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Edelman’s first reported revenue decrease since the early Jurassic has unsurprisingly been greeted with substantial commentary, but much has been misguided, a surprising amount is self-defeating and some merely proves that schadenfreude is alive and well in the PR industry.

Richard Edelman has too much class to respond.  I don’t.

Typical commentary has fastened onto Richard’s admission that brand and digital teams underperformed and linked this to his firms’ hiring of advertising agency talent over the last few years and then draws the straight-line analysis that Edelman has ambitions to do advertising work and that it is not working and they should ‘stick to their knitting’.

It’s nearly two years since I left Edelman, but the strategy to put some real focus behind getting more lead brand roles was baked during my time there.  The analysis for the world’s biggest PR agency was very simple and oft stated.  More than anyone else, the firm needed to grow the industry’s adessable market opportunity so that it could continue its own growth. If you are already the biggest, then it stands to reason that your future growth will be hampered if your category does not also expand.

Above and beyond this analysis, Richard just straight-out believed that PR thinking should have a bigger role in management strategy and in the largest area of communications spend; brand strategy and creative.  He dares to be ambitious for us all.

The move into management strategy (or consultancy) was backed with the development of the Trust Study (incredibly, still the only piece of industry IP that anyone outside the industry has heard of) into a properly analytical tool that allows Edelman teams to solve client problems using real comparative data and therefore be taken seriously at board level because of it. It is a long-term investment of many tensof millions of dollars, the highlights of which are made freely available each year to the whole industry.

As for brand, it was clear that with the arrival of social media platforms and new levels of peer-to-peer trust and the increasing skepticism in some forms of (and some of the claims of) traditional advertising, that the PR industry had a once-in-a-generation opportunity to take a bigger share of CMO spend.  And bear in mind that CMOs spend between 10 to 20 times the amount (in fees) that CCOs do.

But to get access to that, PR people needed to show up understanding marketing; understanding brand; understanding how to come to real insights and then be able to generate big ideas based on those insights and, finally, put those ideas in front of consumers at scale.   For the most part (with some honourable exceptions) the PR industry does not do this.

This is why we can’t even win our own category at Cannes and this is why we have not increased our share of CMO spending despite the existential crisis being experienced by so many advertising agencies and the big four marketing services groups they dominate.

So Edelman made specialist hires and investments in all these areas, not to replicate the advertising model, but to bring some of their disciplines and skills into the PR model or “earned centric creative” as Richard puts it.  Not all those hires worked out, and I can attest very personally that trying to migrate a PR structure and culture to a hybrid ‘communications marketing’ approach is incredibly hard.

I have no idea whether Richard or his new look management team will eventually succeed and I worry that some of the best equipped change agents have left and whether the complacent elements of the firm are as uncomfortable with these challenges as so many outside commentators appear to be.  And as time has moved on, I wonder if exploiting the opportunities in data and marketing automation are not an easier on-ramp to CMO spend.

But just as Trust puts our industry on the map annually at board level, if Edelman does crack getting significant lead brand roles we will all eventually have greater license to operate at the strategic end of the biggest and most lucrative area of communications.

I don’t discount in this the fact that there is a huge amount of innovation and great work that is done within the more traditional boundaries of Public Relations and of course that will always grow our industry too. 

But there is something to be cheered in pioneer thinking that opens up new markets and new opportunities for all of us and that is why I find some of the commentary and sanctimonious glee about Edelman’s results short-sighted and self-defeating.

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 Maybe it’s because I get described as an ‘industry veteran’ but I can’t count the number of times I have heard that us agencies were about to be wiped out by the latest technological shift to head our way.

Whilst there have always been winners and losers, the basic agency value proposition of bringing the ideas of creative people to bear on the businesses and brands of client companies has and will continue to endure.  Creative people need to be around other creative people and like to have lots of different problems to solve. In almost all cases, you don’t get that in a business whose business is not the creative business.

 But art needs a frame and great strategic and creative output has to find its audience where they are most receptive and, of course, it has to be supremely useful to the company or brand it is trying to serve. Which is where the technology comes in.

Technology changes to date have mostly been external to us agencies in that they most profoundly affected the channels through which we delivered our campaigns. Despite all the huffing and puffing about the relevance of the agency model throughout the time of the arrival of the world wide web, the rise of social media and now the dominance of the big ‘platforms’, great agencies (big and small) have continued to thrive and do great and effective work.

 But there is a new wave of technological change that is coming our way, and whilst I continue to believe that we will again adapt and give great value to our clients, this time things will be a little different because the changes this revolution will drive will be internal to our businesses and internal to our clients. 

That change, for want of a better term, is marketing automation. ‘Yes, yes, I know’: A phrase to rival ‘cost accounting’ in its spectacular dullness. And there-in lies our first challenge; we like to deal in rainbows and so we sometimes find it very hard to wade through the grey. Well buckle up and put the sunnies down, because this will be a tour of ‘four shades of grey’. I have categorized marketing automation into four areas, each of which I will look at in terms of the impact it has on the client/agency relationship; its scale and trajectory and what I believe agencies should be doing to harness it and to avoid being squished by it!

 Single use ‘vertical’ solutions

You may have noticed that every agency’s favourite cheap polling solution, Survey Monkey, recently listed on the Nasdaq, where after some ups and downs it raised US$180 million at about a $2 billion valuation.

At $2 billion, Survey Monkey is now worth 20% of the whole of IPG. Maybe the equivalent of McCann, which sounds crazy for what started as a simple survey app. Admittedly, Survey Monkey has a technology company SaaS (software as a service) style valuation supported by revenues of under US$200 million (and not a cent of profit yet), but the valuation is based on the judgement of investors that, over time, it will come to win a large portion of the $44.5 billion research industry. They think it will get much bigger and fast. And with all respect, no one is saying that about IPG.

Take another long–time marketing automation stalwart Mail Chimp (why all the simian branding?) that handy little solution best known for automating a company’s email marketing. Mail Chimp is still private, but last year did revenues of US$525 million. That’s the size of Ketchum in the PR industry and significantly bigger than, say, LoweMullen.

A newer and still small business, Hotjar, uses cool visualization to show what people are doing when they visit your mobile app or web site and what they think about it. They had 6,000 paying organizations, 80,000 subscribed users and net revenues of US$1 million within six months and made a profit within six weeks of launch. Chances are, that one day soon they will be worth as much as the biggest agencies.  

There are a bewildering amount of these marketing automation tools, many of them handily catalogued into ‘stacks’ and reviewed by some dedicated industry visionaries and smart agencies have been using some of them for quite some time to automate and mechanise individual tasks. To date, the biggest challenges to agencies in adopting these solutions has been keeping up with them, training staff and then getting clients to pay for them NOT out of the professional fee. But they don’t change the agency / client relationship in any way and mostly they are additive to the existing model and an efficiency and therefore not a disruptor.  

 Horizontal solutions

The same is not true of companies like Marketo, HubSpot, Pardot, ActOn and Active Campaign (very NOT a full list by the way) which promise more ‘horizontal’ solutions, linking and automating client’s sales, marketing, customer service and communications functions which makes them very different.

 Conceptually, all owned and social content is managed by these solutions as well as sales communications and CRM functions. They are very ‘lead’ and UX focused which may be why they have been ignored by most traditional agencies to date who still see themselves as outside the world of the ‘sales funnel’ and hard ROI. This is not necessarily wrong of course as it’s hard to create emotional differentiation and high reach with an email or gain credibility and third party endorsement through a timely intervention by a customer service bot on your web site.

 But more and more companies are implementing these systems as CMOs and communication leaders look to be on the side of revenue growth. And that will pose the question to anyone producing ‘content’ (pretty much everything that is not traditional paid or media relations); “how does what I do fit in”?

 If a client has not yet asked you how your proposals align with the systems of one of these vendors, my bet is they soon will. To date, the early adopter clients have been mainly from SMEs and B2B marketers (especially the software sector for whom working this way is second nature and whose product is often accessed via the web). But that’s changing. The websites of these businesses boast financial services, health and FMCG companies on their client roster.

With these companies the ‘scale thing’ is eye-opening: Last month, ‘marketing automation leader’ Marketo was acquired by Adobe for $4.75 billion. At time of writing, investors believe that this single software company is worth 40% of WPP. Again, the revenues are still comparatively small, but Adobe is placing a big bet that many hundreds of millions of marketing dollars will be spent through their platform in the future. I think they are right.

And these businesses are just the newcomers to the sector. The established software forces of Salesforce (who own Pardot), SAP, Microsoft and Oracle all of whom have focused until recently on automating from an operations, CRM and sales function base are widening their offer to include marketing and communication functions. Their current clients are not just start-ups and B2B players, but the biggest companies and brands in the world. If you think they aren’t already making the case for marketing automation at the highest levels in your biggest client companies, then good luck with that.

For the curious, here are some examples of client marketing stacks, handily catalogued at the Stackies, an award scheme dedicated to the ‘best stack of the year’. I kid you not!

Having experienced the procurement of a marketing automation solution myself lately, I can tell you that any client that has gone this route has been through some considerable pain and expense to implement it. Smart agencies, will show how what they do and what they produce can align and fit into this system, either using it as a delivery system to the ‘tail’ of their creative or earned media content or, and even smarter, they will be partnering more strategically with their client, interrogating the assumptions about customer journey and experience that are built into smart marketing automation and tailoring their own approaches to complement it.

 To do this well, you need trained staff, which is why Enero’s communications agency Hotwire and digital agency Orchard have Marketo certified personnel in their teams. Horizontal marketing automation solutions directly sit between a traditional agency’s outputs and the consumers and businesses they are looking to target. Not getting ahead of this will result in lost business. Committing to it will, increasingly, help win and retain business.  

 Marketing Automation Agencies

There is now a thriving agency environment devoted entirely to this world of which there are two basic types. The first are ‘creative’ agencies that produce strategy and content customized to an automated environment. The strategy is usually less classic brand strategy and more customer journey, customer experience and hard performance metric focused. So the language is more automated workflows, pre-defined scenarios, customer-driven triggers, single customer view and omni-channel plans than, say, awareness, relevance, saliency, engagement or trust.

And the outputs are usually highly specific and tightly targeted social ads, banners, email, SEO, thought leadership events and ‘surveys’. These agencies are not thinking about TV, press ads or editorial PR (though they are happy to recycle them as owned content).  

The other agency sector helps clients choose and implement marketing automation systems, build out their stacks and the business processes and marketing strategies around them. Most don’t pretend to do creative and if they do, it ain’t going to win any awards.

 Smart ‘traditional’ agencies will look to partner and learn from these firms, especially the more deeply technical ones who may be glad to pass off the creative content to people better qualified to produce it.

It’s more difficult to get a sense of scale of this sector, but the few I have been tracking seem to be growing fast and doing well. And in some cases, some pretty big ‘traditional’ agencies are developing a reputation for being ‘marketing automation compatible’. That will increasingly be an advantage.

The Consultancies 

I’ll start with the scale story because, again, it is big. Actually, it’s really big! According to Consultancy.uk, the big international consultancies have annual fees of $240 billion of which approximately 20% ($48 billion) are marketing related. That means they already earn the same in fees from CMOs as WPP, Omnicom, Publicis and IPG combined. You may have noticed that Accenture has been crowned the world’s biggest digital agency recently by Ad Age.

This scale may be news to PR agencies that rarely come into direct competition with them, and it may still be surprising for creative and digital agencies who meet them more often, but not to the extent these numbers would indicate they might. The reason is that they are rarely competing head to head in creative pitches. More often than not, the Consultancies are winning at C level because they have successfully positioned themselves on the side of the revenue growth and digital transformation and every CMO now wants to claim revenue growth and most CEOs are driving some form of digital transformation.

The ability of the consultancies to knit strategy; enterprise scale IT, organisation and culture change and now creative is compelling and simply cannot be replicated by agencies. Their creative skills, probably the least easy fit in their cool corporate towers, have largely been acquired in recent years in the shape of agencies like Karmarama and The Monkeys. They have realised you can’t solve a marketing transformation task without creative, but it is very much NOT their starting point and none of them make the effort to claim they compete on that basis. They don’t need to!

If you spend any time talking to them or looking at their web sites and case studies you can quickly see that their whole approach to brand and marketing is, a bit like the horizontal software vendors, about customer journey and customer experience, but in their case it is supported by high level IP and data and research. It is incredibly compelling.

I still believe that us agencies can and should chisel off much of the brand custodian and communication roles from the Consultancies, but to do that we may have to change our nomenclature. Many people did not believe Byron Sharp and his relentless focus on reach and penetration and concepts like physical and mental availability, but if you were pitching to Mars then you framed your strategy in those terms or at least made reference to them because Mars did follow those concepts. When you come up against the consultancies, you might well want to flex your planning model to include notions of customer journey and experience, because for sure, CEOs and CMOs are being educated by people in more expensive (though more boring) clothes us, that this is the way successful firms do it these days. Smart agencies will adapt to this and, hopefully, smart clients will realise that, long term, great creative work is not consistently found in cultures that have to strain so hard to house truly creative talent.

A conclusion at last…

In talking to colleagues and friends in all sorts of agencies about marketing automation over the last couple of months one thing has struck me. Few can disguise their lack of interest in the subject (it wasn’t all directed at me) and some are openly contemptuous. I remember a similar reaction to the arrival of social media. Whilst the agency model adapted and thrived on the back of that change some careers ended and some agencies failed. My last word on marketing automation to agencies is ‘lose the snobbery’. This stuff is already huge and is (or will very soon) be adopted by your clients. Adapt and embrace it and use its constraints to continue doing creative and effective work which is what good agencies have always done.

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And so it was, that in my first week in charge of Edelman Europe, I was meeting the eponymous Jackie Cooper and her business partner Robert Phillips in the bar of the Haymarket Hotel, a venue remarkable only for its matching tartan carpet, drapes and serviettes. Jackie wore conspicuous dark glasses to be inconspicuous whilst Robert and I just looked conspicuous.

It was all a bit awkward to start with to be honest. An agency equivalent of being set up on a date by your dad. And what’s more, the bastards had stolen the Dr Pepper account off me not 12 months before! But we got over it. And it was the best acquisition (though truly a merger) I ever made and Robert and Jackie the best partners I could have hoped for.

Master Chief stands guard during the HALO 4 launch by Xbox in 2012 in Balzers, Liechtenstein. JCPR masterminded the invasion of the principality and took over iconic landmarks, including a 13th-century castle to create a real-life ‘Halo’ universe within the heart of Europe. ( Photo by Ian Gavan/Getty Images for Halo by Xbox 360)

And whilst Robert has now left the industry, I’m not sure Jackie ever could. If there was anyone for whom it was in the blood it is Jackie. I can’t think of a more fitting person to be inducted into the PR Week Hall of Fame and here’s why:

• The work the work the work. Jackie brings a ferocious intensity to originating properly breakthrough creative and then defending it from the compromise that PR firms so easily give in to. Her signature campaigns for Wonderbra, PlayStation, Dove and Xbox are just the tip of an almost unrivalled creative record.
• She made creative important. That sounds so trite and obvious now, but ten years ago, let alone 20 years ago, there were precious few CDs in the PR world and almost none had Jackie’s seniority and cut through. Everyone she worked with knew that each pitch, proposal and programme had to have a proper big idea based on a sound insight. Creative was always part of the JCPR culture, but it quickly became so at Edelman too.
• She sells at CMO and CEO level. PR creative by its nature is riskier than paid-media creative. It plays with the texture of journalistic and social media reaction so can’t be predicted or ‘ROI’d’ in the safe, clean (and mainly fake) way that advertising creative so often is and because of that, the best of it needs to be sold-in and committed to by very senior clients and Jackie has that rare ability to make boardrooms and storied CMOs believe and back ideas. She’s also pretty good at facing down uppity ad agencies.
• She respects, cherishes and embraces skills she does not have herself. Pretty soon after the acquisition, Jackie faced an enormous crisis with ‘celebrity twin’ clients. Edelman’s global crisis leader was Mike Seymour; clipped, precise, very British, with a military bearing and slightly scary contact book that years in tanks and war zones give you. Chalk and cheese they may have been, but together they fused two very different traditions into a unique offer. Of course great creative should have issues and crisis management built in. Of course, the best crisis solutions were often the products of a creative thinking process as well as disciplined, reductive one. Jackie is still on a mission to take creativity out of the creative department and into the PR business as a whole.
• She stands for something. Jackie’s personal brand is the last thing she thinks about, but because she has name recognition at a level of many advertising CDs she has importance beyond her work achievements for the PR industry. She is proof we can do the work we so often just talk about.
• She elevates the industry. If we are honest, as an industry, we have largely failed so far at the ‘creative thing’. We can’t even win the PR category at the Cannes festival of creativity (deservedly so in my view). For many, that does not matter, but to those of us it does and who believe that PR can be genuinely transformational for the way companies relate to their stakeholders and can be the lead discipline for enlightened brands we have to get better at it. We cannot reach our potential without improving our ability to deliver more and better creative ideas to our clients and colleagues. To do that we need more Jackie Coopers, but right now we should be grateful for the one we do have and celebrate what she has done for us.

Congratulations to PR Week for picking her, but mostly congratulations to Jackie for leading the way and for fifteen years of great friendship.

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Every few years Singapore Airlines puts its creative agency brief out and each time I feel a pang. Big brands you think you once did important work for are a bit like ex-girlfriends; you’ve moved on but you’re a tiny bit in love still.

And so it is with me with Singapore Airlines; a genuinely iconic brand, if a little aged and let down by a product that has been caught up by some new and old competitors.

I worked on the account as a planner at the legendary (to those of a certain age) Batey Ads in Singapore and prior to that was a speechwriter for the CEO and a number of his brilliant team who created the airline after Singapore’s traumatic separation from Malaysia in 1965. With not much more than a bunch of old planes and some international routes, they established a business that literally linked the island state to the world and a brand that gave some fame and allure to a young and unknown nation making its way in what was then a tough and unsympathetic neighbourhood

The agencies competing and the Singapore Airlines team deciding on the firm and then the work has the hardest of jobs. How do you modernize an advertising masterpiece and re-kindle some of that lost magic and yet stay faithful to that rarest of things; an idea that remains compelling, universal and timeless and which is so closely associated with the brand all over the world?

I wish them all the very best of luck. Or perhaps as Ian Batey might have said: “Don’t fuck it up”.

Here’s fuller story of the creation of the brand, the Singapore Girl and the commitment to the idea that the ‘journey is the destination’ that guided it over the past 60 years.

And here’s what Arthur C. Clarke said was the future of aviation when I asked on behalf of the airline.

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In the last few weeks, both Ketchum and Ogilvy have gone to considerable trouble to re-organise their businesses around new visions of what they believe the market and clients demand. They won’t be the last.

But why bother, given that delivering and communicating these things is a task usually met with derision by competitors, indifference by clients (as long as they keep their team) and fear and loathing by employees?

The brutal truth is that big agencies simply cannot grow at the current pace of change and so after a while they get bogged down in legacy. ‘Re-boots’ are a painful, but essential part of getting back to growth and my guess is we will see more of them more often.

By some reports, Ogilvy has 15,000 employees and Ketchum 4,000. Ketchum shrank last year and though WPP does not break out revenue by brand, the group averaged no revenue growth for the first half so it is doubtful Ogilvy outperformed that by much.

Although never a good thing, 20 (or even 10) years ago this no/slow growth was not such a big problem. Change was not so changey! Hiring was simpler because the job specs were basically the same as they had always been, structures were more static and you could afford to train your people because your training programmes were not outdated by the time you rolled them out and so you could mould a workforce and a business to the incrementally evolving media market and client needs and fashions.

The difference between the service and approach of your most advanced office and your most ‘traditional’ was not that great. And even if one was much better than the other, the underlying organizational structure was probably very similar.

That is no longer the case. The difference between the most advanced and the most traditional office or unit in big agencies (PR and Advertising) is now huge. Other than the logo on the door, they could be from different planets (and the most advanced is very often NOT based in London or New York by the way).

The challenge is with middle management. It’s a bloody difficult job running a business unit of a big global agency at any time but add to that the new imperative of managing exponentially faster change on a much more complex business model, often in an undersized unit, with far fewer global clients and some simply cannot keep up. And, to be fair, many are not adequately supported by their far-away and high taxing centres (increasingly the agency equivalent of absentee landlords).

If those big agencies are growing at a decent clip, however (mid to high single digit or above) the chances are that most of that growth is in the ‘new stuff’ with the new skills and new people.   And so a lot of organizational change happens naturally, even in the less adaptable of business units.

People within the businesses see what is working across the company and have more case studies to be inspired by and more successful colleagues to confer with, often in a more generous culture, so the new ways of working and organising spread faster organically.  A successful, fast-growing big agency business can re-shape itself much easier on the fly.

By contrast, if growth is slow or non-existent, then it is more difficult for a big global agency to organically mould itself to the new marketplace. It is more likely that it has bigger pockets of legacy businesses with legacy people and legacy structures. The gap between those units (and in some global firms these could even be a majority of them) and what the market demands therefore increases.

Responsible leadership then has to force the pace of change from the top. They really have no choice, but it can be bruising and energy-sapping to lead that sort of change and it can be hard and often disheartening to be on the receiving end of that sort of change. And it is a distraction from working on clients, improving skills and pitching new businesses.  But…done right…it can be inspirational to employees; it can stamp new leadership with authority and credibility; it can make clients and prospects re-evaluate and re-consider the agency and the best and brightest recruits decide to join. The stakes could not be higher for leadership.

For small and medium-sized businesses, on the other hand, the imperative for huge set-piece re-organisations is not as great. Owner-operators and smaller, tighter knit management teams can flex their businesses much more easily through sheer force of will and personality.  There are fewer management layers between the coal-face and the top and legacy people tend to be weeded out much more quickly.  Perhaps this is one of the reasons, we have seen the rise of the mid-size agency?

Assuming communications and employee engagement are well managed, the ingredients for a successful big agency re-organisation are; i) an accurate assessment of what the market (media, platforms, technology and clients) demands now and in the future; ii) as simple an organizational structure that delivers on that as is possible; iii) a fully thought-through commitment to management and skills training that makes that structure and offer deliverable in all offices and units (not just the centres); iv) a generous and genuinely client and employee focused culture.

Like the tip of an iceberg, only the first two of these are visible to the outside world, but it is the last two that will define whether these agencies will kick-start growth again with these changes or whether five years from now leadership (possibly new) will have to do it all again.  In big agency re-organisations, market vision and organisational design are the table stakes. Execution and culture are the winning hands.

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The recent publication of the global PR rankings from the Holmes Report confirmed last years’ trend that the big agencies have stalled and had me pondering why? Weber-Shandwick, Ketchum, Burson-Marsteller and Ogilvy are all down. Of the top eight only two, Edelman and Hill & Knowlton, have grown and even this can best be described as anaemic. Overall, the top eight are down by 0.7%

Contrast this with the next eight agencies, which are up on average 7.8%.

Source: Holmes Report

The Holmes Report takes a much wider sample of midsize PR firms, “defined for these purposes as those within $50m to $250m”, and says they “performed handsomely, illustrating how this tier of agencies have come to lead the market in terms of both growth and innovation”. This group grew by 6.1%.

The growth success of the mid-size agency is self-evident from these numbers, but the innovation success is more difficult to prove. Arun Sudhaman contends that the performance of mid-size agencies in Creative Awards is indicative of this.

Perhaps, but perhaps it is just easier to grow a $200 million firm than an $800 million firm? Perhaps also it is the more surprising stalling of the big agencies that provides the clue to what is really happening in the market. Whilst Burson and H&K cannot be accused of visionary leadership (hence why Burson has been subsumed into a middle-sized agency perhaps) and Ogilvy is now just an operating silo of its big brother ad agency, Edelman and Weber (excuse my bias for my alma mater’s) are excellently managed businesses with visionary leadership teams who have defined the industry. And yet Edelman did 2% and Weber went backwards this year.

One year out from a bloody long stint growing these kinds of businesses I have some thoughts as to why this might be the case.

1. For good and bad reasons, clients don’t buy multi-market campaigns or agency relationships like they used to and this alone accounts for most of the recent big agency sluggishness, especially in developing markets. After HP picked Edelman in 2005 we ran 28 markets in Europe for them earning around 6 million euros in fees annually.  This accounted for nearly 10 percent of the region’s fees. The implications of the decline of these accounts is huge and goes way beyond the lost fee opportunity. They knitted offices together with real work and meant best practice and culture flowed seamlessly both ways from head offices to ‘outpost’ small offices. It meant those small offices upgraded their skills and head offices learned to do things globally. The change to this happy situation has occurred fast. I have spoken with three of the big agencies and the fee income of their biggest global client relationships plunged on average 40% across their Asia-Pacific offices between 2014 and today. The same is true of Lat Am, though less so for Europe where some of the big client accounts are hubbed. The biggest account relationships of the biggest agencies are now even more disproportionately benefiting their US and London businesses.  Despite this, global exclusions are still often signed, which restrains the ability of local offices to win competitive business even though they now more rarely get the chance to work on head office clients. And despite a decade of expectations, very few developing market clients have filled that gap and become significant multi-market clients (with some honourable exceptions). But the big agencies still have to manage big networks of fifty or sixty or even more offices, many of which are now condemned to fight it out with little revenue help from the centre against unconflicted and increasingly sophisticated local players.
2. The big PR agencies are on the verge of losing the once-in-a-lifetime opportunity they had to get their share of lead-brand assignments. The rise of social media and the fragmentation and decline of traditional advertising opened the door for us and put the ‘creative’ agencies on the back foot, but for the most part, we were not quick enough to hire or blend new skills.   For all the headlines, not nearly enough planners, creatives or media people were brought in and not enough decent studios built and rarely did we succeed in attracting the very best of those talents. This was doubly the case beyond the US and the UK. And the marketing prize was the big prize for the big agencies and the one that, if properly addressed could still save them, because Chief Marketing Officers control between 10 -14 times the fee equivalent budgets of Chief Communication Officers. This was and is THE most difficult of agency management and culture transitions to make so failing is understandable; it’s just that it might also be fatal for the hopes of big agencies to re-ignite meaningful growth again.  Tough as it is, it is not a challenge that can afford to be neglected.
3. The big PR agencies have a big leadership challenge in the ‘middle’. The diversity challenges at the top in the PR industry are well known (Donna Imperato has just become the only female CEO amongst the top eight firms), but much less discussed is the lack of skill and experience diversity at the country management level, which has (again) become the defining role in big agencies. Once upon a time, the global account people could drive significant big agency growth. Then the global practice and speciality people took over, upskilling and providing products, training and support that underpinned better services at the periphery. Now the local offices (sometimes pretty large and well defined) have to hunt more and more on their own and so whilst the big agency with strong local GMs and office managers should continue to do well, there is no ‘leg-up’ for mediocre offices anymore. This means running an office of a big network comes with lots more challenges, much less help and less real global exposure, but the same unremitting financial pressure. Why put up with that when you can work at a local leader agency with, perhaps, an inspirational CEO at hand, possibly some equity or even for the chance of running your own business?
4. If size does not mean a better service for clients and a better place to pursue your career, then it tends to create bureaucracy and politics. I have always believed that size matters in PR offices because an office of 100 can offer planners, studio, crisis specialists, healthcare experts, senior ex-journalist media experts and a creative director and an office of 30 people tends to have 20 generalists. So led well, the 100 person office will mostly win the pitch against the 30 person office and the client should get a better multi-specialist service. And until recently, if you did not have flags on the map, you could not be ‘in-to-win’ those big global accounts. Many of the big agencies now have too many flags on the map and too many undersized and generalist offices.
5. Two years of no/slow growth ossifies cultures and that further risks future growth. If an agency is not growing at high single-digit levels then people have to leave to enhance their careers because the business cannot grow fast enough to grow better and bigger jobs for them. Unfortunately, when this happens, the best tend to leave first and the slow-growing agency tends to be left with a higher proportion of mediocre talent. This is true at all levels and is perhaps one of the reasons that Richard Edelman said he will not put up with 2% growth as the ‘new normal.’
6. There’s always someone bigger. The ad agencies woke up and got better at many of the things we wanted to do and take off them and they are still much better at planning and creative.  They also began to take some of the big PR agencies more seriously in competitive situations and they are ferocious head-to-head competitors especially for PR firms curiously preaching creative and yet still addicted to 40 page PowerPoint decks.  And whilst I did not experience losing business to the big management consultancies, I do believe less heavyweight reputation or change communications work is coming our way because they are quietly soaking it up.

Those that don’t break the cycle will either end up like Burson and consolidated or be subjected to merger by stealth like Fleishman, Ketchum & Porter Novelli or will whither ever quicker.  But all this said I do believe the best of the big agencies will get growing again because they will re-double efforts to change their approach to meet the new client opportunities that are absolutely out there. And that’s important for the industry because a disproportionate amount of the IP that is used client side and in small and medium firms is generated by the big firms.  And no industry can be fully successful if its biggest players are not also.

Over the next few months in one of my new roles I will be getting a perspective on these issues through the eyes of Hotwire and Frank amongst others and in which case perhaps I will care less about the fate of the big guys, but right now, I still think the industry is better for them being confident and growing.

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Sir Martin Sorrell is marketing Marmite, but the type of Marmite 90% seem to hate and 10% just grudgingly respect. What everyone who has a view seems to agree, is that he has changed the industry (*).

His departure has prompted an enormous social media outpouring. My non-scientific analysis of this indicates a strong correlation between the creative aspirations of the author and the level of disdain and scorn shown.

And I can understand that. Many years ago I worked as a planner in the ‘then legendary’ Batey Ads in Singapore, run by the eponymous Ian Batey, a man who prized creative effectiveness above all things. Ian once re-shot a Singapore Airlines TVC at his own expense because the first shoot did not meet his standards and so was not even shown to the client. As a planner my job was, of course, to give the insights to the creatives to do their great work, but otherwise (and equally as often) to post-rationalise their great work “because it was bloody great work” and therefore needed selling. It was that kind of creative agency. And WPP bought it.

And they did what WPP do in that they showed how Batey Ads performed against other similar agencies across a host of revenue and cost-based measures and insisted the agency begin to meet their ‘norms’. I guarantee no other TVC was re-made at the agency’s own expense. And Ian left and this once great creative powerhouse was managed down and merged into something else and is no more and is another example that will enrage the 90% that believe that what we do should always be ideas-led and crafted and as ‘close to art as business gets’. And if you believe that you are in good company and you will surely cheer Sir Martin’s resignation.

But if you also believe that what we do should be taken seriously in the boardroom and valued by financial markets and that those ideas we generate should be given a global stage and that getting paid appropriately as an industry is important too, then you need to give credit to our best advocate.

Because that is what he was. My old boss Richard Edelman has given an excellent testimony to this here, despite the fact that the two clashed on many occasions.

One year I was attending Davos with Richard Edelman when he did what many Edelman employees have experienced and affected a ‘Richard switcheroo’. Richard was due to attend a working session with the leaders of the marketing groups and the global CEOs of all the major auto manufacturers to discuss their response to global warming. An hour before the meeting start-time he breezily informed me he had another appointment and I was to stand in for him. Attendees included Sir Martin, Maurice Levy and Carlos Gohsn.

Sir Martin knew them all, presented and debated with passion, had time to take a swipe at me because of who I worked for, clashed furiously with Maurice and then pretty much dictated the agenda of the follow-up meeting and suggested tasks and further research. And whilst not all those CEOs agreed with what he said, no-one left thinking that their communications or PR or brand folk should not be hard-wired into their subsequent planning on the subject.

He has done this at Davos and at conferences and wherever business meets for years. No-one has covered more ground and ‘yes’ he was selling WPP above all, and ‘yes’ he talks about nuanced brand issues and creative like an accountant, and ‘yes’ he could be needlessly aggressive to competitors, but despite all of this he made the case for our industry and for the role of agencies more effectively to business at the most senior levels than anyone else.

So whilst the ‘creative purists’ may cheer his departure, unless the agency industry can find another champion and advocate as global, tireless, wiley, well connected and respected as Sir Martin, they may discover their ideas are taken less seriously in the future.

(*) The Marmite Love/Hate campaign was by DDB, part of Omnicom, so Sir Martin will NOT approve of this analogy.

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