrastructural, manpower capabilities of his company, and identification of gaps that will need to be filled to achieve his vision;
6. Identification of new products/categories/markets/businesses for future exploitation.
7. Achievement of quarterly targets and annual targets;
8. Enhancement of long term brand values, market cap;
9. Appreciation of need for turnover growth, profit growth, EPS growth, Share Price Growth;
10. Appreciation of personal ambition: greater fame, higher compensation.

Does the ad agency play an accountable role in any of these areas?
Let us see if the advertising agency in its current avatar, addresses any of these key areas of concern to him. Or in other words, let us ask ourselves which of the above areas will we, as his agency, be held accountable by him today, for our performance? To be blunt, he will not hold us currently accountable for any of them, because the sad fact is that he does not see us playing any such role.

At this point, it is worth asking of course, whether he indeed needs inputs from others in these areas. The fact is that in an increasingly complex world, he is continually seeking informed counsel on these critical areas, both informally and formally.

Who then are the key players to whom the chairman is increasingly turning to, for addressing his areas of concern? Corporate/business analysts, Management Consultancy firms, Financial/Investment analysts, Research agencies, his own Sales & Marketing Departments, his internal and external R & D teams, the media, his network of CEO friends, his board of directors, and more…

What does the ad agency get credit for?
Will he at least give the agency the credit for the success of a brand it advertises for? Or to put it in sharper focus: Will he hold his agency responsible for the failure of a brand it advertises for? Unlikely. In his eyes, the role of an agency currently is restricted to that of being creators of a successful/unsuccessful campaign for his brand.

Why such a limited perception of our role?
Simply because, we agencies have for decades resisted the idea of being held accountable for business results. Because we keep hedging our bets - stating that there are many, many factors beyond our control that affect the performance of a brand or a company. Forgetting that there are many factors equally beyond the personal control of the chairman himself. Bluntly, we agencies do not want to be held accountable for anything of consequence.

And therefore, we continue to get hired or sacked by brand managers, for our operational efficiencies or inefficiencies.

Time for a new role definition?
Is it time that we as agencies decided to change the way we have seen our own role? Yes. If the advertising agency profession wants to carve out its rightful place in the future. As key contributors to the health of the businesses they handle.

Are we capable of adding value at the Chairman's table? Yes, if we believe that we know more about the following than anyone else does: 1. Customers. 2. Markets and market changes. 3. The business of Business. 4. Product Development.
5. State of competition - current/future.
6. Process of building relationships with customers.
7. Dynamics of consumption of mass media and micro-media.
8. Distribution dynamics.
9. Introduction of new products and management of growth.
10. Creation of communication that build relationships.
11. Creation of brands from products. Brands that create capital.
12. Creation of Corporate value.

When I look at the above list, I happily realise that no one is more uniquely positioned to offer this value than the Advertising Agency. Indeed, we use our knowledge of the above areas everyday in developing ads, in creating media plans, in arriving at recommended ad budgets.

Consider knowledge of customers. Agencies by their very nature, handle a wide range of products, address a wide range of customers. Over the years, our antennas have been sharpened to catch the changes in customer dynamics better than any one else.

Any industry that owns this vital knowledge area, holds the key to a company's long term fortunes. The advertising industry if it wishes to do so, can stake its ownership over this knowledge area, by investing its resources in a planned fashion.

Who better than the advertising agency situated in India to guide a naïve MNC to its shores, as and when it decides to enter its complex markets?

Every chairman understands that at its core, business is all about attracting customers and retaining them profitably. While management consultants have their role to play, it is the advertising agency that should be in the best position to provide competitive analyses, estimate demand, recommend price points, and more…

With its expertise across diverse customer segments, the advertising agency is uniquely positioned to identify new product opportunities, new markets for its clients. Its role in new product development is currently underexploited.

No one can claim to have more knowledge, on the understanding of changing attitudes to media consumption, than an agency. Yet we have miles to go before we can act as a definitive sounding board for our clients.

No one adds more value to corporate wealth than an advertising agency. An agency owns the process of building brands, creating markets. Processes that lead to shareholder wealth and market capitalisation. It's time we publicly acknowledged this fact. More importantly, that we become open to being held accountable for this process.

Impressed at what an advertising agency can truly be capable of bringing to the Chairman's table? What's stopping us then? Our myopic vision of ourselves.

We have tended to underplay our being the awesome powerhouse of knowledge. We have tended to under-invest in areas of key concern to the chairman

Our increasing obsession with and focus on the creation of advertising, and its primary release in mass media (that's where our revenues have traditionally come from). We have tended to underplay our being the awesome powerhouse of knowledge. We have tended to under-invest in areas of key concern to the chairman.

(Our own creative people derisively refer to anyone performing any of the above functions as 'suits')

In the process, we have allowed our competitors to occupy this position of strength and marginalise us. In order to reaffirm our future, we agencies must demonstrate ownership of these vital areas of knowledge that influence the fortunes of a company.

To do so, agencies need to remodel themselves in order to be able to provide these resources in a structured, organised manner.

We have to shop seeing ourselves as a band of craftsmen and service men (creatives and suits!). We have to see ourselves as builders of brands, builders of organisations

We have to change our mindset and address the Chairmen as our target audience.

Firstly we have to stop seeing ourselves as a band of craftsmen and service men (creatives and suits!) We have to see ourselves as builders of brands, builders of organisations. Creators of wealth.

For this, we have to develop a different cake - where each inner layer is our knowledge of customers, markets, and opportunities.

The outer ring - the implementation areas - will then get the rightful place they deserve - necessary but not critical - in changing the fortunes of our clients.

We also have to be accountable for our enlarged role at the Chairman's table.

Which brings me to the last point that we need to address, and revalue: our compensation structure.

Agencies need to cut the umbilical chord that connects revenue to ad spend.
We need to question why our compensation continues to be linked to a company's advertising spend. (Leading to increasing cynicism on the part of our clients.)

Because we do much more for our clients. We determine the sales and profits of our client companies. We build assets, which are now recognised to have far more value than factories in corporate balance sheets.

Once, we cut this umbilical chord that ties our industry to advertising spend, we will arrive at remuneration systems that we can justify. Systems that encourage investment in the areas of knowledge, critical to a clients business. Even a simple monthly fee structure based on resources required to add value to a brand's/company's health, overheads, and ROI, will enable agencies to plan their resource requirements better.

In fact, when the time comes, we should be examining whether our industry will have the guts to link our compensation to sales or to profits, demonstrating that we are accountable for them. (Even a carrying and forwarding agent, a service provider, gets around one percent of sales!)

Knowledge as the key to future success
Once the advertising agency business occupies the position of owners of knowledge that lead to strategic business solutions, we will offer our clients a new 21st century platform - agencies as authorities and not service providers.

The crystal ball urges me to pronounce thus:
The future of the 'full service' agency? Bleak!
The future of the 'full knowledge' agency? Unlimited…