THE AGENCY
NO BALL, NO PITCH: AD AGENCIES
ARE ON SHAKY GROUND!
By Marketing Africa Editorial Crew
I
t has been said before and we will
say it again: if your business doesn’t
control a critical component of its
product, you are on borrowed time.
You need an exit strategy, and fast.
If you invested in one or run an Ad
agency … be very wary!
As Jack Welch, former CEO of GE
once said, “Never compete where you
don’t have a competitive advantage.”
Few, if any of our ad agencies in
East Africa got this memo. Viewed
differently, the Ad agency business
model is akin to this poor kid that
lived in a wealthy neighborhood.
While he was a great soccer talent,
he could neither lay claim to the ball
nor the pitch he played on. Each day
of practice, started with a plea to his
right-hand-side neighbor …”may
I please borrow the ball?” Onward
to the left-hand-side neighbor …
“May I please play on your pitch?” It
got worse when his feet were closely
examined … back to this later!.
But what does this story have to do
with ad agencies?
First, The Ball
The ball symbolizes the brand. To do
what it does best, the agency needs a
client brand and to this end, it must
get the client’s permission. Because
the client can pack up and leave,
the agency will forever be at pain to
please the client.
With successive annual pitches, this
sets off a perpetual race down the
price spiral. Bottom line is that the
client has greater bargaining power
than the agency. It follows that while
the agency’s creative effort may drive
super profits for a client, the agency
barely gets to extract commensurate
value from the relationship.
The agency’s hope then lies in its
ability to attract future clients. But
it all boils down to the quality of
the work done for the current and
‘‘ Where the agency favorably negotiates
terms such as discounts, the client is never
too far to claim the spoils. With the increasing
influence of parent offices abroad, most
clients now demand for full disclosure terms in
agency contracts. Save for outright dishonesty
or conveniently forgotten disclosure, the
agency will never keep much of the value it
generates from its relationship capital with
media houses.’’
44 MAL 17/17 ISSUE
previous brands. You know matters
are amiss when you hear the sad tale
among agency execs of the great
campaigns they could do for their
clients, if only the latter would allow.
Back to the ball. So one day, our
poor kid in the rich neighborhood
immensely looked forward to
showing his great talent when the big
league scouts were due in town. Alas,
the rich neighbor who lent the ball
would only allow him to kick it in
two directions; forward and backward
(never sideways, never diagonally).
Not able to demonstrate a lot of skill
under such limitations, his ability
to impress the next scout was not
entirely up to him. It then followed
that his great talent guaranteed no
future. Fate accompli!
Second, The Pitch
The pitch symbolizes media
platforms. With a client campaign
at hand, the agency’s next concern
is placement. In comes the media
houses. Barring the small radio
stations and magazines, your typical
mainstream media house is 5 times
bigger than the agency, both in
revenue and capitalization.
Unlike the agency, they own the
critical component that makes up
their business, be it a newspaper,
radio station or TV broadcasting
license, complete with their own
brand and loyal fans.
The agency can do whatever it pleases