Who is losing influence at a boardroom level?

Do i still believe this?

An old colleague has recently caused a stir in Ad-land with a WARC paper on the death of the creative planner (behind the paywall). It reminded me of the following essay that i wrote back in 2013 for the IPA excellence diploma. It scored me my only “distinction” (Merit overall) and the feedback was that it caused a lot of consternation with the markers (overwhelmingly creative side) who disagreed vehemently. One thing i do know is that its a well constructed paper (if i do say so myself) and remarkably well sourced…

In hindsight, and knowing what the old IPA ex markers used to like (controversy or metaphor) maybe i’d have been better placed extending this as my “future of agencies/branding is…” essay. Nevermind! ( i did write about a new model called BrandEQ based on Golemans concept of Emotional Intelligence instead but i’ll save that post for later)

Anyhow, this is a long read. I’m not sure whether I agree that Media agencies/groups are still in pole position or that it matters. Maslows hammer has become remarkably prevalent whilst media owners have taken up the creativity mantel (often media agencies just brief out and then “rate” the ideas which is pretty uninspiring and completely short sighted) amongst other structural issues but i thought i’d share. Its a long and ongoing debate and the fact its still being had 7 years after i wrote this suggests the future is slow in coming… Have fun!

“The loss of agency influence in the boardroom of clients is widely mourned by those who remember how it once was: how and why has this come about and what practical recommendation(s) would you make to re-build influence in the modern era.”

Abstract

Multiple factors are presented that demonstrate that  agencies (plural) have not seen a multi-lateral decline in influence and that in fact media/comms agencies have seen their influence in the board room rise in the “modern era”.  Combining learnings taken from shift in the balance of power and added to the practical application of decision-making theory at every level of the industry, the agency world can deliver what business requires and maximise their influence in the boardroom.

Why media/comms agencies already hold the keys to influence in the boardroom

“We’re math men not mad men” – Sir Martin Sorrell 2013⁰

Vizeum MD Richard Morris has just returned from introducing the new CEO of Burberry, Christopher Bailey, to Dentsu management in Japan.  My senior IKEA client acknowledging that Vizeum are lead agency on his business.  In 2009 working for Walker media on KFC, I alone presented the comms approach to the senior franchise board.  The rapid blurring of the line between media and transaction and the gradual automation of digital creative across all media including such strongholds as TV and Outdoor, all these small examples (I could name dozens more) are, I believe, examples of a shift in the balance of power and influence within the agency/marketing services world.

I disagree that agencies have seen a multilateral decline in influence.  I believe that in fact ad agencies are gradually losing influence whilst at the same time media/comms-planning agencies are establishing a greater say in the boardroom.

Why this is my belief, in summary

I believe this can be traced back to the mid-90’s and the emergence of digital media as a viable communications platform¹.  This shift has been accelerated by subsequent developments in the science and understanding of communications, the value and accountability of media, the emergence of BIG DATA and the convergence between media and transaction.  I believe the latest neuroscience and decision-making research provides an intellectual platform that explains this process and also provides the theoretical rigour upon which I base the predicted success of my additional recommendations to increase agency boardroom influence.

My essay provides answers to the following 2 questions

1. What factors have enabled comms planning agencies to increase their influence at a time when ad agency influence has declined and what can be learnt from them?
2. How do the latest decision-making learnings help deliver innovation at every level of the industry in order to build agency influence?

What factors have enabled comms planning agencies to increase their influence, at a time when ad agency influence has declined?

I believe that we are in the process of a changing of the influence guard. Understanding the drivers of this process is key to understanding what agencies must do now and in the future to elevate their influence.

I believe there are 2 drivers that explain this shift and provide learnings

1. A broadening of remit 
2. A focus on accountability

Media/comms planning agencies have benefited from a structurally driven broadening of remit

The establishment of frameworks such as POE² and signalling theory³, the importance of context as the key driver of association⁴ and the convergence of media and transaction⁵ all establish the intellectual & functional foundation that have enabled media/comms planning agencies to justify and deliver upon a wider remit.   

This remit puts media/comms planning agencies in the perfect place to advise clients on the increasingly fragmented nature of not only media, but also all the agencies that provide specialist channel advice.  These developments justify the media/comms agencies place as the expert in creating strategy, identifying roles and responsibilities and managing the communications touchpoints from end to end, from on-pack, to shopper media, to online search to traditional TV.  My experience is that increasingly media/comms planning agencies are looked to for advice in bringing POE channels together to provide a fully integrated solution for clients.  In the “Golden era” (1950 – 1980) of agency influence this role was held by the “account man” of a full service ad agency.   Essentially the orchestrating role has shifted!⁶

Media/Comms planning agencies have focused on accountability

A great representation of the “empirical science” blind spot from an ad agency point of view comes from Rory Sutherland who suggests that the industry is very conservative and tend to behave like ostriches, acknowledging the “lion” of new thinking but sticking their heads in the sand rather than actively dealing with the issue⁷.   

An example at a more micro level is the presence of less than 25% of the current IPA excellence intake coming from ad agency backgrounds.   If this truly is the “MBA OF BRANDS” then surely ad agencies need to ensure their best and brightest understand the needs of the board and how to elevate their influence.

So why have media/comms agencies naturally gravitated to this area and seen their influence grow? I believe the reason is straightforward, media/comms planning agencies own the investment⁸.  They buy the media and therefore are regularly challenged to justify the value of this investment at every level within the organisation especially at board level.  

This constant justification has for example led to the purchase of D2D by Aegis⁹ and the establishment of specialist OpCo’s such as Mediascience¹⁰across media land.  In addition their analytics departments are mushrooming in size as boards cry out for help with understanding and managing BIG DATA¹¹.  

Influential books/articles on the science and maths of branding and advertising¹² have been utilised (in my experience) primarily by media/comms agencies as they typically discuss the effectiveness of planning touch-points and investment¹³.  Boardrooms thrive on predictions of effectiveness and models of future performance and with this understanding of the mathematics it is the media/comms agencies that are more comfortable delivering in this area with a few exceptions¹⁴.    

This change of affairs betrays the origin of the account planner as a researcher, comfortable with statistical analysis and quantitative proof.  It’s worth asking the question “If Stephen King worked in agency land today would he sit on the communications planning side?”

In this vein you would be hard put to find a media/comms agency not talking about physical and mental availability¹⁵, applying the SOV vs. SOM¹⁶ relationship and ESOV ratio to budgets setting or planning investment using econometrically built demand curves and ROI hierarchies of performance.  Recent commercial developments like that between Aegis and Sandbox¹⁷ and the Vizeum “like” project¹⁸ show that communications agencies are focussed on developing further expertise in putting science, maths and the true value of communications at the heart of what they do.  

This approach in applying scientific rigour to marketing communications has begun to breed confidence and influence in the boardroom their takeout being that there is a real understanding of the value of this media investment and what it adds to shareholder value¹⁹.  Those that own and apply this knowledge i.e. media/comms agencies, are those that are growing in influence.  In essence media/comms agencies have by accident or design begun to communicate in a manner that delivers upon the implicit and explicit goals of the board²⁰.

So far I have shown how and why I believe the balance of influence has shifted between ad agencies and media/comms planning agencies, how they have benefited from developments in the understanding of how communications work and how through the ownership of the accountability agenda media/comms agencies have implemented an improvement in the language and therefore lines of communication between them and the board.

There is more to be done and innovation is the key

The answer to increasing influence already exists and whilst accountability is key, recent research²¹suggests that to truly to increase influence in the boardroom, agencies²² need to demonstrate innovation²³ as well.

This combination of innovation and accountability should come as no surprise!  In fact, Ian Priests IPA presidency is based on the commercial creativity²⁴ agenda!  However despite the work of the IPA and isolated examples throughout ad land²⁵, it is notable as shown, that the accountability agenda has been taken up and driven primarily by the media/comms planning agencies.

Delivering innovation to clients

Just as I believe and have shown how fulfilling the boards implicit and explicit goals²⁶ supports why media/comms agencies have succeeded in owning the accountability agenda.  I will now show how further elements of the decision-making literature can be applied to deliver and communicate innovation to increase boardroom influence.

Innovation can have many meanings, I prefer a broad definition

“Innovation is the application of better solutions that meet new requirements, inarticulated needs, or existing market needs²⁷.”

How do the latest decision-making learnings help deliver innovation at every level of the industry in order to build agency influence?

I believe that innovation should occur at 4 levels 

• The individual level
• The agency level
• The group level 
• The industry level

At each level I will show how through understanding and applying the latest communications theory we can deliver innovations to improve our clients businesses.

Level 1 – How physical and mental availability can drive an individuals true understanding of a clients businesses

How can agencies deliver better solutions if they don’t understand the current client needs?  E.g. less than 10%²⁸ of agency people read their clients company reports!  To help improve this understanding I propose the wholesale return of the agency secondment²⁹ or at least a regular agency residency within our clients businesses.  This increases the physical and mental availability³⁰of agencies and business towards each other, combats the “them and us”³¹ view and generates true understanding of the client business challenges and how they make money.  

Since the P&O team at Vizeum have taken to spending one day a week working at the clients office we have seen our NPS scores rise significantly, whist feedback has specifically mentioned increasingly relevant and innovative strategic recommendations.  To implement this effectively their needs to be an open and honest discussion about agency remuneration, no longer can individuals’ time be allocated over 100% as client placement demands focus of service.

Level 2 – How agencies should change their implicit signals 

Signalling theory³² shows that most communication is at the implicit level.  Better solutions from a Boardroom perspective require functional, demonstrative action plans that are easy to understand, they require the confidence that their investment is being spent wisely and effectively and they need to know that risk is being managed but not to the detriment of new thinking.  A review of any board level document shows that better solutions come from clarity of communication and a focussed approach to strategies that can be proven.  Overlong PowerPoint presentations and unnecessary, unscaleable innovation³³ betray a lack of business understanding, whilst a lack of conviction in terms of business outcomes does not inspire the confidence required³⁴.  

In order to remedy this state of affairs I suggest the application of three simple process innovations that implicitly communicate directly to board requirements.  

• Utilise the 10-slide presentation³⁵ or PechaKucha³⁶ approach
  • The best ideas are always the simplest.  This approach forces agencies to concentrate on a simple understandable strategy that can be easily implemented brilliantly
• A mandatory “This will deliver….” page
  • Communicates confidence, effectiveness and forces rigour
• Applying the 70:20:10³⁷ approach to innovation to every challenge
  • Reinforces confidence in risk management and establishes the principle of consistently managed innovation, testing and learning³⁸

Level 3 – How at group level loss aversion puts “agency skin in the game “

A criticism often aimed at agencies is that they deliver solutions and then walk away already concentrating on the next deliverable³⁹.  Delivering true innovation can come from a radical approach to the agency model.  This recommendation is based on the theory of loss aversion⁴⁰moving agencies from mere suppliers to owners and/or distributors too.  If business knows we have “skin in the game” then Boardrooms are likely to take more notice as we begin to share in the risk or our recommendations.  

The Dentsu business model provides a template that can and has elevated agencies from mere suppliers.  Dentsu invest not only in media buying but go further up the chain to invest in entertainment rights and talent management, which they then sell to clients and non-clients.  They effectively move from poachers to gamekeepers.  This fundamentally ties Dentsu into making a success of these rights not only to allow them to benefit directly but also for their clients business.  Dentsus’ presence on client boards in Japan⁴¹ and SE Asia is testament to the success of this model and having bought Aegis for over £2b they are keen to roll this model out into the rest of the world.  What could be more innovative than an agency network buying the rights to broadcast the World cup in Russia⁴² or competing with BSKYB and BT for the next tranche of Premiership rights? 

Level 4 – How industry level collaboration can promote WYSIATI*

Ian Priests ADAPT agenda⁴³ is a great first step in reinvigorating the client/agency relationship whilst promoting creative commerciality; however I believe the right audience still isn’t being included. We need to step beyond the marketing sphere and include those non-marketers at board level engaging these key stakeholders in the process.  As these senior stakeholders become exposed to our thinking, perceptions can be changed instilling the Kahneman principle of WYSIATI⁴⁴ so that the whole agency world benefits from this reflected glory.

Conclusion

The essay question makes an assumption that agencies (plural) have lost influence in recent years.  I disagree and believe it isn’t as simple as that, I have shown that in fact, media/comms agencies have increased their influence, aided by understanding the power of context, frameworks such as POE and the convergence of media and transaction but; most of all from the desire to prove the value of media in achieving the explicit and implicit goals of the boardroom.   These developments set out the new base level of client expectation that other agencies should look to learn from.  

However, more is still to be done to facilitate innovation for our clients, whether through greater understanding, better delivery, agency offering or improved client relationships in order to further elevate the influence of agencies in the boardroom.  

The future is bright, we have the vocabulary, we have the techniques and we have the answers, we must now apply and not ignore them.

Appendix

• http://www.beet.tv/2013/04/wppsorrelll.html “Research, plus direct marketing and digital-well over half of our business is scientific or science-related. The rest is what you might call pure art and big ideas” – Sir Martin Sorrell 2013
• The first clickable web ad was served in 1993 whilst the first ad-server platform was developed in 1996 http://en.wikipedia.org/wiki/Web_banner
• http://www.google.co.uk/trends/explore?q=paid+owned+earned#q=paid%20owned%20earned%2C%20paid%20owned%20earned%20media&cmpt=q
• The application of the biological principle of signalling and the communication of brand intent via body language.  Exploiting the Implicit, Pete Buckley, (2012) http://www.mecglobal.co.uk/what-we-think/publications/strategy/exploiting-the-implicit/
• The associative machine. Thinking fast and slow, Daniel Kahneman, (Penguin, 2011) and Framing, the “autopilot” frames our experiences, Decoded, The science behind why we buy, Phil Barden (Wiley, 2013)
• The digital world has facilitated the convergence of the consumption of media and the ability to purchase.  In 1-click consumers can see an item advertised and purchase it in an instance.  This powerful engine of change shifts the onus of media from an advertising device to a distribution and sales channel, elevating it to a directly attributable business channel
• Whilst acknowledging the “decision architecture” theory of Sustein and Thalers Nudge.  Nudge, Thaler and Sunstein (Penguin, 2008), this term most directly references the work of Nick Hirsts experience architects. Nick Hirst, Why experience architecture is the future of planning, (ADMAP, 2012) and the conclusions of  datamine 3 Kate Cox, John Crowther, Tracy Hubbard and Denise Turner, IPA dataMINE, New Models of Marketing Effectiveness – From Integration to Orchestration, (WARC, 2011)
• “The record of the marketing services community to what seems to be a Copernican revolution in the behavioural sciences has so far been notable by its absence.  The past reaction to earlier work by Ehrenberg, Jones, Stephen King and so on – which challenges assumptions with real empirical evidence – suggests that marketers may do what they usually do: show great interest and appreciation of this new information, before carrying on doing what they have always done” Taken from the foreword written by Rory Sutherland in Decoded – The science behind why we buy, Phil Barden (Wiley, 2103)
• Media agencies were after all created after being flung out of full-service agencies in the 1980’s to provide an independent view on investment, separate from the revenue requirements of the ad agency.
• This occurred in 2012 bringing econometric modelling into the Aegis OpCo business from an established and well respected entity
• Brandscience are an OpCo within Omnicom, Businessscience are based out of Mediacom whilst MEC have OHAL inhouse.
• BIG Data has been the business worlds buzzword for a number of years IBMs From stretched to strengthened (2009) details it as a key issue facing business whilst 3 years later 2012s Are CMOs ready for the digital marketing era (2012) showed that data was still a major headache topping the list of unpreparedness (79% said they were unprepared)  http://visual.ly/ibm-cmo-study-infographics-2012
• The varied work of the Ehrenberg institute summarised by Byron Sharp How Brands Grow, Byron Sharp, ((200, Oxford University Press), Kahnemans lifetime of output, Thinking fast and slow, Daniel Kahneman, (Penguin, 2011), The Decoded businesses approach to neuroscience, Decoded – The science behind why we buy, Phil Barden (Wiley, 2103) and the seminal publications by Binet and Field, The long and the short of it, Binet and Field (2013, IPA) and Marketing in the era of accountability, binet and Field (2007, IPA)
• Whilst there is some attempt to measure creativity by Peter Field in The value of Creativity, Peter Field, (2011, Market Leader) which concludes that creativity is great for effectiveness it is difficult to construct a tool kit to deliver “creativity”.  How do you create a process that consistently delivers a concept that is fundamentally in the eye of the beholder!
• Whilst much of this evidence is based on experience or hearsay, it is telling that the only creative agency with a visible effectiveness department is that run by Peter Field for Adam and Eve/DDB.  Across clients as varied at the Lloyds Banking Group, The Department of Health smoking cessation department, IKEA and KFC (to name but a handful across a range of different ad agency partners) it has been the media/comms agency who have pursued the effectiveness agenda and put forward recommendations
• Physical availability relates to the ability to maximise distribution so that consumers can purchase via as many outlets as possible.  Mental availability relates to the mental proximity of a brand to a consumption opportunity.  How Brands Grow, Byron Sharp, ((200, Oxford University Press
• This relationship has been known about for over 30 years although most recently the seminal Marketing in the era of accountability, binet and Field (2007, IPA) has established its usage more widely.
• Sandtable http://www.sandtable.com are a business that develops Agent Based Modelling tools.  Agent based modelling is the next step in agencies ability to predict likely outcomes based on certain inputs.  Agent based modelling essentially creates a simulated world of individuals in a computer programme http://en.wikipedia.org/wiki/Agent-based_model .  Rules are established and then variables such as NPD are entered into the model to see what the response is.  I was part of the project team that originally led the creation of a model for DoH Tobacco control which helped prove the rationale for the month long quitting event “Stoptober” Aegis media have signed a contract with Sandbox to work exclusively for a period in developing standard worlds to enable clients to simulate business inputs at a lower cost that building a unique world from scratch.  
• A project detailing the value of a “like” to business http://vizeum.co.uk/p/the-science-of-social-social-media-week/
• Boardrooms are targeted with maximising shareholder gains.  As such the impact of investment upon shareholder value should be the number 1 target for any service business providing investment advice.
• Essentially Comms planning agencies have begun to fulfil the explicit and implicit goal* requirements of the board.  Boards deal explicitly in facts, science and measurement, allowing risk to be managed and investment performance to be predicted and whilst a full brain scan of the board is unlikely I believe that you would typically find that comms agency behaviour has begun to align with the implicit goals of security and discipline* a key requirement of successful communication according to Decodeds neuro-boffins. Decoded, The science behind why we buy, Phil Barden (Wiley, 2013)
• CIM, marketing wave confidence monitor wave 5.  Reference by Professor Vincent-Wayne Mitchell in the October issues of Marketing magazine http://www.marketingmagazine.co.uk/article/1214724/marketers-need-marketings-case

• Whilst the research explicitly references marketing, as marketing services businesses we need to enable marketing as James Murphy states here http://www.campaignlive.co.uk/opinion/1220566/agencies-looking-empower-marketers/  as the deliverables apply to both.
• Innovation is a broad term and I have taken it to mean innovation is the broadest sense whether it is innovation in service, product, or delivery.  This reference relates to the evidence shown in ref 7
• http://www.ipa.co.uk/page/ian-priest-unveils-his-adapt-programme-at-cannes#.UpITYZE29Fw
• Most notably the work of Les Binet and Peter Field in developing the IPA databank, the datamine series of publications and Binets effectiveness lab at Adam and Eve/DDB
• The need to match implicit and explicit goals Decoded, The science behind why we buy, Phil Barden (Wiley, 2013)
• http://en.wikipedia.org/wiki/Innovation
• Based on a survey monkey survey conducted within Vizeum UK and scaled up.
• http://www.ipa.co.uk/blog/search/let’s-reintroduce-client-agency-secondments/10236#.UpIgbJE29Fw
• The physical proximity, close to point of consumption i.e. the completion of work, of working together increases the physical and mental availability of agencies and clients towards each other stimulating communication and reinforcing the knowledge of capability in the same way advertising can increase the mental availability of a brand in the minds of a consumer.  How Brands Grow, Byron Sharp, ((200, Oxford University Press
• http://www.campaignlive.co.uk/opinion/1220566/agencies-looking-empower-marketers/ A direct outcome of the first Adaptathon on Alliances
• The application of the biological principle of signalling and the communication of brand intent via body language suggests that agencies may implicitly communicating the wrong things to the board even without saying anything.  Exploiting the Implicit, Pete Buckley, (2012) http://www.mecglobal.co.uk/what-we-think/publications/strategy/exploiting-the-implicit/  
• The meat snacking helmet for mattessons fridge raiders is a cannes award winning idea http://www.youtube.com/watch?v=cukCTFH_JaY costing over £500k to reach the Syndicate group of 3.5m individuals.  With these ratios it’s difficult to conclude that this was a worthwhile business recommendation with little scalability and impact.
• Consultants deal in confidence bands.  They will enter a business; make a guarantee using case studies and norms based on previous work and then base at least part of their fee on delivering upon it.  The confidence that is implicitly communicated by these actions explains in part why they have influence in the boardroom.
• Whilst I worked on Lloyds Banking Group, Catherine Kehoe, the head of marketing and brand was quoted as saying she hates slide number 5.  As such we changed our whole way of presenting so that slide number 5 never materialised.  It forced us to pinpoint exactly what we wanted to say and provide the rationale as quickly and efficiently as possible.
• http://en.wikipedia.org/wiki/PechaKucha
• Based on the Google approach to innovation that was stolen from 3M, this breaks down time or spend into 3 elements.  70% of time or money is spent on what we know works, 20% is spent on activity related to the 70% but that tests a new area.  The final 10% is all about the disruptive, innovative ideas that could provide the step change in business performance. 
• This constant test, learn refine approach is key in maintaining an innovative approach.  It harks back to the reductive approach to reasoning the logic of scientific discovery, Karl Popper, (2005, Routledge) and helps business and marketing manage risk whilst pursuing an on-going innovation program.
• Original Innocent founder Richard Reed was fond of telling agencies that “why should I trust you, you have no skin in the game”
• The principle uncovered by Kahneman and Tversky that demonstrated that human’s value losing more than gaining.  Thinking fast and slow, Daniel Kahneman, (Penguin, 2011)
• Two examples are that Dentsu staff are present on both Honda and Sonys management boards.
• http://www.dentsu.com/digitalbooks/index.html  Dentsu have previous having bought the rights to the 2002 world cup in Japan and South Korea
• http://www.ipa.co.uk/page/ian-priest-unveils-his-adapt-programme-at-cannes#.UpITYZE29Fw
• What You See Is All There Is the Kahneman discovery that the System 1 mind makes decisions using immediate info at hand and if it doesn’t have that information then it substitutes and creates explanations to maintain cognitive ease.  When applied to this context it is about creating the simple associations in the mind that the agency world understands and can add value to business.  By implanting this knowledge and developing this heuristic in the minds of non-marketing board members the industry can take advantage of the unconscious minds processes for its own benefit. Thinking fast and slow, Daniel Kahneman, (Penguin, 2011)

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