Why Agencies Should Get Out of the Service Business

By Tim Williams

Is marketing a profession? This is actually an important question for businesses like advertising agencies.  Many practitioners feel that because they have devoted their careers to this discipline, they are “professionals” in the sense that they know their jobs well and take their work seriously.

But the true definition of a professional presents a much more rigorous standard than just being good at your job. For starters, professionals are accredited.  Lawyers must pass a state bar, and accountants must pass rigorous exams to earn the title CPA.  They, along with doctors and architects, are licensed.

Second, the professions require continuing education.  In the United States, CPAs must prove 130 hours of professional development each year to maintain their accreditation.  Third, the professions are based on the study and application of science. 

Less art, more science?

While all professions could ultimately be considered a combination of both art and science (doctors and litigators in particular fiercely defend this position), the professions themselves are rooted in rigorous study and application of research.  While judgment is part of the job, this professional judgment is augmented by a body of evidence that is constantly updated.

Given the above standards, do marketing practitioners qualify?  Not quite yet. To be fully accepted as a profession, the advertising and marketing business must take a much more evidence-based approach. This isn’t to diminish the foundational role “art” or judgment plays in our business.  It’s just an acknowledgement that after over a hundred years’ experience with modern marketing, advertising agencies and marketers alike should be a lot more conversant and knowledgeable about what works, what doesn’t work, and why.

Less order takers, more outcome creators

With the sophisticated metrics made available by technology, agencies need to focus a lot more on studying and understanding outcomes. Resources like the effectiveness databank produced by the U.K.’s Institute of Practitioners in Advertising (IPA) constitutes an impressive “evidenced-based” body of knowledge that agencies around the world should study.  And thankfully, the business of analytics is now firmly established as a serious agency discipline, and can go a long way in maintaining credibility with client organizations.

Unfortunately, rather than identifying and executing against outcomes, agencies often hunker down in production-factory mode, filling orders for procurement departments.  Not only is this type of work increasingly “commoditized” (meaning widely available at low cost), it pulls agencies away from their more important role as informed, valued advisors.

 Less reactive, more proactive

Agency executives everywhere are frustrated by the master-servant dynamic that increasingly characterizes agency-client relationships.  They lament they are often treated as “order-takers,” and are quick to blame their clients.  But agencies must take responsibility for what has happened to their status.  Most have become so wrapped up in the production of “deliverables” they have lost sight of the real value they provide to their clients.  They are caught up in the illusion that their clients are buying services or “time of staff” rather than business results. 

In surveys of its members the 4As (American Association of Advertising Agencies) asks what agencies measure in their organizations.  Around 95% of them say they measure “Labor hours and costs.” But when asked about measuring “Client business results” the answer is closer to 20%. 

Similarly, in the many years our firm has conducted surveys of marketing communications firms, we’ve observed that agencies give themselves the highest ratings in the areas of “Responsive service,” “Listening to clients,” and “Meeting timetables and budgets.”  The lowest-rated areas?  “Developing proactive ideas and delivering marketing leadership to clients.”

Service is a commodity.  Smart thinking is not.  Clients can get good service anywhere, but proactive marketing leadership is in short supply.  The agencies that understand this invest in better people who can produce a better product.  They resist hiring an army of junior account people who are good at service, but fail to add the value that clients are ultimately paying for.  They realize that the way to deal with demanding clients isn’t to give them exactly what they want, but rather counsel clients on what they really need.

So if you’re an agency, think hard about the question of what business you’re in. If you’re in the service business, you can expect to be treated and paid accordingly.  If you believe you’re in the marketing effectiveness business, then you’d better hire, train, and invest in people that meet that standard. 

 Remember, smart clients don’t only hire you for what you do; they hire you for what you know.