So what is the difference between Coca-Cola and Pepsi… Some may claim that there is none, but the majority will state a difference; a taste difference, a difference about their advertising style, something about the colours and packaging… It does not matter what they say, but the majority would believe that there is a difference.
How about a Mercedes and a BMW… There are many more differences we can talk about, aren’t there? Especially if you ask the owners, they would say being German and being luxury cars are the only two things in common. That might not be perfectly right but since “exclusivity” is a category claim, it is reasonable for them to think that way.
iPhone and Galaxy… They are totally different in many ways: operating systems, user experience, apps, design… A bottle of Smirnoff and Absolute: they taste different. Old Spice and Axe? They smell different. Nike and Adidas? Their style is so different… So more or less, there are many differences among different brands in the same industry.
Let’s make it harder: what about a differentiation between B2B brands. Let’s say Intel and Cisco?… For ordinary people, it is hard to answer; but for the corporations, there are many answers to give: About their product solutions, about the service, about performance…
How about JWT and Y&R? And to be more particular and to make the point easier: What is the difference between these two brands in the eyes of the advertisers?
I assume that you’d prefer me to give exact office names in order to have an answer. Excuse me, aren’t they global brands?
They are not really. Because as all other agencies, they tend to depend on their Madmen’s reputation instead of their own. Like Record Labels that depend on their Pop Stars. Even record labels have global diversified supply chain and technical differences that make them differentiated.
So what makes agency brands different from each other? If you exclude the qualities of your Creative Director or your smart strategist, just the agency itself?… Voila! There is none. Welcome to the commodity of advertising!
The agencies you hire to make you differentiated from the competition belong to a commodity market. Ironic.
You know the most obvious question when you evaluate a creative work: Can it belong to some other brand if we take our logo out?… Take the logo out from the presentations of your agency, can they belong to any other agency? Take their creative briefs from their unique (?) format, is it still branded?
It might seem very odd for a global agency network group, not to have a global portfolio strategy among their agency brands. But it is not, in fact, it cannot be much more profitable for them! Think about it: your have a lot of agency brands in your portfolio and if you differentiate their positioning statements, the clients would know it and they will have only “one” option to work with and when things go wrong they will switch to another agency, which is not one of your network agencies. If you’d have a premium agency in your portfolio, everyone will try to work with that one and the others will automatically be economy brands, with less profitability and the premium will crash. Or if you would create a unique know-how, the Madmen of yours will take it and leave with it to their new creative shops. And the clients will follow them, because they are the ones they trust, not you. They know how eager you are.
So global agency network groups prefer their industry to be a commodity. So that you can move one from another and keep spending money in their profitable system. Therefore, they do not invest in any of their brands and create superiorities but invest in the whole industry and its effectiveness, like they do with organisations like CannesLions and Effie.
But I have bad news. It is not working anymore.
Because, the commodity means price wars. Since none of the agency brands have a sustainable quality superiority as a commodity brand, the advertisers are pushing the agencies to work faster and for cheaper. And that creates a vicious circle. With less money, you cannot recruit and hold the best talents. With mediocre talent, you cannot deliver good work in pace. When you cannot do that, the advertisers push you to be cheaper and better. And when it does not happen anymore, they leave. According to a new study done by Advertiser Perception, 66% of the Advertisers consider a creative agency pitch in 2017.
So what are your gonna do?
My dear old boss and the CEO of DDB NA Wendy Clark proudly mentions that over hundreds of talents from 20 Omnicom group agencies worked for McDonalds’ pitch for 16 weeks. That is a huge collaboration for ad industry, it is really hard to gather all those egos around one mission and lead it. I really respect it. However to give you an idea; 2016 Super Bowl show preparations took +2500 people’s effort in almost 16 weeks. They are both “once in a life time” events, howeverMcDonalds would assume that the huge and brilliant collaboration was not just for the pitch presentation, but would keep on…
McDonalds pitch perfectly shows us what is being changed. Big agency network groups are aware that they are loosing profit and they made their first compromise. They made their brands start to collaborate with each other to create some competitive advantage, an added value… and it worked. They got the job as Omnicom. However, it is Pandora’s box, because now the exclusivity deals will limit many Omnicom agencies to work with McDonalds competitors, and many other potential and existing clients will ask Omnicom to give a similar service to them. They will force them to give a full service and negotiate; as a cross-sell promo, as a bundle. And the same demand will be dealt by other groups like WPP, Dentsu or Publicis or Havas. I wish them luck!
In my opinion, this is not the way to make the industry strong again. And maybe these big network groups are already too late or stubborn to find their ways out. For example, they had a big chance during digital revolution. They could have changed everything about the ad industry, but they preferred to buy the best digital creative agencies and make them think and behave as their older brothers… They thought them to chose profit over value.
Maybe the independent agencies will change the rules. Or maybe the advertisers.
UPDATE (Nov, 16): Omnicom’s new dedicated McD agency was launched. Here is more info about We Are Unlimited.