Ad Agencies And Their Holding Companies Fail At Their Own Branding

I read with great dismay and sadness about MDC merging KBS into an unknown (at least in the U.S.) Swedish agency (Forsman & Bodenfors) and obliterating the Kirschenbaum Bond name.  Without getting into the history of Kirschenbaum and its recent problems, all agencies go through up and down cycles, sometimes those phases go on for years.  But that is no reason to destroy the equity which has been built into the agency brand, especially one that is essentially positive.  The evidence is that once that brand name disappears, the new agency rarely fully recovers.  As a result, when it comes to mergers in advertising, one plus one often equals far less than two.

As every good marketer knows, building a brand name takes years, often decades.  Destroying the brand can take only a stroke of a pen. Changing or obliterating names can be confusing and dangerous for the brand.

One of my favorite stories is how Omnicom screwed up both Chiat\Day and TBWA. Omnicom merged TBWA into Chiat in 1995 and ultimately changed the name to TBWA, eliminating the Chiat moniker.  Yet, even today, especially in Los Angeles, Chiat’s headquarters, TBWA is still known as Chiat/Day. (TBWA was a stronger name in Europe and is rightfully called that in those markets). 

Batton, Barton, Durstine & Osborn modernized and became BBD&O and eventually BBDO, which makes total sense. Ditto when Doyle Dane Bernbach was bought by Omnicom, it was changed to DDB/Needham (to accommodate the merger of Needham Harper Steers – but Needham was ultimately dropped); DDB was the stronger brand. Other agency brands are still confused by their own name changes.  JWT is still called Thompson or J. Walter or even J. Walter Thompson; I think I understand why that name was changed, but I could make a good case for having left it alone.  Ogilvy, which started as Ogilvy, Mather and Benson, and subsequently changed to Ogilvy & Mather, became just Ogilvy, but to this day is still often called O&M, even by its own employees (checks still are marked Ogilvy & Mather).  Y&R Just this week became VMLY&R (why not Y&RVML since Y&R is the stronger brand, but even with the name changed it will remain Y&R).  

Changing a name does not change a culture.

When the founding principals of well-known ad agencies retire, merge or die, unless they made strong succession plans, the agencies often diminish or disappear and rarely recover if they are merged.  Saatchi & Saatchi, at least in the U.S., never achieved its potential when Compton was merged with Dancer and their name was changed to Saatchi & Saatchi.  Saatchi was on of  Briton's more creative agencies and the two merged into it were heavily package goods agencies, more known for their ability to create effective strategy; for complicated reasons, Saatchi, at lease here in the U.S., never achieved the creative reputation of its London parent.  The merger never took into account the cultures of the two American agencies and the strength of their client relationships.  In the case of this three way merger, one plus one plus one ended up equaling about one and a half.

IPG merged Bozell and Kenyon & Eckhardt and then the two of them into FCB, which was subsequently merged with Draft.  Now, what remains is a mere shadow of the original agencies.

In a mistaken effort to keep contemporary, merged agencies often drop the names of the founders, which may be unnecessary.  JWT is a perfect example of that.

So much of advertising is driven by creative personalities.  When it comes time to sell or merge the new agency people want their names to dominate, but that often destroys the equity which was achieved by the original agencies.  IPG was smart to leave the Deutsch name alone, even though Donny Deutsch long ago moved on. When IPG merged Lowe into Deutsch, aside from being a cultural disaster, they still kept the Deutsch name dominant. The people who ran Deutsch figured out how to keep their culture, despite often rancorous disagreements with the parent company (and occasionally, Lowe, which subsequently and smartly separated itself).  

Kirschenbaum & Bond now joins a long line of wonderful creative agencies which simply disappeared after being merged and submerged – Ally & Gargano, Scali, McCabe & Sloves, Wells, Rich, Greene, Lintas, Ammirati & Puris are all examples of great brand names which disappeared out of the hubris of holding companies.  

More often than not, putting these agencies together, without any regard to their individual cultures and differences actually ended up killing the brands, costing the holding companies millions of dollars in the long run.

What a waste.

The Diminishing Of The Ad Agency Creative Department

Much has been written about the changes in advertising over the past couple of decades.  Account management is on the wane; planning is no longer dominant.  But little has been written about the diminution of creativity and executions. Once upon a time in American advertising, the creative department reigned supreme. This was true even at agencies that were account or strategic oriented. Even at those agencies, with few exceptions, if there were an argument over execution (not strategy), the creative department would win. Many of my readers would agree that now there is a dearth of exciting, innovative executions, especially on television.  Here is why.

Over the past 30 years a conversion of events has caused the influence of creativity to diminish.

The advent of planning has affected creativity more than the creative departments realize.  Corporate procurement has interfered with implementations, furthering the diminishing of executions.  Weakened account management has effected strategy and given rise to the consultants, who, for the most part, don’t understand advertising or production.  And the holding company emphasis on profits, profits and profits has caused the work to suffer since less time is spent by senior people “tweaking” the work.

While the intent of planning was excellent – originally to be the voice of the consumer and the provider of new insights in order to allow more effective communications – planning has devolved into management of focus groups and supervision of outside research. Many categories and brands have been focus grouped to death.  It is very hard to develop new insights into these.  How many times can an agency develop new insights into detergent or pet foods or computers - categories which have been planned to death over the past quarter of a century.  As a result, my observation is that planning is on the wane at most agencies and, in fact, there is actually less and less classical communications research.  Sadly, neither planning nor research is really being replaced at ad agencies.  In fact, clients have taken over a lot of this role, which is kind of like the inmates running the asylum. 

Much has been written about procurement departments and corporate management demanding that less money be spent on marketing and production.  WPP made an attempt to establish Hogarth as purely a production agency, taking the supervision and execution of all aspects of broadcast and, to some extent, print production away from the creative department which developed the work.  This, was an effort to save clients’ money. Interpublic followed suit. My observation is that these attempts have not achieved their intended goal; rather they have diminished the quality of the message because the very people who created the work are not totally involved with producing it.  The truth is that the vision to execute should remain with the people who created the concept.  One of the complaints by both agencies and clients is that by cutting costs on some production, much has been lost in the translation.

There is no question that more than occasionally, agencies abused the trust clients paid them by overspending on executions, particularly production of television commercials.  I can remember one agency creative director arguing with his client about hiring one of the most expensive star commercial directors at an outrageous rate of $20,000 per day, but with a three day prep minimum and two shoot days; ridiculously, the commercial was merely thirty seconds of a talking head, shot from the waist up.  The total cost for that commercial was to be about $400k.  The account people complained but the creative department insisted.  Eventually, the client rejected the bid and got its own bids for less than a third of that. I am sure, because of the nature of the commercial, it was not much worse than if the star director had done it.

Over time, with incidents like this, clients lost faith in their agencies ability to look out for their best interests.  

Client fees put a damper on big production costs by putting constraints on the amount they would pay for execution and implementation, regardless of the concept or the need for a big production.  As a result, much of the show business has been taken out of advertising.  Today, much of the norm is stock footage and stock music.

This may be good for the corporate bottom line but is not good for the executions or the consumer.  

Finally, the star system is gone. This may be the biggest reason that there has been a diminishing of the creative department. Once upon a time there were creative people whose names everyone in the business knew.  They created award winning work.  Other creative people would, if necessary, take salary cuts to work for them.  These were not only creative directors, but included group heads and others.  Most of the major agencies had one or two (or more) of these well-known people.  Today, there are very few "name" creative people.  The star system has been destroyed by the holding companies, for reasons that make no sense. 

All of these things have contributed to the diminished influence of the creative department.