An open letter to Ron Berger

Dear Ron,

I happened to be in the audience at the 4A’s management conference last week when you delivered your now “famous” remarks on how the advertising industry would be “better off” if….

I was actually quite pleased that you cited my remarks that appeared in Ad Week. In that interview, I supported the growing trend for marketers to use multiple agencies, as I strongly believe this practice optimizes all aspects of brand management – including strategic, creative and tactical development – in today’s increasingly complex marketing environment.

As marketers seek to innovate and reinvent their brands, they depend on trusted agency partnerships – no question about it.  However, it is hard to imagine how any one agency could effectively help a major marketer tackle the diverse, expanding, highly competitive challenges presented by today’s dynamic marketing arena – from the burgeoning interactive/micro media space to the blossoming multicultural marketing landscape, to the fast-changing branded entertainment and sponsorship marketing opportunities, and more.  Seriously, Ron, do you really believe that all these diverse challenges can be effectively met under the aegis of a single agency – without diluting effectiveness?  I don’t.

In fact, it is my strong belief that in most instances, a roster of agencies – working in tandem – can provide better insight, stronger focus and broader expertise than any single agency.  To me, it seems not only appropriate but necessary that marketers partner with a range of expert resources that collectively offer the full complement of competencies and best practices necessary to build strong, enduring brands.  The single-agency model, in my view, is just not a compelling solution for most major marketers today.

Clearly, managing an integrated marketing campaign with a roster of agencies is not easy.  It requires that marketers significantly step up their role as brand stewards, ensuring consistency of strategy and messaging across multiple platforms.  Would this be “easier” to do if a marketer had one agency? Sure.  But “easier” doesn’t mean better.

In recalling your remarks, Ron, I was particularly surprised by your comment that agencies would rather not have to deal with competition.  Of course, you didn’t say it just like that.  What you did say was – and I quote – “all multiple suppliers does is have agencies spending too much time thinking about what their own competition is doing instead of the clients.”  I completely disagree with this perspective.  Competition has always been the catalyst for innovation and reinvention in American industry.  Competition drives businesses to pursue “transformative” products and services that benefit the end consumer.  Here are few examples for you to consider:

• Southwest and Jet Blue “transformed” the face of the airline industry, forcing major legacy carriers to reinvent how they conduct business.  Consumers and business travelers are benefiting substantially.
• Toyota, Nissan and Honda transformed the auto industry and how that industry should be managed for growth and profitability.  Consumers are benefiting with great innovations like hybrid engines that lower fuel costs and reduce worldwide demand for petroleum.
• Enhancing competition was the main idea behind the break-up of ATT in 1984.  Look how the landscape for the telecommunications industry dramatically changed with the introduction of so many product and service innovations!

Competition should inspire agency innovation as well.  In fact, any agency that can’t stand up to “the heat” of competition and deliver consistent, superior work must have its own value equation rethought.

Managing agencies is one of the most important responsibilities for a client-side marketer.  In fact, marketers turn to the ANA for insights on agency management questions with enormous frequency.  It is the number one area of inquiry for our Marketing Insights Center; it is the focus of our two Agency Relations Forums and our Advertising Financial Management Conference; and it is the reason we have agency committees on both the east and west coasts.

At the ANA we are clearly seeing marketers take a far more proactive role in improving agency management.  Why?  Because they see their agency partnerships as among the largest and most important investments in marketing communications.  This view is driving their search for a more balanced and effective agency roster, a fresh look at alternative agency compensation models, the creation of better measurement and accountability tools and the involvement of corporate procurement departments.

As you can see, Ron, I fundamentally disagree with your thesis.  However, I think that the advertising industry is better off because of the dialogue we are now having!  I enjoy this discussion and debate, as I recognize that ours is an industry that requires multiple points-of-view.  Being challenged by you is beneficial to us all.  We should have more thoughtful debates such as the one you initiated.  And we should all appreciate the courage you had to voice your opinions and share your perspectives.  So while this may be a “backhanded” way to thank you, it is a thank you nonetheless.

Robert Liodice
President and CEO
Association of National Advertisers

Comments

[Brokerblogger]

"In fact, any agency that can’t stand up to “the heat” of competition and deliver consistent, superior work must have its own value equation rethought." Well said!

While many agencies are "rethinking" their value equation now by trying to start, enhance, or acquire Interactive departments, some still don't get how unique and specialized the "10 year old" Search Marketing Industry is.

In a 4/18/06 "Search Engine Watch" article entitled "Divining the Future of Search Engine Advertising", it has sections on "The Role of Traditional Ad Agencies", and "Integration with the Marketing Mix" which relate to your post, Bob = http://searchenginewatch.com/searchday/article.php/3599566