Advertising can be great again, but needs to rethink the structure

While the night was young, and the spirits just started to flow to match the buzz in the air that was building up before the FIFA World Cup final in 2022, a friend’s friend who just joined us for the gathering, mentioned upon meeting my wife for the first time, "Oh you’re from the client side!", when she mentioned which company she works at. What underpins that comment?

The very fact that agency employees are so engrossed in their world that they don’t realise there are functions and roles beyond the realms of agencies, is a testament to their commitment to their agency. If you carefully notice the career growth trajectory of almost all senior folks in advertising agencies in APAC, they have a very strong agency background. Seldom, we see people moving from the client side at a senior level.

The truth is that agency folks seldom think about moving away from that world when they can. The world of marketing and communications is huge, many opportunities have opened in recent times. So, right from consulting firms and tech platforms gunning for agency talent, apart from true blue corporates, still only a few brave people have been able to make that shift. Not because they aren’t able to, but because they are wary of the cultural shift.

Culture that sticks

Agencies are known for their easy going, informal culture. But the question that begs to be answered, the comfortable culture comes at what cost? Long hours at work, low pay, and no real benefit. In the age of start-ups and stock options and large corporate bonuses; parties and informal culture hardly count as benefits.

Let’s explore basic pay disparity a bit, in relation to designation. If you ask around and notice trends, you will learn that an analyst / assistant manager in a large multinational corporation earns as much as a director in agencies. Yet the director in agencies is expected to magically drive value without any structural or systemic support.

What do I mean by structural and systemic support? I mean processes and support systems in place which enable senior folks to perform and drive value for the organisation. The human resource movement within an agency often defies any logic or analytical basis. It is all about who can do that job at any given time without really caring about structural support.

The worst are the agencies who hire for a particular role and designation, but shuffle responsibilities after the person joins. Let’s not even get started on the manpower management capabilities of senior leadership in most local market teams. Moreover, when a new team is created to service a new client, it’s more like a congregation of capabilities in people who are required to service the client. There are team structures created without much thought. Ideally a team lead should have everybody in the team reporting to him or her. But often, they report into the functional head, that’s where responsibility and accountability in a team goes for a toss.

The unsustainable pitching route

It's got nothing to do with the capabilities of the leadership team. It’s about the way the businesses of agencies have been setup. Leadership is responsible for getting new businesses and that’s their primary KRA, so actual manpower management is least of their concerns. They are probably only good in manpower movement. Regional teams may be better in the way they manage talent. Local markets aren’t as good. The core businesses of agencies at the local market level comes from winning agency of record clients, which often comes after a long drawn out pitch exercise which is not required, as argued by Avi Dan in Forbes.

He points out that not only there’s an actual cost to continuous pitching but also takes a human toll on employees, “But the costs are more than just financial. There is a human cost to pitches. The toll on mental health is enormous due to the added pressure of handling a pitch that is squeezed into an already stretched team, and is, draining to the employee. This most certainly plays a major role in the talent exodus from advertising agencies.”

Have you noticed, agencies don’t have dedicated sales and solutioning teams at the market level, hence the burden of pitching and winning businesses solely falls on the shoulders of teams handling client accounts. There’s a lot that agencies can learn from IT services organisations in terms of structures.

For agencies to adopt some of the best practices of IT services organisations, it has to truly shed the local P&L burden on leadership. That burden starts a cycle, explained in the previous paragraph. Only one large global agency network has moved to a single worldwide P&L which is enabling them to better allocate resources and better manage teams without the burden of managing a local P&L. Staying with the aspect of P&L, it’s a common practice that growth in an agency environment comes with P&L responsibility and that’s something the HR views as important contribution of senior folks.

In every type of organisation in the world, as people climb up the ladder, P&L becomes a responsibility of senior folks, but it never supersedes the value of actual work. In agencies, the local P&L pressures drives decision making at the top which is often independent of the group’s direction. How many times we have seen a local market teams in IT services organizations doing something radically different from the global direction. That’s called truly global synergy across the organisation. Agencies have been trying to get that global synergy across all markets but have failed miserably as the change requires a fundamental rewiring of how agency networks operate globally.

Flourish or perish

It is literally now or never for agencies to truly transform themselves from within otherwise perish to technology. AI tools, the push towards open AI is sending strong signals of things to come. On the business front, clients are really realising that retainer models don’t work for them and are pushing agencies to adopt project based pricing models which is more efficient from the client’s perspective, as reported by Digiday a few years ago.

This is truly a moment of reckoning for any type of agency in the world, it is probably the last of the knowledge-driven industries waiting to be transformed.

Winning races from behind are stuff that makes legends, and the advertising industry has got what it takes. It just needs to believe better. Taking F1 as inspiration, we have had instances of unbelievable wins from legendary drivers who came from behind, David Coulthard won the Australian Grand Prix in 2003, coming from behind and making pit stops.

Disclaimer: Views expressed in this article are the author’s own opinion and stems from his rich varied experience both on the agency side and client side. This article is not reflective of Publicis' practices or its views.

Siddhartha Dasgupta is the digital director, Performance at Publicis Groupe in Kuala Lumpur.