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Let me tell you how advertising agencies work. Agencies, by and large, sell hours. Unless they find a way to productise intellectual property or build a clever piece of proprietary technology, agency businesses scale by adding staff as they add clients. Win a client, hire people. Lose a client, fire people.
Agency owners and executives make money by consolidating with or selling to larger agencies or networks. When founders or shareholders exit they leave their organisation without its key creative or strategic leadership, often with catastrophic implications. The cycle repeats itself over and over again with relentless predictability.
Somewhere between starting and selling an agency you realise that the ways to make better than average margins when billing hours is to exploit staff, or manipulate clients. If you're a nice person, this is troublesome.
Having had zero agency experience and limited business acumen when I started Cerebra, this realisation came as a bit of a shock to me. Today, we interview people who go to great pains to tell us they're not eight-to-fivers, not afraid of hard work, not shy of high levels of stress. This is, after all, #AgencyLife.This is a thing. It's a meme. It's widely accepted that working at an agency means killing yourself for the 'cause'.
If our staff has to slave away from 7 am to 11 pm all week and come in on weekends scrambling to finish work there are only two possible explanations: They're lazy and don't get their allotted work done in office hours, or (more likely) we run a crappy business.
Overworked employees are not the only messy byproduct of broken agency business models. The fundamentally unhealthy nature of many agency client relationships is a far deadlier.
Last year, we terminated our relationship with a major brand on the back of what we believed to be a better opportunity for shared value with one of their competitors. We were well within our contractual rights to do so.
"Agencies don't fire clients. Clients fire agencies!"
The last three pitches Cerebra attended were all rigged to shoe a specific agency partner in to a client, not to genuinely evaluate the respective skills and experience of the short-listed candidates. We dance around like monkeys in a cage begging for a banana from a kindly onlooker - it's shameful. Staff gets so amped and motivated by new business briefs and pitches and so devastated when we aren't chosen.
Every single mutually beneficial and valuable client relationship Cerebra has ever had begun with an open discussion. Pitches are broken and breed broken results. They are like The bachelorette for business.Because many agencies are deeply insecure about their ability to show tangible results, awards become their primary differentiator. This fuels the unhealthy dynamic between clients and agencies even more. Work is done because it wins awards, not because it achieves business objectives. Choosing an agency primarily on its awards is like choosing an intimate partner based on the car they drive.
Craig and I have no immediate plans to exit from Cerebra. Having said that, if we are still "just an agency" when we do leave one day, we will consider our tenure in leadership as a failure. We are wholeheartedly determined to find better, more sustainable ways to run our company that diminish or eradicate some of the broken dynamics I've alluded to in this post.
This starts with ensuring that our colleagues have healthy working lives. It means that they work passionately and constructively in their contracted hours. It means they leave us happier, smarter and wealthier than when they joined us. Over 25 per cent of all people that have left Cerebra have gone on to start their own successful businesses. We think that's rock ' n roll. It also means agency leadership taking more responsibility and accountability for the health of their businesses.
The author is Mike Stopforth, CEO, Cerebra. Reprinted with permission.
Link: http://www.mikestopforth.com/2015/02/26/agencylife-big-agency-lie/
