Cut the Shit: Why advertisers need to sell more and bullshit less.

In the summer of 2015, Pepto-Bismol made one of the most epic ads in the history of indigestion medicine. You might want to get comfortable before starting this:

It took a strange 4 minutes to get there but eventually the point was made: if you were raised by goats, you would need Pepto-Bismol to deal with the trash you’d end up eating.

“The Boy Raised by Goats” won a couple of Clios but failed to generate much viral traction. And because of it’s unwieldy length, Pepto-Bismol wasn’t able to pump money into paid views of the ad to make it seem viral. So, not a lot of people saw it.

And that’s probably a big reason why Chief Brand Officer at Procter and Gamble, Marc Pritchard, used the piece of content to highlight the “content crap trap” of advertising during his keynote speech at the 2016 ANA “Masters of Marketing” conference.

“In our quest to produce dynamic real-time marketing in the digital age, we were producing thousands of new ads, posts, tweets, every week, every month, every year. I guess we thought the best way to cut through the clutter was to create more ads. All we were doing was adding to the noise.”

Pritchard, who was appointed as the new ANA chair shortly before his speech, used his new platform and the P&G-produced goat spot to illustrate the pitfalls of content marketing. He described the goat spot as “why did we do this” content, questioning the relevance of the creative insight and the length of the video. It wasn’t the only piece of content he called it but it was a crowd favorite.

Waste in advertising has been a hot topic for Pritchard in this era of his career and he used the ANA speech to stress the need for higher quality advertising. In Pritchard’s version of the story, marketers and agencies have been too quick to pour money into content for new technologies, leading to lower-performing ads because, more ads with unchanging creative budgets equals crappier ads.

Even if “The Boy Raised by Goats” is seen as the 21st century’s “Citizen Kane” in a few decades, it would’ve been hard to justify as a business expense because it only ended up accumulating a few thousand views. It’s unlikely that a professionally produced four-minute film had a positive return on investment with only a few thousand views. And that is probably what Pritchard means when he refers to it as crap. Not subjectively in an artistic sense but objectively in a crappy for business sense.

Because Pritchard is speaking up about waste. For him, it’s about value. And waste is the enemy of value.

Pritchard isn’t alone in this. Marketing is a function of business, after all. It shouldn’t be a surprise that senior marketers want results from the investments they make. Surveys of senior marketers show over and over again that what they want most from agency partners is good value for their investments.

Unfortunately they’re not seeing it.

USA Today and the ad agency RPA surveyed senior marketers in the US in 2014 and found that only 56% believed their agencies understood how to generate sales and only 40% believed their agencies delivered a positive return-on-investment. In other words, about half of advertising agencies in the US couldn’t do the number one thing they were hired to do.

A similar British survey from 2015 found that 46% of senior marketers in the UK were not satisfied with their agency partners’ work, and only 8% were ‘very satisfied’.⁶ Again, roughly half of client-side marketers weren’t getting the value they want.

Pritchard’s goat story and ANA speech illustrates the frustration of client-side marketers across the world and across industries who continue to see their agencies pour ad budgets into costly productions that have virtually no impact on sales. Of course four-minute ads aren’t the only form of advertising waste and sometimes they work. But clearly the goat spot was not the G.O.A.T. spot when it came to delivering business results.

Unfortunately, agency-side marketers might not even know that they’re making crap. USA Today asked senior-agency side marketers the same questions they had given the client-side marketers in their 2014 survey and found that agency-side marketers had a much sunnier opinion of their own abilities. 84% said they understood how to drive sales (compared to 56% of clients) and 76% believed they delivered positive return-on-investment (compared to 40% of clients).

Agencies will find out soon enough that they’re not cutting it because Pritchard and his fellow marketers are starting to call bullshit.

CALLING BULLSHIT

“We should get the best price for our consumers, and if that means rooting out inefficiencies in someone else’s business, I will do it.” — Keith Weed, CMO of Unilever

In June 2017 Unilever’s CMO, Keith Weed, announced that the company would be ending half of their 3,000 agency relationships as part of a larger effort to cut inefficiencies in marketing. They set a goal to save €6 billion by 2019 and had already saved €1 billion by the first half of 2017.

Unilever’s agency purge came roughly three years after Pritchard’s P&G announced a similar initiative. Between 2013 and 2016, P&G cut their agency roster of 6,000 by 50%, leading in part to a $620 million in savings, which they reinvested in media and sampling. Between the two advertising giants, 4,500 agency relationships were over or ending.

Kraft, Glaxo-Smith-Kline, Hershey, and other major marketers followed suit by consolidating their work and cutting redundancies around the same time.

The marketing consolidation trend was driven by several factors including technology that streamlined the planning and buying of media and the financial ripple effects of the great recession that increased the burden on business leaders to be more efficient with operational budgets. But the thing that really drove clients to lose trust in agencies was our expensive love affair with content.

THE CONTENT CRAP TRAP

Advertisers are suckers for trends. Stuff like QR codes, web series, food trucks, virtual reality… Show us a cool new, unproven communications technique or medium and we’ll spend millions of dollars to be a part of it.

In the late ’00s and early ’10s the trend was branded digital content. “Content is king” was a favorite go-to-phrase and agencies like VaynerMedia were raking in new business by relentlessly pumping out content and experimenting with new digital formats and social platforms.

“The more content I can put out, the more luck I have… You have to get into the content game. You have to force yourself to make more videos, write more posts.” — Gary Vaynerchuck

People started calling themselves “content strategists” and building monthly content calendars for their clients’ brand pages. Brands became content publishers and dumped huge chunks of their marketing budgets into supporting a constant stream of branded content, where new ads were posted to brand pages daily, sometimes several times a day. Teams of people were hired to manage content, respond to consumer comments, and take advantage of big trending topics.

But the pendulum is just starting to swing back and marketers like Unilever and P&G are starting to realize that quality really does matter when it comes to the bottom line. A lot. And that sometimes less is more.

Unilever created a proprietary tool to measure the creative wear-out of their ads and found they were grossly underusing their creative assets. On average only 1% of ads they produced reached a point of “wear-out” where it had no effect or negative effects on the audience, and only 40% of ads were “worn-in,” meaning that consumers were familiar enough with the idea to move the sales needle. In theory, you want to use all of your ads to the point of “wear-out” to maximize the investment made in the creative idea and production of the film.

In June 2017, Unilever announced that it would cut the number of ads it made by 30%, largely because of these findings. P&G also made cuts, slashing their creative production budgets by $570 million between 2014 and 2016.

Unilever and P&G don’t represent the entire advertising industry of course, but they do have massive influence on the trajectory of the industry. P&G spent $4.26 billion in advertising in 2015 and Unilever spent $8.3 billion in 2014. That financial power alone can be used to force change on the media and creative industries. And that is exactly what Pritchard and Weed are doing.

As of 2017, agencies were still making a profit but combined 2016 revenue was at it’s lowest since 2013, and in a common-sense-defying trend, agencies’ digital revenue dropped from 13.5% to 8% in the 2016 fiscal year, while client side budgets were increasing.¹³

If we want to reverse our fortunes and ensure that we remain indispensable instruments of the marketing process, we will need to understand how we’re creating waste and how we can avoid creating it in the future.

At some point in 2015 it became trendy to start talking about the death of the ad agency. Mashable wrote an article with that exact title and AdAge heavily covered the “death of the agency of record.”

Agencies aren’t dying. But we’re changing in a big way. We’ve been chasing the newest trends at a high cost to efficiency and marketers are wisely demanding an end to the insanity.

It’s time we suck it up ourselves and cut the shit.

CUT THE SHIT

Every three years or so, the Institute for Practitioners in Advertising (IPA), a UK-based advertising trade organization, analyzes hundreds of advertising case studies from around the world to understand what’s going on in the world of advertising. It’s kind of like a census for ad campaigns.

The reports they produce from these studies are usually over a hundred pages long and examine the differences in brand impact from various advertising strategies, like how different campaign lengths can affect the overall growth of a brand, or how emotional and rational messages impact sales differently. They’re incredibly influential reports because of how massive and comprehensive the data sets are; nearly one thousand case studies from a range of industries, countries, and cultures. Despite any selection bias inherent in reviewing award-submission papers, these IPA reports are one of the closest things we have to scientific proof of our collective impact on marketing success.

Within each report, the IPA calculates something called the economic multiplier of creativity, which is a unique measurement designed to isolate creativity’s impact on business growth. The thinking behind this metric is that a creatively excellent campaign should drive more business growth than a mediocre creative campaign, when media spend is equal. Otherwise, why would marketers pay creative agencies millions of dollars to come up with a creative ideas?

This “multiplier” is built on the assumption that brands grow when they spend above their relative market share in paid media, regardless of the creative quality of their advertising. But they grow a lot more for the same spend if they have excellent creative.

Consider this example of imaginary fruit advertising; Oranges have 20% of the fruit market but they buy 30% of all fruit ad space and grow 0.5 market share points without getting any creative awards. Oranges are good but not great. Oranges are the norm.

Plums though… Plums are much more creative. Plums have the same market share (20%) and spend the same amount as Oranges — 30% of fruit ad space — but they come up with an awesome creative idea, rake in a bunch of creative awards and see a 2.5 increase in market share. Plums were 5x more efficient with their media spend than Oranges and excellent according to all the creative experts. Plums for the win!

This is the idea behind the IPA’s multiplier score and fortunately for creative agencies — that creatively awarded campaigns deliver a stronger business results when a brand is spending above the minimum threshold to gain market share.

Fortunately for agencies, the IPA has found that creatively awarded campaigns significantly increased the financial efficiency of campaigns in every edition of the study. It reached a high of 12x in 2010.

However that number has been declining ever since, reaching a low of 6x 2014 according to the 2015 IPA report “Selling Creativity Short.”

This drastic four year slide lines up well with the rapid erosion of client trust illustrated in part one of this series. Something that was driven by the perceived increase in ad ‘clutter,’ which the IPA also signs of in their research:

Between 2010 and 2014, the amount of digitally integrated campaigns campaigns tracked by the IPA rose from 75% to virtually 100%. And while they saw above-average returns for campaigns with multiple assets, they also found a potential limitation to the benefit of multiple assets; campaigns with 5 or more assets performed worse than campaigns with 3–4 assets.

It’s been said so many times that sometimes we forget to remind ourselves how much media changed between 2005 and 2016. Lenses, Live Video, Augmented Reality, Cinemagraphs, Shoppable posts… it’s been a bonanza of ad innovation. And there have been some incredible ads to come out of these new ad formats. According to the Interactive Advertising Bureau (IAB), from 2000 to 2016, internet advertising revenue grew from $8.2 billion to $72.5 billion.

But we’ve become so eager to fill the space that we’re sacrificing the impact of our creative. Not only in the number of channels and ads used but the way in which those channels are used. And how they’re used together. And it’s coming back to haunt our relationships with clients.

ABC — ALWAYS BE CLOSING

“Your role is to sell, don’t let anything distract you from the sole purpose of advertising.” — David Ogilvy

The erosion of client trust and scaling back of agency budgets that we’ve seen over the past five years comes down to one very important problem; advertisers have lost sight of their #1 job: to sell.

This article shows how a variety of behaviors and beliefs can create waste in advertising. But all of those behaviors and beliefs boil down to a lack of business-mindedness. Whether it’s adding more creative ideas to an existing idea and diluting it’s message, selling in more assets to produce and decreasing the efficiency of a campaign, or creating ads that can’t achieve scale — we don’t always have our clients business in mind.

If we want to reverse the erosion of trust between agency and client, agencies need to step up and cut the shit. And that means prioritizing your clients business goals above all else.

REFERENCES

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Sauer, T. “What Do CMOs Want In An Agency Partner?” CMO.com. May 24, 2016.

The Digital Society (SoDA). “2017–2018 Global Digital Outlook.” SoDA. Jan 2018

RPA and USAToday. “The Naked Truth: An Unadulterated Look At The Client / Agency Relationship & What It Means For Creativity.” 2014

Incorporated Society for British Advertisers. “Greater Self Reliance New Agency Models and Performance Based Metrics Are Top Priorities As Cmos Prepare for 2020.” September 10, 2015.

Neff, J. “Why Unilever is Halving It’s Agencies and Investing in Strategy.” AdAge. June 30, 2017.

Roderick, L. “P&G on how it cut agencies by almost 50% to optimise its marketing spend.” MarketingWeek. November 21, 2016.

Clark, D. “ Why Gary Vaynerchuk’s New Social Media Strategy Should Change The Way You Do Business.” Forbes. June 5, 2013.

Neff, J. “P&G’s Pritchard: Time to Cut the Crap — And the Pressure on Agencies.” AdAge. October 2016.

O’Reilly, L. “Almost a quarter of Unilever’s $8 billion ad budget is now spent on digital.” BusinessInsider. January 28, 2016.

AdAge. “The Power Players: Key corporate, division or brand marketing executives at 25 largest advertisers. Ranking based on 2015 total U.S. ad spending.” 2016.

Stein, L. “Agency Revenue Up But Growth Rates are Slowing.” AdAge. April 30, 2017.

Farmer, M. “The Death of the Agency of Record is Near: What the Demise of the AOR Means for Agencies and Advertisers.” AdAge. June 17, 2015.

Epstein, S. “Why the traditional ad agency is a dying breed.” Mashable. July 30, 2015

PwC. “IAB Internet Advertising Revenue Report.” April, 2001.