Addressing the myth of the trusted advisor

There has been a lot of discussion about how this pandemic will be a reset moment for clients and agencies. I suspect this definition of a reset means different things to either party. For some it means the beginning of the 'Darwinian cull' described by Sir Martin. For others it means a return to that moment in a romantic past where we were valued in and around a boardroom. Frankly, I don’t buy the latter case and sadly [because I’m an old romantic] I suspect Sir Martin is right.

To test this out let us look at the historical role of the trusted advisor. I believe its based on that moment in advertising history [and I’ll refer to advertising here but that’s a part of the issue, see later] when demand exceeded supply [media] in a period of generally high economic growth – when people had money to spend on new things and selling them required mass communication. Advertising was key, in the same way that distribution was key in the half century before. It was also difficult to do well, and creativity and risk rarely fitted into a corporate culture. So, agencies were able to operate at high margins employ bright intelligent people and help clients develop new products and the communication to sell them to eager consumers. The so-called golden age.

As an example I’m told that when JWT was given the task of what to do with spare capacity and product at a cake company they had as a client they developed a product solution, researched it, branded it and developed the messaging leading to the advertising and packaging. Mr Kipling is still on the shelves today. JWT could afford to do all that because they were making the margins that allowed them to invest in their clients.

But technology disrupts these models, not just once but continually. Supply grew to meet the demand and margins fell, not least because the basis of payment – media commission does not work in a world where the ratio of content to spend is so different. The new world advertising entered was one without intellectual dominance yet sustained excess. Despite the valiant efforts of many great individuals and the agencies they led. New competitors for client’s budgets emerged most with the beginning of accountability - analytics.

One simple fact demonstrates this, in the last 25 years real salaries of many of the roles in an ad agency have halved. Yes, we pay our people half they were worth 30 years ago. Rates driven down by procurement without value based or properly scoped work to protect the agency. Added value services once given for free were cut. It’s difficult to be a trusted advisor when you can’t pay a competitive rate.

So, its perhaps not surprising that those bright things that came from so many odd places but found a well-paid home in those agencies go elsewhere today. Agency starting salaries are now weak compared to those in marketing, professional services and importantly tech. The war for talent has been decided by competitive forces, as always.

So why should there be a reset? How can our service industry, in its broadest sense, rebuild and become a trusted advisor? Why should so many clients that have commoditised our business to deliver lower fees whilst the holding company takes more to deliver to there shareholders believe we have anything to say that cant be delivered better and with more certainty by others that can command the respect and margin to go with it?

So, what is the alternative? I think it’s about getting back to the basics of understanding consumers better developing better insights and compelling creative ideas. We cannot continue an FTE hours-based model when technology is removing the need for the hours or our business model makes those hours in house 30% cheaper. We do not need large complex operations built on a model of feeding the monster. Technology means we can connect and collaborate more easily than ever before.

To come back to the pandemic for a moment. Isn’t it interesting that GP Practices have been talking about how to do more n email and text and video conferencing? Yet most have been able in 6 weeks to move to a near virtual service that’s better [and safer].

Technology is disrupting our business world again - and will do so again and again. The companies that understand that the market is digital and that the tools to make if work better are available to us will grow. The ability to use the data will make us trusted advisors. [In much the same way that our government is now being 'led by the science']. But those that don’t refocus on this as the basis for developing truly compelling insight-based content will fall in the Darwinian cull envisaged by Sir Martin.

So, the pandemic will accelerate change but its change that many will find difficult to manage. Drucker once said [to a Ford meeting in Michigan we think] that ‘Culture eats strategy for breakfast’ – the culture unless it changes will be the end of many in our industry. Because its not just about having a strategy its about having a culture that can embrace radical change fast.

Julian is a fellow of the IPA and has spent 30 years in and around our industry. He is now a consultant on marketing services with a focus on branding, agency relationships and business culture.