Fluid Networks: The Next Agency Model?

Master’s Thesis

Fluid Networks: The Next Agency Model?

Trevania Henderson

Master’s Thesis

Fluid Networks: The Next Agency Model?

Trevania Henderson

Master of Business Administration

Creative Leadership

Class of 2008-2010

1. Supervising Tutor: Doug Guthrie, PhD

2. Supervising Tutor: David Slocum, PhD

Editing Time from: March 15, 2009

until: March 24, 2010

Statement of Authorship:

This dissertation is the result of my own work. Material from the published or un-

published work of others, which is referred to in the dissertation, is credited to the

author in the text.

Boston, March 24, 2010 Trevania Henderson

Fluid Networks Trevania Henderson

IV

Table of Contents

List of Tables ...................................................................................................... IX

1.0 Introduction/Rationale .................................................................................. 1 1.1 Change is afoot ......................................................................................... 1

1.2 Hypothesis: Fluid networks—either of specialty agencies or of lone rangers—are the most effective partners for clients in the new marketing universe............................................................................. 2

1.3 Personal expectations and findings.......................................................... 3

1.4 The term “agency” .................................................................................... 4

2.0 Research Methodology and Biases............................................................. 5

2.1 Sources of research .................................................................................. 5

2.2 Background reading .................................................................................. 5

2.2.1 Sources of articles ......................................................................... 6

2.2.1.1 Database Search ............................................................. 6

2.2.1.2 Google Search................................................................. 6

2.2.1.3 Advertising Age................................................................ 6

2.2.1.4 Pertinent Articles and Insights ......................................... 7

2.2.2 Bias in article selection .................................................................. 7

2.3 Interviews .................................................................................................. 8

2.3.1 Sources of interview subjects ........................................................ 8

2.3.1.1 Practitioner Interviewees: Agency Size and Type ............ 9

2.3.1.2 Client Interviewees: Corporate Size ................................. 9

2.3.1.3 Additional Interviewees .................................................... 9

2.3.1.4 Geographic Distribution of Interviewees ........................ 10

2.3.2 Bias in interview subject selection ............................................... 10

2.4 Personal experience ................................................................................. 12

3.0 Essential Data: Background, Context and Components......................... 13 3.1 One hundred years of advertising ........................................................... 14

3.2 What is driving change? .......................................................................... 15


V

3.2.1 The digital revolution ................................................................... 17

3.2.1.1 Marketing Today: The shouting is all over ...................... 17

3.2.1.2 Creative Today: No boundaries means no set solution .. 19

3.2.1.3 Success Today: Metrics tell all ....................................... 20

3.2.1.4 Work Today: Dialing it in has a whole new meaning. ..... 20

3.2.2 Compensation Today: Finding a new path to profit ..................... 21

3.2.3 The current fiscal crisis................................................................ 22

3.3 The new norms: What needs to change?................................................ 23

3.3.1 What the agency delivers ............................................................ 24

3.3.2 The (in)ability to team across boundaries ................................... 26

3.3.3 The compensation model ............................................................ 30

3.3.3.1 The traditional model: commission based ...................... 31

3.3.3.2 The traditional alternative: Fee based ............................ 32

3.3.3.3 The client reaction .......................................................... 32

3.3.3.4 Option: Pay for performance........................................... 32

3.3.3.5 Option: Profit sharing ...................................................... 34

3.3.3.6 The client role ................................................................. 35

3.3.3.7 Whither now?.................................................................. 36

3.3.4 Egregious excess: The mandate to do more with less. ............... 36

3.4 The critical components: What must remain? ......................................... 38

3.4.1 The client relationship ................................................................. 39

3.4.1.1 Winning the business...................................................... 39

3.4.1.2 Keeping the business ..................................................... 40

3.4.1.3 Partnering for productivity ............................................... 41

3.4.2 The team relationship .................................................................. 43

3.4.3 The four C’s ................................................................................. 45

3.4.3.1 Culture ............................................................................ 45

3.4.3.2 Collaboration................................................................... 45

3.4.3.3 Continuity ........................................................................ 46

3.4.3.4 Communication............................................................... 49

3.4.4 Training and Tools....................................................................... 52

3.4.5 Global Reach; Local Knowledge .................................................. 54

3.5 Conclusion to Chapter 3 .......................................................................... 55

4.0 Analysis: Alternative Agency Models ....................................................... 57 4.1 In defense of the large agency ................................................................ 58

4.1.1 More than the status quo............................................................. 58


VI

4.1.1.1 Size matters .................................................................... 59

4.1.1.2 Internal shifts .................................................................. 60

4.1.1.3 Starting from scratch....................................................... 61

4.1.2 Analysis ....................................................................................... 62

4.1.2.1 An expertise in establishing and nurturing strong client

relationships. .................................................................. 62

4.1.2.2 A sense of security as a trusted provider for clients. ...... 63

4.1.2.3 A well-oiled machine ...................................................... 63

4.1.2.4 An incubator of strong teams ......................................... 64

4.1.2.5 Dedicated teams that know the client business inside out .. 64

4.1.2.6 A single integrated system that spans the globe ........... 65

4.1.2.7 Many levels of bureaucracy which slow production and

add expense .................................................................. 65

4.1.2.8 A hard time thinking in new ways .................................. 66

4.1.2.9 Conclusion ..................................................................... 66

4.1.3 A word on holding companies ..................................................... 68

4.2 A team of specialized agencies .............................................................. 69

4.2.1 Specialized agencies................................................................... 69

4.2.2 The concept in practice ............................................................... 72

4.2.2.1 Procter & Gamble: Brand Advertising Leader................ 72

4.2.2.2 McDonalds...................................................................... 73

4.2.2.3 Citizens Financial Group ................................................ 74

4.2.2.4 TAM Airlines .................................................................. 75

4.2.2.5 An Apparel Company..................................................... 76

4.2.2.6 The agency perspective................................................. 77

4.2.3 Analysis ....................................................................................... 77

4.2.3.1 Multiple touch points for the client ................................. 78

4.2.3.2 The security of true expertise ......................................... 78

4.2.3.3 Long-standing teams that understand the client ............. 78

4.2.3.4 A client-driven expectation of strong teamwork .............. 79

4.2.3.5 Potential interagency cultural conflicts............................ 79

4.2.3.6 Leaner, quicker, less bureaucratic—and maybe more

cost-effective .................................................................. 79

4.2.3.7 New-media savvy, media agnostic approach with global

reach and local knowledge ............................................. 80

4.2.3.8 Conclusion ...................................................................... 80


VII

4.3 Fluid Networks ........................................................................................ 81

4.3.1 The fundamental idea.................................................................... 82

4.3.2 Whence the workforce................................................................... 84

4.3.2.1 Hot senior creatives ........................................................ 85

4.3.2.2 The newly unemployed................................................... 86

4.3.2.3 Gen Y and beyond.......................................................... 87

4.3.3 Emerging models........................................................................... 89

4.3.3.1 Club Hegarty ................................................................... 89

4.3.3.2 Agency 2.0...................................................................... 91

4.3.3.3 Host Universal, Ltd. ........................................................ 91

4.3.3.4 Mavens & Moguls ............................................................ 92

4.3.3.5 Agency Nil....................................................................... 94

4.3.3.6 Victors & Spoils............................................................... 95

4.3.4 Analysis ......................................................................................... 97

4.3.4.1 Relationships still matter. ............................................... 98

4.3.4 2 You don’t need walls; you need infrastructure. .............. 99

4.3.4.3 Wait. You do need walls. ............................................. 100

4.3.4.4 But does the team have to work there? ........................ 101

4.3.4.5 Just who is the team? ................................................... 103

4.3.4.6 Presenting your dedicated experts on any topic........... 104

4.3.4.7 Keep the team and the institutional knowledge. .......... 105

4.3.4.8 Can there be a culture in a fluid network? .................... 106

4.3.4.9 Being nimble and fluid means perforce less bureaucracy—

and lower costs............................................................. 107

4.3.4.10 Conclusion ................................................................. 109

4.4 DIY: Crowdsourcing by the client .......................................................... 110

4.4.1 A plethora of options ................................................................. 111

4.5.2 Analysis ..................................................................................... 113

4.4.2.1 Relationships—client or team—are more or less forgotten ....113

4.4.2.2 There is no trust, only results....................................... 114

4.4.2.3 Global reach? Local knowledge? You bet. .................. 114

4.4.2.4 Innovative, media-agnostic solutions live here. ........... 114

4.4.2.5 It’s all about cheap, fast, nimble. ................................. 114

4.4.2.6 It’s the bane of the industry.......................................... 114

4.4.2.7 Conclusion ................................................................... 115

4.5 Conclusion to Chapter 4 ........................................................................ 115


VIII

5.0 Conclusion: Which model works best? .................................................. 117

5.1 A quantitative rating of qualitative forces.............................................. 117

5.2 The move towards networked solutions ............................................... 119

5.3 Future fluidity ........................................................................................ 122

5.4 But then what happens?....................................................................... 123

6.0 Bibliography .............................................................................................. 125

7.0 Interview Subjects..................................................................................... 133

7.1 Named Interview Subjects..................................................................... 133

7.2 Anonymous Interview Subjects ............................................................. 140

Addendum........................................................................................................ 141 I Analysis of Interviews ............................................................................ 141

II Sample Interviews ................................................................................. 144

1. Karen Dawson, Principal, Two Blue Spruce .................................... 144

2. Deborah Lotterman, EVP, Managing and Executive Creative Director,

Lehman Millet .................................................................................. 150

3. Keith Reinhard, Chairman Emeritus, DDB Worldwide..................... 153

4. Michelle Heath, Vice President of Marketing, Currensee ................ 159

5. Stacey Minton, Director Management Communications, Merck Serono

......................................................................................................... 163

6. An advertising executive, UBS AG .................................................. 170

III Acknowledgements ............................................................................... 175


IX

List of Tables

Page

Tab. 1: Practitioner Interviewees: Agency Size and Type 9

Tab. 2: Client Interviewees: Corporate Size 9

Tab. 3: Geographic Distribution of Interviewees 10

Tab. 4: A Quantitative Rating of Qualitative Forces 118

Tab. 5: Gauging Change 141

Tab. 6: What Matters 142

Tab. 7: What Is Irrelevant or No Longer Functional 143


1

1.0 Introduction/Rationale

The established agency model was architected in a time when the task of the

agency was to push one-way messages en masse through a handful of channels.

That world has changed irrevocably—a realization that opens a Pandora’s Box of

questions as to the form—and the role—of the future agency.

1.1 Change is afoot Keith Reinhard, Chairman Emeritus, DDB Worldwide, states succinctly, “I believe

the traditional agency model is really obsolete. We are competing to see who can

create the best horseshoes.”1

What happened? Fundamentally, digital communication. It has changed the way

consumers live and brands communicate with them. It has changed the way we

think and the way we work. It has changed the expertise required to market and

the ability and cost of accessing that expertise. And it has changed the economic

landscape of marketing—including the primary compensation structure on which

the agency model rests.

Some of these shifts were already occurring—but with the crushing economy of

the last year, the hairline cracks in the model are now cavernous holes. That

begs the question, what’s next?

Many minds are focused on this issue—indeed a simple Google search quickly

surfaces these three recent investigations:

• In June 2009 Agency Future launched. “Half documentary, half social me-

dia experiment, my ultimate ambition is to produce a snapshot of an in-

dustry in flux, while also showcasing the collaborative and transformative

power of the tools that are powering such upheavals.”2

1 Reinhardt, Keith. Chairman Emeritus, DDB Worldwide. Interview November 5, 2009. New York City, New

York. 2 Agency Future website. Accessed October 5, 2009-March 14, 2010. www.agencyfuture.com


2

• September 24, 2009 the British publication Marketing Week held a con-

ference for marketers from both sides of the aisle (client and agency) ti-

tled “Agency Evolution.” The theme echoed again and again: “Faster, ac-

tion-oriented partner.”3

• On November 16, 2009 Sean Corcoran of Forrester Research announced

a new initiative: pondering the future of agencies. The Forrester brand ob-

viously lends the topic further credibility (it also lends Corcoran access to

a far broader network than I have explored).4

One thing is clear: A spirit of change is abroad in the industry…what happens

now will shape the landscape for years to come. These are indeed exciting times.

1.2 Hypothesis: Fluid networks—either of specialty agencies or of lone rangers—are the most effective partners for clients in the new marketing universe.

At the September 2009 “Agency Evolution” conference, Karina Wilsher, Manag-

ing Director, Fallon, stated, “The old-fashioned supertanker model is already

dead. Clients want smaller collections of people tied to nimble, innovative, evolv-

ing structures that can shape and mould themselves into whatever form is

needed to best solve their problems.”5

Indeed, there appears to be a movement away from the traditional agency struc-

ture to a more fluid one. Hard data on this is difficult to acquire, but, as presented

within the body of this thesis, empirical evidence is strong. Assuming that this

transition is occurring, questions arise as to why, and how best to shape the new

model(s).

To answer these questions, we must first look at the forces driving change, the

shifting circumstances surrounding the current marketing environment, and how

each force translates to a need for change within the model. We must also look at

3 Agency Future. Agency Evolution Report. Published September 30, 2009; downloaded October 14, 2009.

www.agencyfuture.com 4 Corcoran, Sean. The Future of Agencies: What do you think? The Forrester Blog for Interactive Marketing

Professionals. Posted November 16, 2009; downloaded January 2, 2010. http://blogs.forrester.com/marketing/2009/11/the-future-of-agencies-what-do-you-think.html

5 Agency Future. Agency Evolution Report.


3

those things worth preserving—the essential components of marketing success.

Finally, armed with that “must change/shouldn’t change” matrix, we can examine

multiple agency models—some currently in practice, others visions yet to be real-

ized—judging the relative merits of each in meeting the needs of various types of

clients. And we can see the ascendency of the fluid network.

1.3 Personal expectations and findings I began this research with the assumption that large multinational corporations

would require large multinational agencies to supply their marketing—but that

start-ups and small to mid-sized companies (< $500 mm) might prefer a leaner

team, one with minimal overhead and maximum flexibility, one that could be

shaped precisely to meet their needs, even as those needs shift. In short: a fluid

network.

In the course of months of internet research and approximately 50 interviews, I

discovered that even many large corporations are evolving toward a multi-source

solution. That solution takes many forms; while it rarely involves a completely

fluid network, it also rarely is exclusive to a single agency or even the sister

agencies within a holding company.

Will brands still need agencies? Definitively, yes. In fact, as the marketing envi-

ronment becomes increasingly complex, the need becomes increasingly grave. A

more pertinent question is what kind of agency?

Can traditional agencies transition to the new market reality? Do holding compa-

nies hold the key? Should digital agencies take the lead, assuming agency-of-

record priority? Should brands decentralize, creating their own galaxy of best-of-

breed partners? Or do “agencies” themselves take on the task of decentraliza-

tion, whittling down to lean core teams that access top talent chosen specifically

for the brand? What role does crowdsourcing play? These are the questions we

will explore in the following pages.

In the end, there will not be a single answer; a kaleidoscope of multiple models

will exist in the future, just as they do now. It would be impossible to name or


4

predict them all; what is possible is to examine the current industry trajectory and

to contemplate the most effective options for future operation.

As one blog commentator wisely noted, “It’s one thing to see the writing on the

wall, and quite another thing to do the right thing about it at the right time.”6 Per-

haps my work will provide some fodder for both agencies and other researchers

contemplating the situation as we move forward.

1.4 The term “Agency” It is important to note that throughout this thesis I continue to use the term

“agency” to describe a wide range of organizational models.

Webster’s Third New international Dictionary defines agency as “a person or

thing through which power is exerted or an end is achieved; an establishment

engaged in doing business for another, <an advertising — >.”7 Whatever the

form—from a 90,000-person conglomerate to a lone person crowdsourcing solu-

tions via a robust website—we are still discussing the entity through which a cli-

ent’s marketing objectives are achieved. So, for both swift comprehension and

long-term accuracy, I feel the term remains the best choice.

It is also important to note here that I am considering marketing holistically, rather

than advertising specifically. As we will discuss in Section 3.2.1, with the shift

from consumer as target to consumer as collaborator—and the concomitant ex-

plosion of marketing options—advertising alone will not satisfy many clients, nor

should it.

6 Corcoran; Alan Peters, Principal, Singlebound Creative, commenting. 7 Webster’s Third New International Dictionary of the English Language Unabridged. Ed Philip Babcock Gove,

PhD. Merriam-Webster Inc, Publishers. Springfield, Massachusetts, 1993.


5

2.0 Research Methodology and Biases

Investigating an industry in flux is somewhat daunting, and quite possibly fool-

hardy. While I made every effort to be thorough in my methods, I was perforce

constrained by both time and access; this research is in no way exhaustive. Ob-

viously, these interviews and articles represent only a tiny portion of the industry

and the writings concerning it; indeed, new relevant articles appear to be pub-

lished daily, and every person with whom I speak and article which I read points

to new avenues of exploration. Moreover, I am not a scholar of (nor particularly

well-informed about) the business machinations of the agency world—the merg-

ers, the start-ups, the superstars or even the thought leaders. Consequently, this

thesis draws broad conclusions from a very small sample of representative opin-

ions.

2.1 Sources of research

I took a two-pronged approach to conducting my research, turning first to existing

print materials and then probing the experience and opinions of a host of peo-

ple—both practitioners and clients—from companies of all sizes. The literature

review provided a grounding in current thought, as well as a more detailed under-

standing of the advantages of, issues surrounding and best practices related to

virtual teams. The bulk of my findings come from individual interviews; this seems

important as the changes—and solutions—being described here are occurring in

real time. Finally, a reasonable amount of the thinking presented in this paper

stems from my own personal experience, as a client, as in-house talent, as a

freelance/consultant, and as the conductor of a fluid network of specialist agen-

cies and lone rangers.

2.2 Background reading Before initiating any primary research, I conducted a review of existing publica-

tions via a multi-term search of databases through two key internet portals. Sub-

sequently, I conducted a similar search via Google. Additionally, in March 2009 I

subscribed to a number of media feeds from Advertising Age publications.

Throughout the time I have been working on this thesis, I have earmarked any-

thing pertinent found in my daily and academic reading.


6

2.2.1 Sources of articles

The articles that underpin this thesis stem from four key sources:

• Database search

• Google search

• Advertising Age

• Pertinent articles found in general reading

2.2.1.1 Database Search

In March 2009 I searched http://search.ebscohost.com [recommended by Stein-

beis University] and the Boston Public Library databases [Business and Industry

from 1994-2008; individual periodicals as pertinent and available] on the terms:

• Advertising Agency

• Creative Team

• Virtual Team

• Virtual Agency

• Agency Model

• Agency Future

2.2.1.2 Google Search

In July and October 2009 I conducted Google searches on the terms:

• Agency Model

• Agency Future

• Future Agency

I have also used Google to do follow-on research concerning items of interest I

have found in other reading.

2.2.1.3 Advertising Age

From March 2009-2010 I have subscribed to several daily Advertising Age news

feeds. At least once a week, these have produced some article that appears rele-

vant—whether about an enterprising approach to handling industry job loss,8

8 Proloux, Erik. Stop waiting for the rain and make your own weather. Advertising Age, May 06, 2009;

http://adage.com/results?endeca=1&return=endeca&search_offset=0&search_order_by=score&x=4&y=5&search_phrase=stop+waiting+for+the+rain+and+make+your+own+weather.


7

trends towards crowdsourcing and the “gig economy”9 or Crispin selling its in-

terns’ services on EBay.10

2.2.1.4 Pertinent Articles and Insights

Having had this topic in mind for the past 18 months, I have both subconsciously

and consciously collected articles and readings that touched on some aspect of

virtual collaboration, entrepreneurship, and changes in the advertising industry.

Sources include the Wall Street Journal, the Boston Globe, the New York Times,

as well as case studies and comments professors have made in class. Occa-

sionally interview subjects have suggested follow-on reading.

2.2.2 Bias in article selection

Because my thesis deals with the current and future state of the industry, I fo-

cused my attention on periodicals rather than books. Moreover, these are largely

industry periodicals; indeed, very few of the articles cited are academic in nature.

However, because I do not have access to subscription services for any industry

publication, it is entirely likely that I have missed some pertinent articles and

commentary.

Further, while my initial database research was quite methodical, my subsequent

reading has been limited to articles that caught my eye. There is a strong prob-

ability that they reinforce my sense that the traditional single-source agency

model is evolving towards a more fluid scenario.

9 Eidson, Kelly. Tools for the Gig Economy. Advertising Age. Posted April 17,2009; downloaded July 1, 2009.

http://adage.com/print?article_id136072 10 Parekh, Rupal. Crispin Sells Its Interns on EBay. Advertising Age. Posted May 18, 2009; downloaded May

18. 2009. http://adage.com/results?endeca=1&return=endeca&search_offset=0&search_order_by=score&x=4&y=5&search_phrase=crispin+sells+its+interns+on+ebay


8

2.3 Interviews To ask, “What do clients need and how do we best deliver it?” poses a striking

sampling challenge. The term “clients,” after all, covers a wide swath of enter-

prises, whose needs are as varied as their profiles. Who gets to determine the

optimal solution—or, for that matter, even define the issues? Over a six-month

period I have conducted approximately 50 interviews with a host of subjects rep-

resenting both client-side and agency-side views, as well as a few people who fall

outside those two arenas, but seemed to have pertinent perspectives.

2.3.1 Sources of interview subjects

In identifying interview subjects, I began with my personal network: colleagues

and former colleagues, clients and former clients, friends. I sought people from

agencies and clients of all sizes. Then I made a grid to illuminate the areas that

lacked representation, and made a plea to specific people to reach within their

networks to fill in the holes.

The charts below detail the number of people with whom I have spoken, stratified

by agency or corporate size. A final chart shows geographic distribution.

Despite my concerted effort to find representation of companies of all sizes, my

practitioner interviews are disproportionately weighted toward fluid networks

and/or smaller agencies as measured by numbers of people employed. Con-

versely, my client interviews are disproportionately weighted toward clients from

>$1 billion companies; the latter is due to my failed quest to find a statistically

significant number of clients of multinational agencies.

Because many senior level people have been on both sides of the equation, serv-

ing as practitioners and clients in companies of all sizes, I have included a sec-

ond row that indicates the number of other interview subjects who have worked in

a given role at some point in their career. Hence, someone who has always

worked for a multinational agency is only represented in that column under “cur-

rent”; someone who began at a small agency, moved to a multinational, worked

for a >$1 billion company and now is part of a fluid network is represented in all

four areas, either “during their career” or “current.” The “total” line in each column

shows the collective number of voices representing each perspective.


9

2.3.1.1 Practitioner Interviewees: Agency Size and Type

These interviewees include both creatives and account people.

Tab. 1 Practitioner Interviewees: Agency Size and Type

2.3.1.2 Client Interviewees: Corporate Size

These interviewees are primarily marketing executives; one is a division presi-

dent.

Tab. 2 Client Interviewees: Corporate Size

2.3.1.3 Additional Interviewees

I also interviewed four people in related industries—three management consult-

ants and an organizational design/co-working space guru.


10

2.3.1.4 Geographic Distribution of Interviewees

While my interview subjects primarily reside in the northeastern United States,

there are representative voices from around the globe.

Tab. 3 Geographic Distribution of Interviewees

2.3.2 Bias in interview subject selection

Ideally, interview subjects would be a random sample of people representing

every industry and every size corporation (thus every type of marketing need), as

well as every type of marketing service provider. We do not operate in an ideal

world. Though most interview subjects were not previously acquaintances, all


11

were found via my personal and professional network. This holds several implica-

tions:

• As a practitioner of the fluid network model, my industry contacts are pri-

marily among clients and purveyors of smaller or fluid agencies. Clearly

these interviewees are likely to be biased towards the model.

• Equally, that total strangers were willing to give me their time and insights

for no personal gain may indicate that they have a bias against the large

traditional agency model—or at the very least an interest in exploring al-

ternatives.

• People working within the context of any given model (multinational

agency or fluid network) are more likely to prefer and defend their model,

so the inequity of my sample perforce leads to inequity in their collective

responses.

• Through personal and Berlin School of Creative Leadership networks, I

was also able to speak with personnel from large multi-national agencies

and to clients from large multinational companies, yet I was struck by how

extremely difficult it was for me to find clients of the large multinational

agencies. I put a fair amount of concerted effort into locating them, but

only found two. (Agencies, understandably, were not enthusiastic about

introducing me to their clients). Clearly these clients exist, but they exist

largely outside my reach.

In sum, there are lots of large and multinational agencies who are serving large

and small clients alike with skill and success. Their knowledge, attitudes and

practices are not adequately reflected in these pages.

Similarly, although I consciously strived to expand the geographic breadth of my

subjects—and indeed have a few representative voices from Canada, Central

and South America, Europe and Japan, and across the United States—half my

interview subjects are drawn from the northeast of the United States, bringing into

question whether the findings hold true across the nation and/or across the world.


12

2.4 Personal experience

As someone whose livelihood depends on fluid networks—building and running

project-specific teams—I clearly have a strong bias towards the model. Many of

the reasons I founded my business are echoed throughout this document, obser-

vations that:

• What constitutes marketing is changing more quickly than any bureau-

cratically bound institution can.

• Many of the most talented people are opting out of the large agency

world—often because they have been promoted beyond the creative work

they love best or find their creativity stymied by layers of bureaucracy.

• Clients are under pressure to deliver more for less.

• In the traditional agency model, clients spend a lot of money for warm

bodies; the larger the agency, the more people “needed” in every meeting

(and the more meetings that “need” to occur). At some point it seems as

though this investment yields diminishing returns.

• At some agencies, “star” talent spends a disproportionate amount of time

on pitches, in effect creating a bait and switch. Smaller accounts often are

shunted onto junior teams—and the large teams that service large ac-

counts often contain a lot of filler. Freelance talent is brought in at both

ends: to add fresh perspective to a stale account team and to handle the

drudge work while the in-house talent moves on to a new account. By

forming teams of those same freelancers, one could deliver the same

personnel at a fraction of the cost—and with total transparency.

• With each gain in technology, working from disparate locations becomes

easier.

I have found a robust client-base among start-ups and mid-sized companies, and

a secondary client-base handling non-core projects for agencies—often servicing

multinational companies. This sparked the question as to where the limits of the

model lie, as well as how it fits within the general industry-wide shift.


13

3.0 Essential Data: Background, Context and Compo-

nents

“Change, Change or Change: Options for the Agency of the Future”11

Maurice Levy

Chairman and CEO, Publicis Groupe,

The call for agencies to change rings loud from every direction. But just saying

“change” is not enough. Before one can parse a problem, much less posit solu-

tions, it is imperative to have a strong sense of the present state and to identify

pertinent trends. It is also essential to identify the building blocks that will create

new forms.

In this section, we examine the current state of the industry. Specifically, I present

data I have gathered through extensive reading and interviews; this data plumbs

people’s views on the industry, including ways in which it is changing and forces

which are causing that change. Further, it examines various facets of agencies—

from relationships to processes to tools and services—and provides insiders’ in-

sights—drawn from my interviews—as to which facets need to change and which

are essential to maintain in order to ensure effective marketing and/or effective

business management. Clearly, not all interviewees agree on these issues;

where there is disagreement I present multiple sides of the argument and con-

sider the biases from which each view springs.

Using these insights, in Chapter 4 we will examine specific agency models, ana-

lyze each against the criteria set forth in Chapter 3, and assess their relative effi-

cacy.

11 Levy, Maurice, Chairman and CEO, Publicis Groupe. 2006 Keynote speech at the American Advertising

Federation National Conference. Accessed October 14, 2009. http://www.tvmainstream.com/default.cfm?ID=6969&type=wmhigh&clip=2


14

3.1 One hundred years of advertising “It’s no secret that the ad agency model is broken. You can pick up any back is-

sue of Advertising Age or Adweek and read about the demise of the business.”12

Brad Abare

Founder/President, Personality

The advertising business is well over 100 years old; in that time, agency models

have undergone many iterations. The R/GA website documents the evolution of

the agency structure. In the 1950s client teams included copy, art direction, me-

dia and account management; by the 1990s that matrix stretched to encompass

nine disciplines, overseen by account management, in turn overseen by vice

presidents of each marketing silo (advertising, CRM, ecommerce, etc.), under-

pinned by production and all mirrored by members of the client team—a complex

and unwieldy configuration.13

Glancing over the last decade, we see the rise in digital agencies, as well as the

advent of the non-agency. In 1999 Naked ushered in something between an ad-

and-media shop and a consultancy, a group of 65 strategists who simply insert

themselves at the heart of the creative process with a view to making sure the

best ideas get executed. “The firm’s fans credit it with unleashing creativity that

had been stifled by bureaucracy for years.”14 Detractors claim there is nothing

new but the packaging.

That same year, Isabel Bird of The Coaching House, noted that “every single

agency I’ve been to is looking for a new process.”15

Five years later, Tim Williams, writing for Marketing Professionals, noted that

“large advertisers are dissolving their longstanding relationships with agencies of

12 Abare, Brad. Ad Agency Model is Broken, Duh. Think Personality.com. Posted April 9, 2007; downloaded

October 14, 2009. http://www.thinkpersonality.com/archives/2007/04/gency_model_is.html 13 R/GA website. Accessed February 7, 2010. http://www.rga.com/about/featured/our-model 14 Sacks, Danielle. Is Mad. Ave. Ready to go Naked? FastCompany.com Reported October 2005. Posted

December 19; downloaded October 14, 2009.2007. http://www.fastcompany.com/magazine/99/naked.html?page=0%2C1

15 Alburty, Stevan. The Ad Agency to End All Ad Agencies. FastCompany.com. Posted December 18, 2007; downloaded October 14, 2009. http://www.fastcompany.com/magazine/06/stlukes.html


15

record and turning to branding specialists, media specialists and CRM specialists

to increase the effectiveness of their marketing dollars.”16

And now we stand in 2010, where it seems the industry is poised for a seismic

shift. As one blogger notes, “even the name ‘advertising agency’ is a problem.

‘Advertising’ refers to paid media, and ‘agency’ connotes the idea of commis-

sioned agents.”17 Neither stirs the desires of today’s client base. In fact, they

seem to nicely encapsulate the twin core problems: The way brands interact with

customers has fundamentally changed, and the compensation model no longer

works.

Is this the start of a revolution?

3.2 What is driving the change? “The big agencies know they have to change; the old agency model is dead.”18

Chip Bergh

Group President, Global Personal Care, Procter & Gamble

“The threat is if agencies don’t look at the model and explore new forms of con-

nection and collaboration.”

Brian Perkins

Vice President Corporate Marketing, Johnson & Johnson19

“Change is hard.”

Zo Bjorgvinsson

Creative Director, Founder, Dotbox20

Article after article, voice after voice, speaks of change in the industry. In the

course of my interviews, nearly half the people I spoke with volunteered that the

16 Williams, Tim. Evolve or Die: The changing model of the advertising agency. Marketing Professionals.com.

Published August 31, 2004; downloaded October 14, 2009. http://www.marketingprofs.com/4/williams1.asp 17 Ibid. 18 Bergh, Charles V. Group President, Global Personal Care, Procter & Gamble. Interview December 15, 2009.

Boston, Massachusetts. 19 Anomaly website. Accessed January 3, 2010. http://www.anomaly.com 20 Bjorgvinsson, Zo. Creative Director, Founder at Dotbox. Interview November 23, 2009.


16

industry was in the midst of change. Only one denied it. The reasons given are as

myriad and as layered as the people giving them, but they come down to two

things: the digital age and money.

As Mel Exon, Managing Partner of BBH Labs, the “global innovation unit of BBH,”

wrote on the BBH Labs site,

“Two things are apparent to anyone whose eyes are open:

1. Social media, CS and technology change everything. They create new

opportunities and beg that we think differently about our business, pros-

pecting, partnering, creating, everything.

2. Clients are demanding, not asking for but DEMANDING, lower costs and

greater efficiencies. You can squeeze every last person and resource you

have, work even longer days than we historically do, or get inventive.

Funny thing is, we are supposed to be creative.”21

In the next section we will explore the implications of these dual pressures: how

they may affect the type of work needed, the people doing it, even the definition

of success.

However, first, it is important to note that not everyone agrees that there is a

change underway—nor a need for one. Instead, some contend that the noise is

all in the trenches, but that when you rise to the 50,000 foot view it is clear that,

fundamentally, nothing has changed. Craig Markus, Executive Creative Direc-

tor/Executive Vice President at McCann Erickson & Tag Ideation, expressed this

viewpoint quite eloquently. “The problems a client has with their agency change

every three years. It was Facebook last year, it’s Twitter today, it was Cable 10

years ago—but it’s always the same issue. When digital was introduced all the

clients said, ‘The sky is falling! We have to do digital!’ So they went to the small

digital specialty shops. Now they are back with the big shops, because we do

21 Exon, Mel. Crowdsourcing clients: where Agency Nil went next. BBH Labs, Posted August 11, 2009; down-

loaded October 14, 2009. http://bbh-labs.com/crowdsourcing-clients-where-agency-nil-went-next


17

digital too.”22 In short, to Markus, what looks like a crisis today is simply the latest

bump in the road, changes agencies can easily accommodate.

3.2.1 The Digital Revolution

“An ad campaign ten years or so ago used the line, ‘The internet changes every-

thing.’ It’s more true today than ever before.”23

Chip Bergh


The advent of the internet has wrought change in every area of the marketing

arena—from the way consumers glean information, and thus the way we market

to them, to the ways we produce work and that work is judged. The internet has

broken open the world of marketing and set the opportunity and the mandate for

fundamental change.

3.2.1.1 Marketing today: The shouting is all over.

“The role of marketing is changing from an Outbound perspective (shouting

longer and louder) to an Inbound one (listening carefully to more and more peo-

ple).”24

Eric Goldman

Principal, Gossamar

The internet and other digital applications have not simply added web sites and

banner ads and apps to the marketing arsenal. The web has become our de facto

town square, where shoppers chat and compare insights as they squeeze the

cantaloupe. Online communities, backed by the proliferation of information ac-

cessible at the click of a mouse, mean consumers know far more than brands

choose to tell them—and they are basing decisions on how brands treat them.

As Aaron Savage of Interactive Mix, comments, “Customers don’t want to hear

the megaphone of the ‘big idea’ anymore, and they don’t care about ‘the mes-

sage.’ They care even less about whether it is direct, brand-focused or anything

22 Markus, Craig. Executive Creative Director/Executive Vice President at McCann Erickson & Tag Ideation.

Interview November 5, 2009. New York City, New York. 23 Bergh. 24 Corcoran; Eric Goldman, Principal, Gossamar commenting.


18

else. All they care about is whether a company is prepared to be brave enough to

listen to them and develop a relationship.”25

Further, in the internet age there is nowhere to hide. People on the far side of the

globe know as much about your business and your product as the person down

the block. Chip Bergh, a Global President at Procter & Gamble, notes, “If you

launch a new idea, a new variant or new sub-brand, everyone knows instantly.

Things move faster; consumers themselves are more complex and at the same

time more similar across the globe.”26 That makes the marketing puzzle analo-

gously more complex and more interconnected; it also means it needs to be

solved more rapidly.

As a result, the formulas for successful marketing are fundamentally transformed.

Bergh continues, “The consumer commercial model has changed: To be a suc-

cessful marketer is more complicated than getting the right product, packaging it

and putting your ad on TV. There are no longer just 3 TV channels. You can

spend $100 million and not reach 50% of your target.”27 A senior advertising per-

son at UBS AG furthers this notion, pointing out that, “The use of media is driven

by target audience behavior; as their usage has changed, shifting toward nontra-

ditional media, we have been forced to change as well.”28

The power of pervasive media has been chiseled away, ironically, by even more

pervasive yet highly fragmented media. That is a sobering realization for

brands—and one agencies need to take to heart. The bottom line: “Agencies

need to adopt a new way of thinking to survive; the clients already have.”29

25 Corcoran; Aaron Savage, Managing Director Interactive Mix commenting. 26 Bergh. 27 Ibid. 28 Senior advertising person, UBS AG. Telephone interview January 5, 2009. 29 Fling, Brian. The agency model is dead. Posted August 1, 2006; downloaded October 14, 2009.

http://blueflavor.com/blog/2006/aug/01/the-agency-model-is-dead


19

3.2.1.2 Creative today: No boundaries means no set solution.

“The internet has brought transparency. Consumer choices are influenced less

and less by messages about how great product X is, and far more by their direct

experience of organizations.”30

Seth Campbell

Account Executive, Dare

With the rise of everyone knowing everything, comes a diminished attention span

coupled with a chary eye towards who’s selling what. Not to be too redundant,

but the traditional methods of marketing just aren’t cutting it. Consequently, the

traditional agency, which is built to deliver (and financially incented to sell) tradi-

tional media solutions needs to give way to something more…well, creative. And

as the definition of “what is marketing” changes, so does definition of “what is

creative.”

Of course, brands are still interested in traditional channels: print and television

ads, in-store displays, sampling programs; indeed, the contents of the mailbox

show that not even direct mail has diminished. However, the “must have” list now

has expanded to include any area in which digital technologies touch people’s

lives, including the digital variants of traditional media (banner ads and push

email), blogs, online communities, games and mobile phone applications.

Indeed, in this 360° immersive marketing atmosphere, the best answer might be

anything: an experiential event, statement architecture, a fashion show, a blimp—

or just the script you train your sales staff on. “Creativity is a much broader term

these days, as it encompasses everything from a media strategy to a product

development cycle to the content strategy on a Facebook page. And the agency

of the future is going to have to jump on all these loose threads and tie them to-

gether into some sort of cohesive something.”31

30 If I launched an agency. Campaign. Posted September 25, 2009; downloaded November 5, 2009.

http://www.campaignlive.co.uk/news/features/943002/I-launched-agency/ 31 Wolk, Alan. “The End of ‘Creative Hegemony,’ The Toad Stool. Posted September 14, 2009; accessed

March 20, 2010. http://tangerinetoad.blogspot.com/2009/09/end-of-creative-hegemony.html


20

3.2.1.3 Success today: Metrics tell all.

“Metric-driven decision making is replacing opinion-driven decision making.”32

James Sherrett

CEO, AdHack

When asked how they measure successful creative, people agree it is totally sub-

jective. “It needs to give me a pit in my stomach,” says Michelle A. Heath, Vice

President, Marketing, Currensee, a social network for Forex Traders. “I want to

know how it is pushing us forward, how is it creating something different for the

target audience that is going to make them pay attention.”33

Yet, when asked how they measure a successful campaign or initiative, both cli-

ents’ and practitioners’ responses were far more objective; several agencies

noted that they were being pressured to provide clearly measureable results.

Marc Osofsky, Vice President, Global Marketing, Optaros, observes, “We keep

hearing the same thing from our clients: They want to create authentic and help-

ful tools and content, and [to place them on third party sites] where their target

audiences are. Then they want to track, manage and test these experiences in a

manner similar to Google Adwords.”34 Score three for the internet.

3.2.1.4 Work today: Dialing it in has a whole new meaning.

“Creativity and ability once trapped in the agency space has been set free.”35

Brian Fling

President, pinch/zoom

The internet boasts a host of tools that abet and promote virtual work and col-

laboration. The result is two-pronged, both unleashing top creatives from their

desk jobs and harnessing the masses of people who suddenly find themselves

without desk jobs—as well as providing access to those in lands far away.

Online document-sharing spaces, from Huddle and google.docs to Box.net and

Yuuguu, let projects live in the clouds. Skype makes video conferencing available

32 Corcoran; James Sherrett, CEO AdHack commenting. 33 Heath, Michelle. Vice President, Marketing. Currensee. Interview July 18, 2009. Cambridge, Massachusetts. 34 Corcoran; Marc Orsofsky commenting. 35 Fling.


21

to anyone with a newish computer. LinkedIn helps people preserve their net-

works, once they are no longer face to face, while Blellow and Beehance Network

give them a place to elicit feedback—and peer plaudits. And, crowd-sourcing

pervades every niche from campaign concepts to client referrals.

Of course, these same tools are equally effective whether used within the agency

context or extra-agency: Crowdsourcer Sherrett notes, “We’re seeing the creative

process opened and reconstructed to fit the creative output needed. Team mak-

ing and idea creation are happening on the fly through web-based tools.”36 Giles

Rhys Jones, Director Interactive, Ogilvy & Mather, concurs, “The growing acces-

sibility of information technologies puts the tools required to collaborate, create

value and compete at everybody’s fingertips—not only consumers, but advertis-

ing agencies, marketers and their staff.”37

But it also means that the world is suddenly a much smaller place. “Now talent

can come from anywhere in the world, not just Madison Avenue. And a kid in

Bakersfield, CA (or Lahore, India) has access to sophisticated tools that not that

long ago were only affordable for huge agencies. Add in the DIY creative trend

that has consumers making the commercials and you can see why agencies are

taking another look at ideas that would have been laughed about over a three

martini lunch by Roger Sterling and Don Draper,”38 concludes Rick Liebling,

Global Director, Client Management, Taylor.

3.2.2 Compensation Today: Finding a new path to profit

“Bernbach said that a properly practiced creative can make one ad do the work of

ten. In the old system, bad creative that requires ten ads means you make ten

times as much money as good creative that only requires one ad.”39

Keith Reinhard

Chairman Emeritus, DDB Worldwide

36 Corcoran; Sherrett commenting. 37 Jones, Giles Rhys. Manifesto for a new Agency. Posted on Slideshare August 2009; downloaded November

17, 2009. 38 Liebling, Rick. Agency Nil, Crispin Porter + Bogusky & BBH Labs on agency models. Eyecube. Published

June 2, 2009; downloaded October 14, 2009. http://www.rickliebling.com/2009/06/02/agency-nil-crispin-porter-bogusky-bbh-labs-on-agency-models/

39 Reinhardt, Keith. Chairman Emeritus, DDB Worldwide. Interview November 5, 2009, New York City, New York.


22

Monetarily, there is a far deeper issue at work than the current economy. Clients

are dissatisfied with the compensation model—and perhaps even more perti-

nently, it largely does not parallel the new forms of marketing that are taking hold.

That means incentives are out of alignment with goals. Coupled with powerful

margin pressure being exerted by holding companies, the current situation is un-

tenable. We will explore this in greater depth in Section 3.3.3.

3.2.3 The current fiscal crisis

“It’s the economy, stupid.”

Bill Clinton’s 1992 presidential campaign

For decades, clients have been under pressure to do more for less. Then came

the fall of 2008. As Gawker Media owner Nick Denton stated in Advertising Age,

“This is an ‘extinction level event.”40

Smart (and desperate) agencies have cut costs to the bone. Many have cut staff;

65,000 jobs were eliminated between December 2007 and February 2008

(though, interestingly, employment at public relations agencies grew 1.2%; PR is

less expensive to implement).41 Many agencies have also cut fees. Peter Pap-

pas, Principal at 8 Beacon Partners, an unabashedly virtual firm, says he nor-

mally profits in a down economy. But, he muses, “2009 has been a challenging

year. Even the big agencies are willing to compromise on money, so they can

retain clients. The downtown agencies that got it were charging 30% less than I

had budgeted. Essentially, they were giving it away not to lay people off. This

downturn has created interested dynamics.”42

Not all agencies are getting that message, however. As Heath comments, “I have

to look at how can I make the most out of the resources I have. I found that I can’t

just go to an agency and say: ‘I have half a million dollars, how shall I spend it?’

Now I have to really articulate my goals, then figure out how to reach them all

within my budget.”43

40 Dumenco, Simon. In a rapidly shrinking media land: What’s your Plan B? Advertising Age, 80 (6): 15, Feb-

ruary 16, 2009. ISSN: 0001-8899. 41 Johnson, Bradley. Ad industry cut another 18,700 jobs in December. Advertising Age, 80 (5): 1, February

09, 2009. ISSN: 0001-8899. 42 Pappas, Peter. Principal, 8 Beacon Partners. Interview November 12, 2009. 43 Heath.


23

She continues, “For example, I was producing a video, and I wanted to do it in a

cheap and effective way. I asked ‘Who knows some really good freelance video-

graphers?’ My friend from an agency said, ‘I can do it for half a million, but these

two guys can do it for $35,000.’ I was able to do a great job cost effectively.”44

Of course, that doesn’t mean the change is permanent—or at, least, not because

of the economy. Every time we have a down economy, work shrinks and agen-

cies follow suit. Agencies try new things to attract and retain clients. For instance,

“after 9/11 some agencies stopped charging for time, and started charging flat

fees.”45 Clients look for cheaper solutions that may come in the shape of free-

lancers or one- or two-man shops—many of whom, laid off from their agency,

simply pick up the same clients on their own. When the economy changes, work

picks up, large agencies hire again and everything goes back to normal.

Will that hold true this time? Certainly both clients and talent who have missed

the comfort of their agency homes will scurry back; change is hard. But for oth-

ers, this downturn may offer the chance to re-evaluate. Creatives who have fig-

ured out how to run their own businesses will never go back; clients who have

found a highly satisfactory solution, perhaps better attuned to the current nature

of marketing, and to their budgets, may be loathe to return to the agency system,

too. In sum: I believe the current economic crisis will not be the cause of perma-

nent change, but may hasten some of the changes that were already underway.

3.3 The new norms: What needs to change? “In the new network, it’s all about the brains, not the box.”46

Juniper Networks ad

If the world has changed, then to continue to thrive—and stay relevant—agencies

need to change too—but what parts and to what degree? Tracking the zeitgeist

shifts identified above (pull vs. push marketing, new creative outlets, new metrics

for success, new modes of working, and new compensation structures) against

standard agency protocols, we can easily identify some fundamental changes

44 Ibid. 45 Leonetti, Elaine. Director, Strategic Development, Six Degrees. Telephone interview November 20, 2009. 46 Juniper Networks ad; Wall Street Journal, December 4, 2009.


24

that must occur, as well as some fundamental factors that any new model must

incorporate to succeed.

3.3.1 What the agency delivers

“The advertising industry as we know it is facing an Armageddon moment. If we

want to remain relevant, we need to start playing a broader role all along the

value chain.”47

Ian Millner

Joint CEO, Iris

If the definition of marketing has changed, then so has the list of deliverables. To

recalibrate, agencies need to stop thinking in terms of tactics and take a much

broader strategic view. Just as we can no longer run a great 30-second television

spot and win masses of customers, we can’t simply switch that firepower to the

internet and expect it to work. As digital agency executive Aaron Savage wryly

comments, “Using Twitter isn’t a strategy.”48 His point: marketers need to “stop

looking at tactical disciplines and start looking at the customer and the journey

they need to go on in order to become and remain a customer.”49 That journey is

likely to wander well outside the disciplines currently housed within agencies.

Reviewing her career, veteran client Michelle A. Heath describes the evolution

thus: “When I was running marketing for Manulife Financial we used a great

agency and they did all our print; we had a whole marketing and advertising sys-

tem. It is so different now than it was 10 years ago. I almost feel like in some

ways, especially in the world of social media, the agencies are behind. They were

so focused on traditional media buys and pitching commercials and big ticket

items that they missed the ball and are all struggling now, trying to catch up.”50

Charles Hughes, Group Director Creative Services at The Clarks Companies

North America has brought all his creative in-house, and then supplements with

“whatever types of talent I need. If we can’t think of anything else to do we will

come up with a print ad, whereas 10 years ago it was the Holy Grail. Customers

47 Agency Future, Agency Evolution Report. 48 Corcoran; Savage commenting. 49 Ibid. 50 Heath.


25

are so media savvy—and print ads are too passive. I have three kids; they don’t

watch much TV and they never page through a magazine. They are a lot more

interactive, you have to create new touch-points to engage these guys. The num-

ber of options is mindboggling.”51

Not only does this mean agencies need to learn to think another way, it means

they need new skill sets on staff. “To a hammer everything looks like a nail. If you

go to an agency you will get an agency solution, what they are good at,”52 ob-

serves Hughes. Dick Dunn, a former vice president at Carlson Marketing Group

offers hard proof. “At Carlson virtually everything is handled in house, and we

sold that as an advantage—that our strategist wouldn’t come up with something

that couldn’t be executed because the strategist knew what our capabilities

were.”53 That is fine if some iteration of the agency’s standard solutions is right for

your brand, but it underscores the extreme unlikelihood of out-of-the-box thinking.

As the website of Anomaly (“the unagency”), admittedly an extremely biased

source, avers, “What this means for the client is that the resulting end-product…is

not necessarily an objectively conceived, truly innovative solution, but more likely

and unfortunately, a discipline-centric solution that is awkwardly integrated across

channels as best as possible.”54

Heath concurs. “It’s a capability issue. Today, agencies don’t have the expertise

to help me grow a viral brand. They are sourcing it via freelancers. [When I

worked with agencies] they weren’t bringing me anything that I couldn’t have

thought of myself. If I am spending that money, I am expecting them to think way

outside the box…and I have pretty high standards for what [out of the box] looks

like.”55

Critically, for most agencies the financial model doesn’t support thinking outside

their skill set, so there is an inherent conflict of interest: “The agency must filter all

their ideas through the machine they must keep feeding.”56 Of course, everyone

talks about being media agnostic. Five years ago, Fast Company reported that

51 Hughes, Charles. Group Director Creative Services at The Clarks Companies North America. Interview

November 21, 2009. Newton, Massachusetts. 52 Ibid. 53 Dunn, Dick. Director, Coalition Marketing, BI. Telephone interview November 25, 2009. 54 Anomaly website. 55 Heath.


26

flagship agencies such as BBDO and major media buyers Carat Americas and

Starcom MediaVest Group said they were willing to put marketing dollars wher-

ever they have the most impact—“commissions and industry awards be

damned.” But is that what agencies truly practice? Jon Wilkins, of Naked Com-

munications, thinks not, finding it unlikely that Madison Avenue would ever rec-

ommend reshuffling a $30 million television budget to train call-center reps; after

all, “they are in the business of producing advertising, not training manuals.”57

The bottom line: When an agency has really good writers and designers on staff,

they are not going to tell clients to stage a street performance or present a fash-

ion show or get the in-store sales force to persuade customers to fill out a form.

Moreover, if they did, most would not have the skills in-house to translate their

ideas to reality.

There is a clear need for change, but also cause for optimism. First, print and

broadcast won’t evaporate overnight. More importantly, in many ways this situa-

tion frees agencies to return to the more premier position they enjoyed half a cen-

tury ago. As Keith Reinhard notes, “We used to be brand consultants in the

1960s; we can be again.” He explicates the difference thus: “Then we just had to

run a TV ad. Now there are so many points of contact—people in the street, peo-

ple on the internet. We need to pay attention to how we reach them, how the

brands are talking to them. Otherwise we all become carpenters instead of archi-

tects—and people will buy carpenters at the lowest price.”58

3.3.2. The (in)ability to team across boundaries

In the introductory section detailing changes wrought by the world wide web, we

addressed the freedom it has given individuals and teams. Work now easily

spans time zones, skills can be imported, and creatives who seek the quiet of

home or the stimulation of Tokyo’s Shibuya Crossing can work in the locale that

best serves their muse. This may benefit agencies by providing a broader pool of

talent and simplifying issues related to servicing international accounts.

56 Abare. 57 Sacks, Danielle. Is Mad. Ave. Ready to go Naked? 58 Reinhard.


27

But before they can harness these advantages, agencies must conquer teaming

across existing boundaries; separate silos working under the same roof—and

within an agency network—need to play nicely together. Story after story says

they don’t. Turf wars may or may not frustrate the denizens of the agency (some

may even find them invigorating), but they decidedly do not serve the client. And

again, clients notice.

Disciplinary Xenophobia is a term coined by Dr. Denis Benson, a writer and con-

sultant in Columbus, Ohio, to describe why different departments of a company

don’t get along.59 Alyson Young Magliozzi, a veteran of five agencies and now

Director of Marketing Operations at a $2 billion company, describes how it works

in real life. “Having worked with agencies that claim to handle it all, I know they

are not as integrated or consolidated as they would have you believe. [One large

agency I worked for] couldn’t even get the general ad people to TALK to the in-

teractive people. There were different account execs, different points of contact,

different strategies, all of which the client had to manage.”60 She continues,

[There was also] “a separate creative team, traffic manager, etc. That means they

use double or triple the resources they need to. And that costs money.” Therein

lies the problem: For clients, agencies with poorly integrated silos offer no advan-

tage (not cost, not convenience, not expertise) over forming a team of separate

agencies—a strategy that allows them to chose the best in each field. We will

discuss the burgeoning use of this strategy in Section 4.2.

Internecine fighting not only works against the larger agencies, it completely un-

dermines a key selling proposition of multinational agencies and holding compa-

nies.

Magliozzi, whose experience includes stints at two multinational agencies and

whose marketing needs now reach over 45 countries, feels that the international

agencies aren’t truly international; they are just separate offices strung together

under one umbrella. So why bother? “I truly believe that whether you have re-

gional agencies that are different companies or one global agency with regional

59 Disciplinary Xenophbia. The Connection. Communispond, Inc. January 7, 2010. 60 Magliozzi, Alyson Young. Director of Marketing Operations at a privately held, New Hampshire-based ap-

parel company. Interview November 20, 2009. North Andover, Massachusetts.


28

offices it’s the same—separate companies that don’t share resources or informa-

tion. So I don’t see a huge benefit to going with a global agency partner.”61

Stacey Minton, the Geneva-based Director of Management Communications at

Merck Serono volunteers that her experience bears this out. “[In theory it] may be

useful if they have a global agency network, but I haven’t seen that they have

found how to use the network effectively. I am sure the offices they have in Japan

do a great job for their Japanese clients, and the offices they have in NY do a

great job for their NY clients, [but they don’t seem to be communicating with each

other]. If they are talking about [the benefits of a global network] they seem su-

perficial. They need to have more discussions among the networks.”62

To be fair, one multinational client (of the eight interviewed) did feel that net-

worked agencies work well together, increasing efficiency and ensuring consis-

tent messaging.63 And all eight considered that global reach is not only valuable,

but essential. Further, multinational clients are sometimes the ones loathe to co-

operate. Paul Epner, former Director Healthcare Improvement of Abbott Diagnos-

tics, recalls “Our European colleagues tend to think of themselves in their own

world, their own fiefdom with the need to do things their own way. Europe had its

own agencies, own creative, own media. At the higher levels, [management]

thought this was a waste of money, and tried to drive the use of a common

agency that has the skills and affiliates to meet local needs as well…but talking to

the agency, the locals were never satisfied.”64

Client territorialism may trip up some agencies’ abilities to work across national

boundaries, but it doesn’t explain silo-centric behavior. I believe the real issue in

both intra-agency and intra-“hold co” noncooperation stems from economic self-

interest. Again, “un-agency” Anomaly’s website is eloquent on the issue. “Holding

companies tend to be a collection of silo-like fiefdoms based on individual disci-

plines—the ad agency, the design group, the media department, the direct mar-

keting division, etc.—that all have different P & Ls and agendas.”65

61 Magliozzi. 62 Minton, Stacy. Director Management Communications at Merck Serono. Telephone interview November 21,

2009. 63 Senior advertising person, UBS AG. 64 Epner, Paul. Director, Healthcare Improvement, Abbott Diagnostics. Interview November 11, 2009. 65 Anomaly website.


29

That issue of profit and loss really gets to the core of the problem.

“Someone sells the network, but the companies never figure out how to make it a

smooth organism. At [my former agency], we always talked about our interna-

tional teams but we didn’t really leverage them effectively—partly because there

were cultural nuances that got in the way. Partly because it was C Suite to C

Suite making the deal, and no one talked to the management team who worked

on the business; they had no sense of mission and no desire to work together.

And partly because there is the issue of how you are going to share the revenue.

[Financial issues] get in the way,” says Elaine Leonetti. “I see agencies acquiring

other agencies to extend their core competencies and I shake my head and won-

der how that is going to work.”66

In practice, it doesn’t. Matthew Connor, Executive Director, Wunderman World

Health, describes a project his team won in part because they could access the

cultural expertise of a sister agency. But when it came time to do the work, the

sister agency was not…wholly cooperative. “Our client work was not a priority for

the other agency, even though in theory we were partnered. There is a human

component to it; these are not their bread-and-butter clients, so they are lowest

priority. It makes sense; why would they put their best talent on a client that is not

theirs?” Connor is in the midst of launching a new healthcare-focused agency for

Wunderman in Asia. He continues, “Turf wars are a huge issue, and a hindrance

to successful partnership. The trick is finding sister agencies with complementary,

not overlapping service offerings. Otherwise it gets nasty. An interesting dynamic

I am now discovering is the tension between local and regional offices, and the

ferocity of the antagonism at times.”67

Asked whether McCann Erickson’s offices really work together, Craig Markus

smiles. “It depends on the environment. When times are good, people feel more

fearless, which leads to collaboration between global offices.”68 The unstated

corollary: when bottom-line pressure increases, it’s every man for himself.

66 Leonetti. 67 Connor, Matthew. Executive Director of Wunderman World Health. Skype interview March 7, 2010. 68 Markus, Craig. Executive Creative Director/Executive Vice President at McCann Erickson & Tag Ideation.

Interview November 5, 2009.


30

It is clear that the holding company system creates its own set of profit-based

issues. Take the Gillette account as an example. Chip Bergh, Group President,

Global Personal Care at Procter & Gamble, describes the situation thus: Gillette

uses a team of agencies—most, but not all, Omnicom affiliates—orchestrated by

BBDO. Gillette pays a single set fee, established in advance, that covers the full

scope of work—big, small, local, global, across all media. “BBDO has to divide up

the check into all those little pieces. Because Omnicom is a holding company,

each individual agency in the system has a profit goal they are held to.” In

Bergh’s view, “It stifles cooperation, because they need to worry about their bot-

tom line—and under the current system no one ends up making as much profit as

they want.”69

Leonetti echoes Bergh’s insight, having faced this problem from the account side.

“My affiliate isn’t going to help my client in Singapore if he isn’t going to be ade-

quately compensated, but if I price it so we both get a piece we will price our-

selves out of the business.”70

Bergh posits, “If Omnicom thought more holistically—like a business in which not

all departments were expected to show a profit—then they would foster less

worry and more cooperation.” Tellingly, he believes, “Over time more companies

need to go to this model or the brands will go to more fluid networks.”71

To realize true value from multiple disciplines—whether within a single agency or

a holding company—it seems clear that the incentive structure needs to change.

Then even when people operate from a stance of pure self-interest, true collabo-

ration can occur.

3.3.3 The compensation model

“Clients want more and want to pay less. And there is margin pressure. I don’t

think anyone has figured it out yet.”72

Senior Advertising Person, UBS AG

69 Bergh. 70 Leonetti. 71 Bergh. 72 Senior advertising person UBS AG.


31

Agencies are in business to make money. Yet, if intra-agency incentive structures

need to change, so do overall agency incentive structures, also known as the

compensation model. Indeed, remuneration has become a hot industry topic and

was the subject of fiery debate at the September 2009 Agency Evolution confer-

ence. There, Alex West, Global Innovation Director at Mother, posited that “cli-

ents are looking to us for more interesting remuneration models. We have to be

inventive and push for fair reward for what we do.”73

3.3.3.1 The traditional model: Commission based

In the US, agencies traditionally reaped profits on commissions based on media

spending (in some countries, such as Brazil, this model still holds).74 As Keith

Reinhard, Chairman Emeritus of global powerhouse DDB Worldwide observes,

“Pay based on media was stupid from the start. We in the advertising business

brought this on ourselves; the commission system is flawed.”75 However, it hasn’t

entirely disappeared.

John Winsor, industry leader and CEO of new fluid network Victors & Spoils, ob-

serves, “The agency-of-record model is still loosely based on media spend—and

it is broken. When you have a client spending $300 million on media, that means

they are spending $30 million on creative, which has inherent issues. The client

wonders what they are buying that is worth $30 million and the agency thinks

they are working their asses off to get Super Bowl tickets for the [client’s] CEO.”76

That is not going to work any more.

Client dissatisfaction is a key reason media-based commissions have dwindled

over recent years, with percentage of sales declining: “first 15%, then 12%, then

10%.”77 Agency profits are another: As media choices shift from costly television

into less expensive digital media, the relative proportion of the campaign spend

allotted to media vs. creative also shifts. James Sherrett observes, “We are see-

ing the 80/20 flip in action—the spend for a campaign is flipping from 80% me-

73 Agency Future. Agency Evolution Report. 74 Markus. 75 Reinhard. 76 Winsor, John. CEO Victors & Spoils. Telephone interview March 1, 2010. 77 Bergh.


32

dia/20% creative to 20% media/80% creative.”78 Facing a smaller percentage of a

dramatically smaller pie, agencies are strongly incented to find a new paradigm.

3.3.3.2 The traditional alternative: Fee based

With the decline of commission-based remuneration, fees for services—strategy,

creative, programming—have risen. Mostly these fees are hourly, though some

agencies charge flat fees—which have grown flatter in the current climate.

3.3.3.3 The client reaction

Clients are dissatisfied with both commission- and fee-based approaches. Sara

Sampson has seen the problem from both the client and agency view, having

served as Director of Marketing for Holiday Inns Worldwide and Pearl Vision,

Vice President of Sales for Lifetouch, and Senior Vice President of Carlson Mar-

keting Worldwide. “I used to manage general agencies and they are dying, they

can’t reinvent themselves fast enough. I always look at their revenue model.

Years ago it was all in broadcast which was ridiculous. When I was at Pearl we

hired an independent media specialist, so we went to a fee basis, but I always felt

the fee was not as transparent as it needs to be. I felt like we were always paying

a lot of overhead. I struggled at Carlson to explain our fee structure to my clients,

because there was definitely a premium charge; they brought people in specifi-

cally to service an account which is a very expensive model.”79

If the current compensation model is broken, then what should take its place?

3.3.3.4 Option: Pay for performance

As an idea, pay for performance is gaining considerable traction. A senior adver-

tising person at UBS AG, explains, “We are considering changing from labor-

based compensation to value-based compensation; Coke has been the lead

force in terms of this approach. It’s the new way to think about it—a pay-for-

performance component which I think most agencies want. It’s a fairly slippery

slope, though.”80

78 Corcoran, Sherrett commenting. 79 Sampson. 80 Senior advertising person, UBS AG.


33

Why? If pay is tied to the value of your performance, how is that value meas-

ured? She continues, “The key is the appropriate metric that you as a client and

your agency agree on. From a creative standpoint that is more challenging than

from a media standpoint…both parties need to agree on what the metrics are.”81

In 1990 DDB attempted a variation of pay-for-performance called “Total Creativ-

ity, Guaranteed Results.” Reinhard explains that it failed for two reasons. “First,

‘Guarantee’ sounded like a stunt. Also, clients wouldn’t go through the rigor or

share data, so we couldn’t make the DDB role real. You need the client and the

creative director to agree on a very specific goal. You can’t just say ‘turn the

brand around’; that could mean:

• Get new users by expanding the client base

• Increase the perception of value so we can raise the price, or

• Steal the competition’s clients

If you can’t identify the goal, you can’t measure success.”82

A decade later, in 2000, P & G was paying all agencies based on sales rather

than time or media buy. “The attitude is: if we have entrusted you with our brand,

you will get paid if the brand grows,” says Leonetti.83 Reinhard thinks this ap-

proach is right. “The client is taking a risk; we should share that risk—and also

share the reward. So if we are not on track in 6 months, we make a correction.”84

Today, one company I spoke with has put a risk-based model in play for both

their agency of record and their media company. It amounts to just 5 to 7% of the

total fee—but that means a ±10 to 14% swing in their profits. Of this swing, half is

based on quantitative metrics, the other half on qualitative measurements of eve-

rything from creative delivery to customer service.85

81 Ibid. 82 Reinhard. 83 Leonetti. 84 Reinhard. 85 Doran, Amie. Senior Vice President, Director of Advertising and Promotions, Citizens Financial Group.

Interview February 4, 2010, Westwood, Massachusetts.


34

3.3.3.5 Option: Profit sharing

Several people have suggested an analogous model, hedge-fund-like, wherein

agencies collect a management fee, and also have a stake in the business that

allows them to keep an upside from an increase in performance.86 Agencies are

interested and so are clients.

In 2008, when Zo Bjorgvinsson founded Dotbox he decided to test a profit-

sharing compensation model. The day we spoke, Bjorgvinsson had just inked a

new ecommerce deal with “a traditional Fortune 500 company. The contract dic-

tates that we can participate in the offsite effort coming from our work, so we get

a percentage of sales. From my point of view, that participation will replace the

architecture of the traditional agency model.”87

He explained that for him, it was about growing billings without growing staff, a

strategy that leads to a healthier bottom line. “I started my own business because

I have a keen interest in a large Christmas bonus,” he laughs.

“I specifically do not want to build a company that is only a billable-hour business.

I don’t like it for a lot of reasons, among them that it is challenging to be a busi-

ness that requires more and more people as you grow—and I want to grow the

business quite a bit. We want for half our income to be consultancy like a tradi-

tional agency and half to be equity [in the results of our work].”88

Of course, that can be easier said than done. Bjorgvinsson continues, “I do know

quite a number of creative agencies who tried to get clients to sign up but failed.

It is always hard to get new models to work; you have to get the financial contract

right [which can be very complicated].”

There are also questions from the agency view, notably that the success of your

client’s business correlates to a lot of things besides your work—from their prod-

uct to their sales force or customer service reps to their basic strategy. So there

can be an issue if your earnings are tied to the success of the business.

86 Corcoran; Katie Smillie commenting, quoting Seth Goldstein, CEO at SocialMedia.com 87 Bjorgvinsson. 88 Ibid.


35

Asked how that impacts his model, Bjorgvinsson muses, “Of course [with my

model] you don’t have control over many of [those issues]. If you are dependent

on the income of the client, what happens when their income gets cut in half be-

cause there is a recession? Given the basic business architecture, your business

is going to be cut in half too.” However, he doesn’t really think that is any different

than the situation now, in which budgets—and thus billings—rise and fall with

client profits. “It just renders more visual what is an obvious causal relationship.”

He does think it spurs the agency to be more proactive. “You fight more vigilantly

for what you believe to be right if your income is dependent on it. Also, you be-

come better at articulating [your vision] and getting the right things chosen and

done.” Perhaps most importantly, “you get better at identifying the relationships

that you can manage. We try only to work with clients where we have two or

three relationships at different levels, both middle and upper management; we

specifically have said no to a pitch because we didn’t have those contacts.”89

3.3.3.6 The client role

Just as client dissatisfaction is driving change, clients themselves need to be part

of any fundamental shift. Laurent Ezekiel, Client Services Director for LBi thinks

they are not ready. “The reality is that the vast majority of blue-chip companies

are too structured to allow for any significant changes to the model.”90

Reinhard’s experience backs up that assumption. “Clients aren’t willing to create

budgets directly related to the objective. The budget says Advertising got X last

year, so they get X this year. In another room, someone is deciding the objec-

tives. There has to be a connection between resources and outcome.”91 There

also has to be freedom to maneuver. When Maureen Suda was Director of

Communications at Eastman Kodak she found negotiations with her agency

hampered by internal regulations at her corporation. “I could have accessed more

cost-effective solutions, but I never had the opportunity. Purchasing had to meet

certain criteria.”92

89 Ibid. 90 Agency Future. Agency Evolution Report. 91 Reinhard. 92 Suda.


36

3.3.3.7 Whither now?

Will pay for performance be the right solution for all agencies? Will profit sharing

take hold? Will clients be open enough to let either be a feasible solution? The

answers remain to be seen. But, reflecting on the fundamental changes de-

scribed in Section 3.3.1 (What the agency delivers) it is clear that for agencies to

embrace a shift in marketing deliverables there will need to be a shift in incen-

tives. If agencies are paid as a percentage of a media buy, they are incented to

buy more media—and to produce the creative for the most expensive media. If

they are paid by the hour, they are incented to take longer. If they are paid a flat

fee, they may be incented (or tempted) to cut corners. If their profit comes

through some form of partnership—or through some stake in their client’s suc-

cess—then they are more incented to move product than to win awards. Where

an agency-client relationship strengthens to one of true partnership, surely both

the skill sets and the fee structure will shift too.

3.3.4 Egregious Excess: The mandate to do more with less

“Every time I walk into that big office in New York, I know I’m paying for it.”

President

Fortune 100 Company

“Money is never not an object.”93

Iesa Figueroa

Marketing Director, Insulet Corporation

Even in the go-go 90s there was pressure for clients to take fat out of their budg-

ets. Then came the black days of October 2008, and “pressure” became “impera-

tive.” Today’s economic realities leave no room for excess. As agency escapee

John Winsor remarks, “Today, CFOs are running the marketing department;

agencies are living on existing contracts, but they know those contracts will be

seriously renegotiated soon.”94

Bloat comes in many forms. The big offices. The fancy meals. The excellent Sky

Box seats. And the scores of people deemed necessary to service a big account.

93 Figueroa, Iesa, Marketing Director, Insulet Corporation. Interview September 30, 2009, Boston, Massachu-

setts. 94 Winsor.


37

One particularly sharp-tongued blogger opined, “It is a well known fact that once

an agency signs a big account they ramp up, adding coddlers (typically mediocre

to barely-a-heartbeat type people) to fill seats and waste time on the multitude of

out-of-sync spreadsheets that end up floating around. This justifies the huge bill

at the end of the month.” She continues, “Smaller agencies of 15-20 people are

so much more efficient and cost-effective for brands to navigate these new wa-

ters we live in.”95

Winsor backs that assertion, noting that his network delivers dynamite creative

solutions for roughly 25% of the cost of the old model; he also recognizes that

agencies will be hard-pressed to cut 75% out of their own operating budgets.96

Clients are taking notice—and speaking up.

Sara Sampson, former vice president of a 2500-person agency, recalls, “[My firm]

found that they were constantly defending their cost structure to good clients. My

biggest client was Northwest Air. They were very cost conscious. It’s obvious you

are paying for overhead. You see the opulence, the offices, the perks.”97

Clients also object to the robust size of many agency teams. Theresa Kaskey,

Marketing Manager, John Hancock Financial Network, states, “If you are working

with a typical large agency system, you get good customer service, but it seems

like overkill. Even when you want to do a quick one-off project that you hope will

be inexpensive, you set up a kick-off meeting and there are eight or ten people

from the agency and you aren’t sure who they are and what they are doing.”98

The sentiment is echoed at UBS AG. “There is a question of how [agencies] staff

their accounts to get the work done. There are far too many layers that I don’t

need to pay for.”99

95 Exon. 96 Winsor. 97 Sampson, Sara. Senior Vice President Marketing and Business Development, Incentium. Telephone inter-

view November 22, 2009. 98 Kaskey, Theresa. Marketing Manager, John Hancock. Interview December 16, 2009, Boston, Massachu-

setts. 99 Senior advertising person, UBS AG.


38

Michelle A. Heath, who worked at large corporations before her current start-up,

concurs, “Even if we were twice the size we are I probably wouldn’t choose to

use an agency. I wouldn’t want to spend the money to just have them push the

work around. It would have to be a unique type of agency that I haven’t seen be-

fore.” She sums up, “To spend half a million a year on a retainer for the sake of

having an agency [is stupid].”100

“Given that most agencies rely on the freelance talent pool to ebb and flow with

client demand, this gives [clients] significant [incentive] to cut out the middle man

and work directly with the same talent at a fraction of the cost.”101

Of course, most clients have neither the bandwidth nor the inclination to manage

hordes of freelancers themselves—they count on their agency for such project

management as much as for ideas. Just as obviously, for middle managers

whose agency-organized perks supplement mid-level salaries, the luxurious of-

fices and front row seats aren’t extravagant; they are simply part of customer

service, a critical agency plus, as we will see later. As Sampson observes, “Some

clients like it; it makes them feel good that they are successful enough to warrant

it.”102

Yet it is interesting to note that, in my interviews, the more senior the client voice,

the more loudly it objected to anything that looks like waste. Perhaps they have

large enough salaries that the perks don’t make a difference to their lifestyles.

Perhaps they are secure enough that they don’t need the ego massage of a bevy

of fawning agency flunkies. Or perhaps it is simply that the buck stops with

them—and they would like to keep more of it for their own companies.

3.4 The critical components: What must remain? “The best agencies will still have the best people, the best ideas and the best

culture. Good ideas will still be central to what we do.”103

Karina Wilsher

Managing Director, Fallon

100 Heath. 101 Fling. 102 Sampson. 103 Agency Future. Agency Evolution Report.


39

Both to market most effectively and to reap the largest rewards in today’s envi-

ronment, many aspects of the traditional agency may no longer be essential or

even useful. But some aspects are fundamental to success, and as we consider

remaking agency models, we should be careful not to toss out the baby with the

bathwater. Over the course of my interviews, people pointed to several elements

they felt were important to success: knowledge of local markets, creativity and

expertise (whether in the client’s industry or in the marketing medium). Most im-

portant were relationships, both between agency and client and among the team;

nearly everyone deemed these crucial to success.

3.4.1 The client relationship

“P & G is old school. We are a big believer in relationships. We consider our

agency relationship to be a marriage.”104

Chip Bergh


Across the board, my interview subjects agreed that large agencies have raised

the nurturing of client relationships to an art form. This helps them win and keep

business, though some comment that an overly comfortable relationship can lead

to complacency on the client side, which might result in less good work. However,

many people believe that the future of marketing lies in a strong partnership be-

tween agency and client—and that partnership will thrive under the care of

agency executives with deeply ingrained expertise in keeping their customers

happy.

3.4.1.1 Winning the business

Before an agency can work on an account, they have to land it. And people on

both sides of the table speak to the importance of relationships in winning busi-

ness. “Certainly there is a question of reputation and the work presented in a

pitch, but when we became unhappy with our previous agency, we looked to a

group we knew,” says Paul Epner of Abbott Diagnostics. The incoming agency

president “had relationships with our senior vice president of pharmaceuticals,

104 Bergh.


40

our vice president of marketing, and our global commercial officer, so his agency

had an inside track.”105 Bevan Bloemendaal of Timberland has a similar tale. “We

were using six or seven agencies, but they didn’t come to the table with enough

strength. We chose a single agency that had more expertise—and an existing

relationship with our CEO.”106

3.4.1.2 Keeping the business

“There is still a lot to be said for the way big agencies are close to their clients;

they are very, very good at it,” says Lars Hemming Jorgensen, Partner, Chief

Creative Officer at the London-based powerhouse Story Worldwide. “They have

people who do nothing else; a client may have three people who just buzz around

them. And the clients who have the budget for that, like it.”107 Jennifer Brett, Part-

ner at the two-man shop dot•content, remarks wryly, “Some clients need a larger

agency because they need a lot of handholding.”108 Account executives tell tales

that substantiate this view.

“At Burson-Marsteller [a large PR agency] I used to take people to see shows

where the tickets were $900, which went straight on their bill,”109 remarks

Maureen Suda. Matthew Allen, Vice President and Account Director for Arnold

Worldwide also finds himself attending lots of events; he works on McDonalds,

covering the Midwest.

“Ten percent of this account is actual creative work,” says Allen. “The other 90%

is about client management. There is a fair amount of entertaining: dinners and

tickets to sporting events and theater. We put in lots of face time. There is a cli-

ent-driven expectation that they will be taken care of.”110

For these clients, handholding is just good service. Of course, the definition of

good service may differ, client to client. Reflecting on her days as Director of Ad-

vertising for Holiday Inn Worldwide, Sara Sampson summarizes, “The older you

105 Epner. 106 Bloemendaal, Bevan. Sr. Global Director - Creative Services, Timberland. Telephone interview December 4,

2009. 107 Jorgensen, Lars Hemming. Partner, Chief Creative Officer, Story Worldwide. Telephone interview December

2, 2009. 108 Brett, Jennifer. Partner, dot•content. Interview July 16, 2009. 109 Suda, Maureen. Principal, Suda Communications, LLC. Interview November 12, 2009. 110 Allen, Matthew. Management Supervisor, Arnold Worldwide. Interview December 9, 2009.


41

get, the more you get the way [agencies build] relationships. It’s all wining and

dining. I am more interested in a swiftly or proactively returned phone call.”111

Interestingly, Allen says even the expectation of free tickets and lavish meals

varies by market, with a much higher sense of entitlement in Boston than in Min-

neapolis.112

To some extent this spoiled behavior on the part of clients may serve to inflate

their own self-importance—or to improve their lifestyle in a variation of padding

the expense account. Concurrently, it may mean clients fail to push for strong

work. As Suda says, “If a client wants familiarity, handholding, and the comfort of

having you nearby, they are not going to be the client that values the best of the

best. The best might not be in their back yard.”113 But, used properly, client-

agency face time can be invaluable both for selling the work and for developing it.

3.4.1.3 Partnering for productivity

“An ongoing client relationship is beneficial; you are brought into the company for

meetings, and the resulting insights can really improve the work.”114

Joleen McFadden

Senior Account Director, RAZR Marketing

The client relationship isn’t all about good times; it is also about good work. “We

used to get an assignment and go into a black box and produce the answer. That

doesn’t work anymore,” says Deborah Lotterman, Executive Vice President,

Managing and Executive Creative Director, of 50-person agency LehmanMillet.

“Clients need to be part of collaborating with the platform; we need their insights.

We combine their knowledge of the market, the customer and the product with

our knowledge of creative—we really come together as two teams.”115

Koichiro Tanaka of Projector agrees vehemently. Spearheading a virtual team,

Tanaka swept the 2008 Cannes Lions with his Uniqlock project for Uniqlo, win-

ning Interactive Agency of the Year, the Cyber Grand Prix, Gold and the Titanium

111 Sampson. 112 Allen. 113 Suda. 114 McFadden, Joleen. Senior Account Director at RAZR Marketing. Telephone interview November 23, 2009. 115 Lotterman, Deborah. Executive Vice President, Managing and Executive Creative Director. LehmanMillet, a

HealthSTAR Affiliate. Interview November 10, 2009.


42

Grand Prix. Asked about his work process, he says, “When it comes to the crea-

tive process, having a relationship with the client [is critical]. The presentation

itself isn’t everything; show it to the client throughout. Bring in everyone’s ideas

and absorb them.”116

Graeme Dignan, founder and CEO at Erasmus Partners, summarizes, “We need

to get closer to and share common goals with clients.”117

But how? Craig Markus of McCann Erickson thinks it all comes down to trust.

“The most important thing is the value of the relationship between the client and

the agency. That has to be based on trust. Clients start out thinking that my

agency is doing great work—not doing what’s best for them. It takes a long time

to convince them that I care about them. Once I have earned their trust, I can find

my way to solving their problems. The best compliment I can get is, ‘He really,

really understands our business.’”118

If understanding the client’s business is beneficial, the inverse is lethal. Rebecca

Peterson speaks from twelve year’s experience fielding agencies for biopharma-

ceutical companies. “I am very interested in someone who strategically under-

stands the essence of the company. They need to take the time to educate them-

selves and really listen to what we are saying. We have often had a situation

where an agency comes into the process with a preconceived idea. No matter

what you say, they already have a decision made. Having something fed back (or

worse regurgitated from work they have done for someone else) isn’t helpful.”119

Clients are taking steps to foster understanding and nurture partnerships. James

Tipple, UK Marketing Director for Yahoo notes, “We are taking a more collabora-

tive approach…trying to phase out the project-by-project mentality and think more

coherently. We need to be closer partners with our agencies.”120 Phil Rumble, UK

Marketing Director for Cadbury’s echoes this sentiment: “I see an agency’s main

116 Tanaka, Koichiro, Projector. Interview January 30, 2009, Tokyo, Japan. 117 Agency Future. Agency Evolution Report. 118 Markus. 119 Peterson, Rebecca. Vice President, Corporate Communications, Alkermes, Inc. Interview July 17, 2009,

Cambridge, Massachusetts. 120 Agency Future. Agency Evolution Report


43

role as working much closer with its client and acting as [a] purveyor of brand

ideas and as [a guardian] of brand behavior.”121

“As the person responsible for the brand, I will always have to be pretty involved

with whatever we are doing,” says client Michelle A. Heath. “I won’t ever be in a

place where I can just say ‘the agency is handling that.’ Frankly, I think that is

where brands get in trouble. They hand too much over to the agency and lose

touch with the people who are touching their brand, with what the audience

needs and what they don’t need, with what is changing. If the agency says ‘this is

a great idea,’ [as a client] you need to decide whether you agree based on what

you think is happening in the market now—not on what the agency thinks.”122

A final caution: When the team spans client and agency, the ecosystem can be

very fragile. “If one person in the relationship leaves, the whole thing is up for

grabs,” says Markus. He gives McCann’s efforts to maintain their relationship with

MasterCard as an example. “Joyce is credited with that campaign. She has a

relationship with the CEO of MasterCard. Even though she has been promoted,

she has never replaced herself as Executive Creative Director on the account. It

keeps her safe, it keeps the client safe in the building, you see it in the work

globally.”123

3.4.2 The team relationship

“What special skills do teams need? Trust.”124

Paige Arnof-Fenn

Founder, Mavens & Moguls

If it is important to form strong relationships with the client, it may be more impor-

tant to form strong relationships within the agency. People from agencies of all

sizes (and around the globe) agree that nothing replaces the camaraderie, the

deep intuition, and for many, the spark of a team that has a long history together.

Felix Tataru, General Manager of the privately-held Romanian agency GMP Ad-

121 Ibid. 122 Heath. 123 Markus. 124 Arnof-Fenn, Paige. Founder, Mavens & Moguls. Interview July 10, 2009, Cambridge, Massachusetts.


44

vertising specifies, “Team dynamics are critical between copy and art. When

good chemistry happens you keep it.”125

Craig Markus, representing the global agency view, believes that dynamic is a

key benefit supplied by the agency itself. “The team gets security from the

agency structure. I don’t lose people. It is my responsibility to create an environ-

ment in which they thrive.”126 At least one client I spoke with agreed, saying,

“There is an agency environment that fosters…creativity.”127

As a bonus, Deborah Lotterman, EVP, MD, ECD of a mid-sized specialty agency,

argues that established teams speed the workflow. “Chip and I have worked to-

gether so long we can finish each other’s sentences,” she says. “So when a prob-

lem comes in, we can take it apart and solve it quickly. We just say, ‘Remember

when we did xxx…’” Part of that power comes from the original selection of

teammates. You chose a partnership in which “you complement each other’s

strengths and weaknesses. I know Chip will ask about X and he knows I will for-

get Y so he covers it. When you pull freelancers together, there is a ramp-up time

and you don’t know if the combination will work; if I put the team together within

the agency, I know it does.”128

When even Pixar credits their success on having formed “a community in the true

sense of the word,” one with lasting relationships, one that is “the antithesis of the

free agent culture that reigns in Hollywood,”129 is there hope for those who have

not yet found their place?

Agency veteran Joleen McFadden says: Yes. “There is an advantage to having

worked together, but you can build [a strong team] pretty quickly if you get the

right people. If you have worked with someone before, you have instant credibil-

ity. If you haven’t, they will challenge you to the point where you satisfy them that

you are good at what you do. That happens at big agencies, small agencies and

on your own.”130

125 Tataru, Felix, General Manager, GMP Advertising. Interview April 6, 2009, Berlin, Germany. 126 Markus. 127 Senior advertising person, UBS AG. 128 Lotterman. 129 Catmull, Ed. How Pixar fosters collective creativity. Harvard Business Review. September 2008; pp. 64-72. 130 McFadden.


45

3.4.3 The four C’s

A number of elements that support good work—and good working conditions—

flow naturally out of the agency environment. Here, I dub them “the four C’s”: Cul-

ture, Collaboration, Continuity and Communication. Culture, if it is positive, not

only supports but breeds excellent work, as well as a happy, dedicated staff. Col-

laboration is, in many ways, an outgrowth of the team relationship, but it refers to

the need for many minds when searching for a strong solution. Continuity—a

team that stays together, with the project and with the client—also underpins

strong work. Communication, when outbound, is a corollary to the client relation-

ship, but within a team is both the glue that binds and the grease that keeps work

moving smoothly. Each is essential to producing an excellent product.

3.4.3.1 Culture

Keith Reinhard, Chairman Emeritus of DDB Worldwide, wrote, “You asked what

the big agencies have that should be preserved or that would be missed in a

newer model: To whatever I said, I would add ‘culture’ and ‘continuity.’ I was

speaking with the head of one of the DDB offices who said his top concern is still

the DDB culture, preserving it and building upon it, because he believes it is cul-

ture that most differentiates one agency from another and he believes that culture

is important to clients.”131 This sentiment is rather reverse-echoed by a senior

person from another agency, who notes wryly, “The DNA of this agency is not

creative. It was started by account people which shows.”132

The critical elements to building and sustaining a culture would make a fine paper

of their own, but suffice it to say that the right culture can make a tremendous

difference to both agency and client.

3.4.3.2 Collaboration

“It is all about collaboration.”133

Carlos Alvarez Téllez

Innovation Consultant, Play Mexico

131 Reinhard. 132 Markus. 133 Alvarez Téllez, Carlos. Innovation Consultant, Play Mexico. Interview April 6, 2009, Berlin, Germany.


46

Drew Jones makes his living through an innovation consultancy that helps com-

panies tap into the creative problem-solving power of teams. It’s a subject he

knows a lot about. “Collaboration is critical to the generation and advancement of

ideas. Companies that are most innovative tend to have no more 42% of time

spent heads down working alone. About 40% of work one does should be solo.

Companies that come in with 80% [solo work] are average companies.”134 One

can only imagine that the need for collaboration is even stronger when creativity

is core to the business. To truly solve a problem requires some debate and group

probing; the ‘divide-and-conquer’ approach is simply not as effective.

Agency owner Felix Tataru observes, “People like to fight for a cause, so make

the agency’s creativity the primary focus, make it measureable. When there is a

dragon, use the whole power of the agency to slay it. It is not a [straightforward]

process and the answer may not come just from the creative team.”135

That is unquestionably true, but may not mean you need an entire agency to

solve a problem. Matthew May, author of The Seven Laws of Projects and How

to Break Them, observes, “If you have too few people on a project, they can’t

solve the problem. If you have too many, they create more problems than they

can solve.”136

The bottom line: accept good ideas from any source—and be sure to have a

large enough team to think through the problem at hand.

3.4.3.3 Continuity

“Clients still want the same team on their business and resist and hate changes

in personnel assigned to their business.”137

Keith Reinhard


134 Jones, Drew. Co-founder Austin Coworking; co-founder Shift 101 (previously AquiferDesign). Telephone

interview November 10, 2009. 135 Tataru. 136 May, Matthew E. The Seven Laws of Projects and How to Break Them. Open Forum. Published September

28, 2009; downloaded October 24, 2009. http://www.openforum.com/idea-hub/topics/the-world/article/the-seven-laws-of-projects-and-how-to-break-them-matthew-e-may

137 Reinhard.


47

Matthew Clark, Global Marketing Director, Strategy Practice, The Boston Con-

sulting Group, discusses stable client teams thus, “The question is: What does

the client want? In the marketing service world, consistent touch points are impor-

tant to the client. Because so much time is invested in the ramp up, there is real

value in continuity. If you are launching a multi-year program, you want to form

one team through the whole thing…If a person has done a great job, the client

will want them back. If a person is busy with another client, then they can’t de-

liver.”138

With today’s job mobility, there is a hidden benefit to client-specific teams too. An

advertising executive at UBS AG notes, “Depending on how long the account has

been at a shop, the people in the agency may have more of a history than the

people in the marketing department. It is good that someone has it! In the agency

it gives you some staying power.”139

So how do you ensure they aren’t busy? One strategy is keeping dedicated

teams on staff, people whose time and attention is dedicated solely to each ac-

count. But in the “do more for less” economy, no client wants to pay agency staff

for the weeks they are “slow,” any more than they want their brand’s marketing

campaign to be predicated on the skill sets existing in-house. More frequently,

agencies (and independents) turn to the same people, without their being exclu-

sive to the account.

Specialist-agency chief Deborah Lotterman says, “Most of our clients aren’t re-

tainer-based, but we still keep their teams on wherever we can. We use the same

account planners, and definitely the same creative team as much as possible.

They know how to use the logo and they know where the landmines are.”140

Agency owner Felix Tataru thinks it is just good business. “We keep the same

team all the time on the brand, because then they understand it.”141

138 Clark, Matthew. Global Marketing Director, Strategy Practice, The Boston Consulting Group. Interview

November 12, 2009. 139 Senior advertising person, UBS AG. 140 Lotterman. 141 Tataru.


48

Interestingly, in my interviews, several people who lead fluid networks mentioned

that clients never asked whether the people they bring together for an account

are likely to leave midway or whether they will be available for phase 2 next

year—whereas, at agencies that is often a client worry.

Peter Pappas of 8 Beacon Partners, says, “I have never heard a concern that the

team wouldn’t be consistent, [but] I had a meeting last night with a prospective

client who was frustrated about having gone through agency reviews, where sen-

ior guys come to the pitch, but then [once the account is landed, the client is]

dealing with people just out of college.”142

That client is not alone. Whenever agencies spy bigger fish, existing clients may

fall victim to a switch.

“I often find that you get better quality work from smaller mom and pop agencies

than from the big agencies, where you are saddled with 21-year-old vice presi-

dents who don’t know what they are doing, and/or you start with a superstar who

gets pulled to another account. With a mom and pop shop, you get veteran ad-

vertising people who know what they are doing. Plus, what you see is what you

get,” says experienced client Rebecca Peterson.143

Maureen Suda, principal of a fluid network, agrees, “My clients never have ques-

tions about people shifting, whereas at big agencies it is always a question: Are

you going to bait and switch? One of the key value propositions I offer is that I am

going to be working on your account.”144

Bait and switch isn’t the only problem; sometimes people simply have moved on

to better jobs. As agency-veteran-turned-client Stacy Minton remarks, “The turn-

over rate at agencies is historically quite high, so you tend to go through account

teams; you are constantly having to rebuild these relationships.”145

So, consistency—and the commitment that underpins it—is important to clients.

142 Pappas. 143 Peterson. 144 Suda. 145 Minton.


49

After all, it is the people themselves who really make the difference. “A go-to firm

is really a go-to staff, and when the staff changes the clients will follow them.”146

3.4.3.4 Communication

“You almost can’t have enough contact within the team or with your client.”147

Liz Wos

Former Senior Account Executive, Erwin-Penland

“I know this: If I want to keep a client, or sell creative, I go there. Big ideas can’t

be communicated over the phone; it requires face to face.”148

Deborah Lotterman

Executive Vice President, Managing and Executive Creative Director, Leh-

manMillet

“Business takes place around the world over the internet and on the phone; it is a

question of rising to the level of the medium and delivering.”149

Maureen Suda

Principal, Suda Communications, LLC

When Liz Wos was an account executive, she practiced constant communication.

“Internally, we had daily meetings and a lot of copying everyone on everything;

you may not read every email, but [they ensured] some familiarity [with the pro-

jects] so anyone could serve the client anytime. Then we had a status call with

every client every week, as well as daily phone and face-to-face meetings as

needed.”150

Everyone—agency and client, multinational and lone ranger—agrees that good

communication is essential to good work. From establishing the goal to providing

all the background data to bench-marking progress to getting input throughout

the process (ensuring that you don’t get to the presumed final presentation only

to find that you are completely off track) there needs to be a flow of information

146 Suda. 147 Wos, Liz, Director of Marketing, Better Banks and State Street Bank. Telephone interview November 9,

2009. 148 Lotterman. 149 Suda. 150 Wos.


50

among the team and between client and agency. However, opinions diverge as to

whether that communication needs to be face to face—or whether teams that

operate virtually function as well as teams that are colocated.

Paige Arnof-Fenn, Founder of Mavens & Moguls, a fluid network, prefers for the

project lead and client to be face-to-face (“it is really nice when a virtual company

can have a physical presence”), but that “the rest of the team can work from

anywhere in the world.”151

Many believe, however, that virtual teams need to start off together. As Iesa

Figueroa, who has made the switch from agency to client, says, “Being in-person

is critical in the beginning, as you are building the relationship and trying to get

the team to cohere.”152 A chorus of others agree: “Remote works best when you

have been in the trenches with someone at some point.”153 “A previous relation-

ship is more important if you are working remotely than if you are working in per-

son.”154 “It is easier to work virtually if at least some members of the team have

been through the fire drills and the battles together before.”155

However, as Peter Pappas, fluid network principal, adds, “That is the same in an

agency. You always feel more comfortable and more efficient with someone you

have teamed up with and partnered with in the past. If it is someone new, there is

a learning curve.”156

Lisa Schiavello, Executive Creative Director at Red Door Interactive, voices the

next-generation opinion. “We have no issue with the team not being in the same

place. We are a digital company, creating strategies that are out there, so they

can happen anywhere. Our collaborative teams can use technology to close the

gap on traditional ways of meeting and working together. In fact, we encourage

151 She then illustrates the value of that geographic diversity with a tale about making time zones work to your

advantage. “Our client was in Bangkok; the team leader met with the client, then did an email brain dump. When the people in New York and Boston woke up, the email was waiting for them. They worked until lunch, then turned it back to the person in Seattle. By 9:00 the next morning in Bangkok, the client had work waiting for them. They were amazed; we said we had people working round the clock.”

152 Figueroa. 153 Schiavello. 154 McFadden. 155 Pappas. 156 Ibid.


51

employees to work remotely two to three days a week; we have WebEx, Go-

ToMeeting, videoconferencing, and a dedicated website where we can dump

ideas, sort of a virtual war room…The days I work from home I am most produc-

tive.”157

“With the technology today, you can have virtual meetings like you are sitting in

the same room,” says Bevan Bloemendaal, Senior Global Director of Creative

Services at Timberland. “The new virtual meeting space that Cisco has is a fan-

tastic means of holding meetings.” However, he notes, “TV does add some

pounds.”158

Matthew Clark of The Boston Consulting Group, offers a few cautions. “Video-

conferencing is easier if you have worked together, but awkward anyway; some-

times you forget they are real people. Phone conferencing is even worse. People

wander off mentally, work on their email, etc. That is more true, the larger the

group. When you are just two people, everyone is equally on the hook for keep-

ing it going; the more people that are involved, the more likely they are to tune

out.”159 Arnof-Fenn agrees that there are occasions when “you need to have the

people around the table,” generally in a war-room situation to access information

and keep client and team on task for a rapid turnaround.160

Clark concludes, “Gen Y may be more comfortable with [working virtually]. Still,

there is something to be said for being locked in a room. It’s like a secret sauce;

certain things are really hard to get without co-location.”161

Looking ahead, agency head Deborah Lotterman sees the world becoming more

virtual. “In five years the agency world definitely will be more virtual. I will be

working with someone in California and someone in Japan—but we will have

worked together a dozen times, so we’ll have a shared commitment, kinship, en-

joyment, and trust. It is hard to get that over the phone.”162

157 Schiavello, Lisa. Executive Creative Director at Red Door Interactive. Telephone interview December 4,

2009. 158 Bloemendaal. 159 Clark. 160 Arnof-Fenn. 161 Clark. 162 Lotterman.


52

In sum: Nearly everyone likes face-to-face communication at some point in the

process; the question is how much—and how crucial it is. Some deem it essential

for kick-off meetings, brainstorming, presenting work—and even simply checking

in on a projects’ progress. Some put it on a nice-to-have basis, noting especially

an inverse relationship between shared history and the import of current proxim-

ity. And some have fully embraced the digital age, citing the host of electronic

aides—from texts to video conferencing to cloud computing—that keep teams

deeply connected without ever even having met.

In my observation, the degree to which alternate means of communication can

effectively substitute for face-to-face interchanges correlates directly with the

group comfort level with digital technology. (NOTE: The word “group” is espe-

cially critical to this remark; everyone involved needs to be equally at ease). I

anticipate that with the ascension of the media-savvy Gen Y, the need for in-

person meetings will dwindle, and perhaps evaporate. However, clear, constant

communication will remain fundamentally important to success.

3.4.4 Training and Tools

When discussing non-traditional, fluid or virtual agency models, proponents

nearly always promote the fact that their teams are built exclusively from sea-

soned marketing professionals. That begs the question: If traditional agencies

ceased to exist, where would the next generation acquire that seasoning?

Liz Wos, who is currently client-side, but was previously an account executive at

a large agency, feels the agency atmosphere is essential to strong marketing—

and that it is irreplaceable as an on-going training-ground and incubator. “You

need to be constantly around people just like you, people who are 100% market-

ing; I don’t think you can get that quality of thought outside an agency. Caterpillar

is here in Peoria, and they have a pretty humongous marketing department—but

it isn’t the same as an agency. They are surrounded by people who do trac-

tors.”163

163 Wos.


53

Another agency advantage: Agencies often offer their employees continuing edu-

cation; after all, keeping their employees fresh and up-to-date in evolving tech-

nologies is a form of capital investment. Lisa Schiavello, Executive Creative Di-

rector at Red Door Interactive, describes “a speaker series that we host with ex-

perts from various industries. They give interviews and Q & A sessions.” Red

Door invites everyone to these sessions. “We share what we know. We feel like

information changes so rapidly.”164

However, several people felt that what is being learned (culturally, not formally) is

not necessarily beneficial. Describing her own transition from a 2500 person firm

to a 20 person firm, Elaine Leonetti says, “In a large corporation if someone isn’t

pulling their weight they can hide; you can’t hide here. We all have to contribute;

if you can’t step up and step in, there is no one to take your place.” She contin-

ues, “This is a huge culture shift; if you come with a habit of politicking from Cor-

porate America, we aren’t that way. No one cares if you get to be VP or Director;

we don’t have those layers. Some people have difficulty accepting that—and we

have trouble accepting them if they can’t leave that baggage behind.”165

Clients can also resent having their money spent on training. As a senior adver-

tising person at UBS AG comments, “Agencies traditionally have a hierarchy of

talent of different levels; it is how they train people. I am less interested in the

assistant AE; I want access to the right people [not the children]. More clients are

going to be like me, so agencies need to look at the model to make sure how

they grow their talent, without making it the clients’ job to be part of the training

program.”166

The bottom line here is that while hands-on training is clearly essential, and

agency advocates feel it is a benefit of the traditional agency structure, clients

don’t value it—or at least not enough to pay. In the new world, practitioners may

have to get their continuing education on their own.

164 Schiavello. 165 Leonetti. 166 Senior advertising person, UBS AG.


54

3.4.5 Global Reach; Local Knowledge

“Global brands will still need a global network to get a global reach. Will that al-

ways be the best creative solution? I don’t know.”167

Charles Hughes

Group Creative Director, The Clarks Company of North America

All marketing is local. So to be effective, it is clear that brands need a local pres-

ence. The question for clients working internationally—or even across the US—is

whether that presence is better established through a global network or through a

series of local partnerships.

“When we are [advertising] in Asia, and we want to know if the idea works in

China, we want people on the ground there—it is different. You start in English

and don’t translate, you transcreate,” says a senior advertising person at UBS

AG. But she is clear that those people need to be connected via the global

agency. “You need someone who understands the culture, who understands

UBS, who really wants to make the communications relevant. Working with a

local agency may be cheaper, but from a consistency standpoint it doesn’t

work.”168

Elaine Leonetti agrees that as a US-centric agency, her company cannot always

meet the needs of multi-national corporations. “Global clients often believe that a

large agency is the only one that can take them globally. In some instances they

are right. We cannot be all things to all people and we will admit that. Those

agencies have in-country offices that really understand the culture. It’s tough

enough to market domestically; we don’t have the bandwidth or experience to go

into international markets like a full service agency.”169

Manuela Amaro, Marketing Director, TAM Airlines, disagrees; she has switched

from a global agency to source essential local knowledge directly through individ-

ual agency partners, a strategy we will discuss at length in Section 4.2.2.4.

167 Hughes. 168 Senior advertising person, UBS AG. 169 Leonetti.


55

Taking all this into consideration, it is interesting to note that of my interview sub-

jects, only two multinational clients found value in global networks (and six listed

them as something that is “broken”), whereas four clients and nine respondents

overall deemed local knowledge critical. Speaking of his new Asian venture, Mat-

thew Connor writes that “a local physical presence is critical for knowing the mar-

ket conditions and servicing the client credibly.”170 Indeed, an ability to really ac-

cess what local people think, feel and do is essential to marketing success—but

how that knowledge is best gained is open to debate.

3. 5 Conclusion to Chapter 3 As presented in Chapter 3, multiple data points—articles in business magazines

and trade journals, employment and revenue statistics, casual conversations and

formal interviews—show that the advertising industry is in a state of flux. The

economic debacle of 2008 may have hastened some shifts, but the true change

agent is the rise of the digital age. It has empowered consumers and thus

changed the way brands need to market to them, rendering it virtually impossible

for an agency to have up-to-the-minute expertise in all critical marketing silos.

Concurrently, it has enabled people to work from anywhere; anyone can access

the best expertise (and those experts can find their customers); teams can form

across geographic boundaries; and many of the interstitial layers agencies place

between the client and the work are no longer necessary. Lowering the body

count lowers costs, which is attractive to most clients in almost any economy.

Yet the question remains: What is the optimal agency model for this new land-

scape?

Both clients and agency personnel describe the facets of traditional agencies that

must change, and those that must remain. Most interestingly, the issues around

which there is general consensus are precisely those that new digital technolo-

gies either caused or can alleviate: the means of marketing, collaboration and

cost.

There is also consensus (if not absolute agreement) around the factors that are

essential to either good work or good business: strong relationships (both with

170 Connor.


56

the client and within the team), the right corporate culture, clear communication,

and a combination of possessing local knowledge (and the ability to deploy it)

while coordinating efforts globally.

These data points then—both pro and con—form the framework for Chapter 4, an

analysis of four broadly painted agency models.


57

4.0 Analysis: Alternative Agency Models

“It is certain that if you were starting the business today no one would ever come

up with the model we have now.”171

Keith Reinhard


“Different has already been done…whatever the model, it is bound to become

obsolete if it doesn’t constantly evolve and adapt to constantly changing de-

mands.”172

Carlotta Brentan

Account Executive, Saatchi & Saatchi

Yes, the industry is shifting—but what comes next? Examining the current land-

scape of the agency world and the marketing universe, Chapter 3 identifies spe-

cific data points that are essential to any discussion of the industry’s future.

These break apart the agency eco-system into discrete concerns and considera-

tions. In Chapter 4, those data points form the basis for analyzing the models

currently at work and some new models under consideration.

While there is an almost infinite array of variations in size, composition, expertise,

target client, and so forth, broadly, these models fall into four primary organiza-

tional structures:173

• The large network/multinational agency

• Specialized agencies that team to serve a client

• Fluid networks organized by a small core team

171 Reinhard, Keith. Chairman Emeritus, DDB Worldwide. Interview November 5, 2009, New York City, New

York. 172 If I launched an agency. Campaign. Posted September 25, 2009; downloaded November 5, 2009.

http://www.campaignlive.co.uk/news/features/943002/I-launched-agency/ 173 Some companies of course, prefer to keep the bulk of the work in-house. Describing his department, Char-

les Hughes, Group Creative Director at the Clarks Company of North America, says “We handle everything from print ads to web design, emails, packaging, all the in-store signage, flash demos, 10,000 square-foot trade show booths, every touch point imaginable. And we do not use an agency.” Hughes was formerly a Creative Director at Pierce Promotions/Omnicom. “Having been on the agency side for many years looking back, the agency brings a good deal of creative energy, but I think on the client side we have a better grasp of the basic DNA of the brand in a way an outsider never can.”


58

• Virtual services, otherwise known as crowdsourcing

In the following pages we plumb these primary models, analyzing their strengths

and weaknesses in light of the core issues raised in Chapter 3. My belief: that the

successful agencies will be those that address the new marketplace realities and

embrace the new possibilities technology provides, while retaining the best facets

of the old order.

4.1 In defense of the large network/multinational “This may be the time to destroy the vertical organizational structures, retrofitted

with ad hoc and matrix overlays, that encumber companies large and small…Turf

wars kill promising projects. Searches for information aren’t productive, and

countless hours are wasted on pointless emails, telephone calls and meet-

ings.”174

McKinsey, Leading Through Uncertainty

December 2008, Bryan & Farrell

“You need a global network to protect a global brand.”175

Senior Advertising person

UBS AG

Prior to exploring the new models—which appear to hold the future of the indus-

try—we should first consider the issues and advantages of the reigning model.

4.1.1 More than the status quo

“I think about the agency as an organism. It grows and changes. You add people

and shed people. But it has a process and a shared history, a shared knowl-

edge.”176

Deborah Lotterman

Executive Vice President, Managing Director and ECD, LehmanMillet

174 Jones, Giles Rhys. Manifesto for a new Agency. Posted on Slideshare August 2009; downloaded November

17, 2009. 175 Senior advertising person, UBS AG. Telephone interview January 5, 2009. 176 Lotterman, Deborah. Executive Vice President, Managing and Executive Creative Director. LehmanMillet, a

HealthSTAR Affliliate. Interview November 10, 2009, Boston, Massachusetts.


59

Although “everyone” agrees that the industry is in trouble, many voices confirm

the primacy of the traditional agency, stating that news of its death is greatly ex-

aggerated. Not only does the traditional model offer the strengths outlined in Sec-

tion 3.4—relationships, culture, collaboration, commitment, and communication—

it also offers a proven infrastructure that gives clients security.

4.1.1.1 Size Matters

Clients—especially those with national and multinational needs—count on heft

and breadth of reach to adequately deliver their message.

Amie Doran, Senior Vice President, Director of Advertising and Promotions, Citi-

zens Financial Group, recently oversaw an agency review. Describing their selec-

tion process, she says, “The five agencies who made the cut were all pretty big;

we do 3,500 ads a year.”177 She needed to feel secure that the agency had the

infrastructure and resources to handle any amount of work she threw at them.

Global agency EVP/ECD Craig Markus agrees—the infrastructure matters to

global clients. “The network does help in serving global clients. It gives you the

resources to service the client, keep them engaged, and deploy the message.

Otherwise they all fend for themselves. The infrastructure is in place to service a

big client.”178

Notwithstanding the layers of bureaucracy, the seminal campaigns and multitude

of awards won by large agencies speak to the strength of the creative. As indus-

try veteran Lisa Schiavello says, “A big company does as well for the client as a

small company. At Digitas the teams were so intimate it was like having a lot of

little agencies under one roof. With the right leadership you can get an excellent

product—and the parties are better.”179

Often, the budgets are better, too.

177 Doran, Amie. Senior Vice President, Director of Advertising and Promotions, Citizens Financial Group.

Interview February 4, 2010, Westwood, Massachusetts. 178 Markus, Craig. Executive Creative Director/Executive Vice President at McCann Erickson & Tag Ideation.

Interview November 5, 2009. 179 Schiavello, Lisa. Executive Creative Director at Red Door Interactive. Telephone interview December 4,

2009.


60

There is another powerful incentive for clients to choose name-brand agencies:

the safety and confidence that comes from a name brand. Lars Hemming

Jorgensen has gone from being a shop of 40 to being a shop of 250—and now is

preparing to start again. Though he wants no more than 20 people at his new

agency, he believes his success will come in part through his “big agency back-

ground; [I am] safe for those clients who care.” He illustrates his point with a

story. “When we founded Large, there were just the two of us and we rented

space from another agency. If clients came to visit we would take the other

agency’s name off of the door, so they thought we were a real company—not just

the ‘Jim and Lars Show.’ People want to see that you are successful. They want

to buy into the success. Successful agencies with a big name will do a good job

because they don’t want to hurt their reputation. They have a brand. If an agency

of only 5 people messes up, then they just change their name.”180

Jorgensen found even a 40-person group wasn’t substantial enough for some

clients, “When we started, no one wanted a 40 man company to do a big project.

When we [Large] joined Story, some clients gave us twice as much work over-

night just because we now were 250. In truth we had not really quintupled our

capabilities; we had skills the others didn’t, so our guys were a little over-

whelmed—because of course you say yes.”181

In short: To many clients, size matters—even when the capabilities are the same.

4.1.1.2 Internal Shifts

Still, the inherent advantages of the traditional model do not mean agencies can

or are maintaining precisely the status quo. Many agencies and agency groups

are making changes to address some or all of the issues presented in Section

3.2: the digital revolution, the reliance on metric-based measures of success, the

calls for greater cost-savings and new compensation models.

Nearly every agency worth the name has added digital capabilities of some kind.

For some, it is a new department, for others a skill set that is part of the core

180 Jorgensen, Lars Hemming. Partner, Chief Creative Officer, Story Worldwide. Telephone interview Decem-

ber 2, 2009. 181 Ibid.


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creative. As we examined in Section 3.3.3, many groups are exploring alternate

compensation models, including quantitatively measured performance-based

pay.

As for cost-savings, some big agencies are reorganizing their internal work flow.

For instance, one management consultant interviewed stated, “Leo Burnett is not

outsourcing creative but centralizing it. It used to be that the Detroit auto manu-

facturers would go to Leo Burnett in Detroit, they would handle the account from

beginning to end; they would figure it out together. Now the account people are

still in Detroit but creative is happening in central locations in different parts of the

world.”182 Presumably cost-savings stem from this shift.

4.1.1.3 Starting from scratch

“Innovation rarely comes from inside the industry. You become a conservative

because you have something to conserve.”183

John Winsor

CEO, Victors & Spoils

Some people believe that to build an agency that functions in today’s environ-

ment, you need to start from the ground up.

Creative legend Jorgensen notes that “lots of [new] multidisciplinary firms start as

on-line web agencies, then are transforming themselves into much bigger content

providers successfully. Because they are starting from a user-centric place they

are successful. Their approach is that power lies with the audience, so they need

to create content so good that the audience seeks it out. That is very different

from the mindset that we do something jazzy that gets attention when we blast it

out—and the buzz ends when media budget ends.”184

In founding R/GA Bob Greenberg took that idea one step further, creating an

agency “built from the ground up to meet the needs of digital age clients and

brands.” Indeed, the agency declares itself “The Agency for the Digital Age” and

Adweek named it “Digital Agency of the Decade.” Just as in a previous era agen-

182 Management consultant to Fortune 50 companies. Telephone interview November 24, 2009. 183 Winsor, John. CEO Victors & Spoils. Telephone interview March 1, 2010. 184 Jorgensen.


62

cies built global businesses designed to market to the passive television con-

sumer, R/GA has organized its capabilities to maximize marketing to the engaged

digital consumer, with three strategic disciplines and three creative disciplines all

married to technology and bracketed by account teams and internal production

capabilities.185

Clearly the R/GA format answers many of the issues posed by new media and a

new consumer attitude. These are not people whose standard answer is a 30-

second spot. However, the model does not seem to address many of the other

issues identified in Sections 3.3.2-3.3.4—top heavy teams, solutions that are

married to the skill sets found within the agency, the excess hours, expenses and

turf wars that come with layers of bureaucracy, or the compensation model. In

short, it appears still to be a traditional agency, albeit an agency for the digital

age.

4.1.2 Analysis

R/GA and other agencies show that the model can be remade to produce rele-

vant content in the digital age. Yet as set forth in Sections 3.3 and 3.4, the struc-

ture itself—which intensifies in all ways good and bad in direct proportion to an

agency’s size—has inherent positive and negative attributes. Additionally, some

areas that either agencies sell as advantages or clients perceive as advantages

on closer examination turn out to be detriments. Yet, if the client believes they are

valuable, does the truth matter?

4.1.2.1 An expertise in establishing and nurturing strong client relation-

ships.

To succeed, any business needs solid long-term relationships with clients or they

expend proportionally far too much effort keeping the pipeline filled relative to

doing the work. People like working with people they know and trust. Agency ac-

count executives, for the most part, have elevated client service to an art. The

middle-manager decision makers enjoy the attention and perks doled out by large

agencies; it is their bosses who know the bill comes out of their budget, and so

who view the added luxuries as a waste of money. This is an undisputed strength

185 R/GA website. Accessed February 7, 2010. http://www.rga.com/about/featured/our-model


63

of large agencies; while not impossible, such lavish service is more difficult for

smaller, less padded entities to achieve.

4.1.2.2 A sense of security as a trusted provider for clients.

Many clients find security in the large agency’s solid, organizational structure.

“McCann Erickson, Young & Rubicam, Ogilvy, etc. all benefit from their ability to

offer structure, proven success and large-scale solutions to big brands that

need…to feel safe about spending millions with an agency.”186 Sole-proprietor

Maureen Suda concurs. “Certain clients find that using a large multi-national firm

validates their own company. [For them,] even though I have the experience and

even if [an agency provides] more resources and infrastructure than the client

needs, I am not the right fit. It is a brand orientation.”187

Interestingly, this security may also extend to personnel. Perhaps because they

are less well capitalized, anecdotal evidence suggests that smaller shops have

had a harder time weathering the evaporation of business over the holocaust

year 2009. “Two years ago I interviewed for a project manager and I got 2 re-

sumes; last month I interviewed for the same position and got 75. Most are peo-

ple from small and independent shops; right now, big agencies feel safer.”188

4.1.2.3 A well-oiled machine

When everyone has clearly defined expectations and processes are in place,

there is far less possibility of things falling through the cracks due to human error,

fatigue or simple over-extension—there is always someone else to catch the

problem. However, all those checks and balances tend to slow production rather

than speed it, so it could be considered a mixed advantage.

186 Corcoran, Sean. The Future of Agencies: What do you think? The Forrester Blog for Interactive Marketing

Professionals. Posted November 16, 2009; downloaded January 2, 2010. http://blogs.forrester.com/marketing/2009/11/the-future-of-agencies-what-do-you-think.html ; Arash Zafarnia commenting.

187 Suda, Maureen. Principal, Suda Communications, LLC. Telephone interview November 12, 2009. 188 Magliozzi, Alyson Young. Director of Marketing Operations at a privately held, New Hampshire-based ap-

parel company. Interview November 20, 2009. North Andover, Massachusetts.


64

4.1.2.4 An incubator of strong teams

Great ideas are often sparked by chemistry within the group—and the level of

comfort that can produce that chemistry may come from having worked together

over years. However, large agencies have many creative teams and not all are

equally talented. The EVP/ECD from a multinational agency tells me, “Especially

with big brands it’s my responsibility to make sure I have the most talented teams

working on their business. Of course, that means they may have to move off

other accounts.”189 The inverse is also true; as another former big agency

EVP/ECD notes, “Agencies say they pick teams who really fit the client, but there

are dogs in every agency who are shifted around from account to account;

someone ends up with them.”190

4.1.2.5 Dedicated teams that know the client business inside out

Clients feel that with a large agency they will get a team they can learn to love

and trust—and who will know their business better than they do themselves. And

to a certain extent that is true. Certainly agencies build teams for key clients. Cer-

tainly they try to hold onto those teams. And sometimes, the members of those

teams stay on the account far longer than the client’s own team members, mak-

ing the agency the holder of all institutional knowledge. However, just as often,

team members are presented at pitches, used to produce the high level creative,

then moved on to other accounts. They also switch agencies, move, have babies

and retire—in short, are prone to all the forces of the work-a-day world. It is also

an open secret that agencies rely heavily on armies of freelancers and consult-

ants to deliver the end products. And sometimes the consultant the client turned

down because the project warranted an agency, turns out to be the very person

the agency outsources to. Of course, “the client is unaware of the relationship.”191

Medical device marketer Iesa Figueroa is eloquent on the issues from the client

perspective. “The problem with an agency is that you don’t know who is doing the

work. You have 25-year-old account reps who take care of you, and they talk to

the people who are doing the work, so the creatives don’t understand what you

want. I would rather talk to the creatives myself…. Plus, your team changes and

there is no control on your part. The agency moves the good people onto a pitch

189 Markus. 190 Dawson, Karen, Principal, Two Blue Spruce. Interview November 13, 2009. Newburyport, Massachusetts. 191 Suda.


65

because your account is stale. All the exciting stuff is over, so you get the dregs

doing your work.”192

Obviously, this is not the universal experience, but it certainly holds true in many

instances. I believe that other models deliver just as strong a chance of a lasting

dedicated team—with much more direct client contact.

4.1.2.6 A single integrated system that spans the globe

Global clients require a uniform brand message or experience “transcreated” for

local markets. UBS AG finds that “When you have a single brand that you want to

ensure has consistency around the world, it is more efficient to have one agency

than to have different agencies with different cost structures.” It is interesting to

note that this marketing executive still feels the need to use other agencies to

market specific product areas that require specialized knowledge, because “it is

not worth the time and energy to get generalists deep in a product area; a spe-

cialist is just more efficient.”193

More importantly, as we saw in Section 3.3.2, territorialism and economic disin-

centives often prevent global agencies from working as a whole. In short: while

global brands certainly need reach into all their markets—and may find it simpler

to execute via one agency—sometimes today’s global network may be better on

paper than in practice. This is an area of opportunity for holding companies going

forward, as Chip Bergh explained in Section 3.3.2.

4.1.2.7 Many levels of bureaucracy which slow production and add ex-

pense

No one likes bureaucracy. It frustrates creatives: “I find the AE’s are like a Chi-

nese whisper; eventually after five times back and forth, you ask the AE to just

get out of the way and speak directly to the client.”194 “With agencies so much

time is wasted presenting ideas internally up and up and up a level.”195 It frus-

trates management: “At a big agency there are a lot of people touching the work

192 Figueroa, Iesa, Marketing Director, Insulet Corporation. Interview September 30, 2009. 193 Senior advertising person, UBS AG. 194 Jorgensen. 195 Dawson.


66

who don’t add value to work product.”196 And it frustrates clients, both small

(“Firms that have full service are typically larger; I don’t want to pay for the over-

head and I want to deal with the principals.”)197 and large (“[We don’t need the]

assistant product manager facing off the with the assistant account executive.

That’s too many layers that I don’t need to pay for.”)198

Clients are beginning to revolt against the bureaucracy. As one interviewee re-

counts, “MasterCard works with McCann, and they have a continual frustration

with red tape and not meeting deadlines. They may need McCann for the mass

media portion, but for a lot of other work, they are going elsewhere, to small

companies like RAZR [which is her company].”199 While the layers may stem from

positive developments—new clients, new expertise, greater oversight—in the end

they just slow things down—to the frustration of everyone involved.

4.1.2.8 A hard time thinking in new ways

Agencies form around their ability to deliver a certain thing—and should that thing

not be exactly what the client wants or needs, too bad. A former producer at an

agency with offices on four continents notes, “They are a big agency with a big

price tag and they always try to sell the product that they have. Why? It is what

they know how to do and it is better for them financially.”200 As Section 3.2.1.2

hopefully made clear, there is no place in today’s world for one-track thinking.

Today evolution occurs in the time it takes to gather the team in the conference

room; this then, may be the biggest issue with large agencies. Even assuming

the pace of change eventually abates, it may be too late.

4.1.2.9 Conclusion

Big agencies were designed to deliver creative via clearly defined media to a

passive audience. In the process, they developed many core strengths that the

industry would be fools to relinquish. Moreover, many clients and employees

want the security of an impressive organization. But the deliverables have shifted

to insights, innovation and creative across platforms and in ways only bounded

196 McFadden, Joleen. Senior Account Director at RAZR Marketing. Telephone interview November 23, 2009. 197 Sampson, Sara. Senior Vice President Marketing and Business Development, Incentium. Telephone inter-

view November 22, 2009. 198 Senior advertising person, UBS AG. 199 McFadden. 200 Ibid.


67

by imagination. And clients—budget constrained and anxious for their brands—

are going to be more proactive and less amenable, no matter how hands-on the

client service. Money spent will have to deliver results.

Will large agencies continue to exist? Absolutely. But they will need to evolve.

Discussing the state of the industry, Lars Hemming Jorgensen says, “People are

powering forward at incredible speeds. Some [agencies] will definitely break be-

cause they can’t hedge their financials on two big television ads a year. The sec-

ond that all the big agencies crack, a new leaner, meaner, sharper ‘big’ agency

will emerge, one that is more aggressive and smarter about the people they

hire.”201 It is interesting to note that Jorgensen deliberately built his agency up to

250 people “because he craved the power rush” and is now leaving it to start a

new, nimble group with a maximum of 20 employees.

The industry is clearly trending smaller.

The challenge will be for individual agency powerhouses to recognize the need to

change. Commenting on an industry blog, Edinburgh-based digital planner Jim

Wolff writes, “Whether a scientific, technological, cultural or creative revolution,

the impetus to change hardly ever comes from the establishment, as they already

have vested interests in the status quo. It’s not until something new comes along

and really threatens that status quo that they make any significant changes, and

usually too late.”202

Once recognition occurs, actual evolution poses a further—perhaps insurmount-

able challenge. Many industry experts think reinventing an existing enterprise is

next to impossible—the issues are baked into the DNA. As Michael Conrad, For-

mer Vice Chairman and Chief Creative Officer, Leo Burnett Worldwide, observes,

“You have to have the guts to shrink and start again, rather than trying to protect

201 Jorgensen. 202 Malbon, Ben. Where does the Agency end and the crowd begin? BBH Labs. Posted February 3, 2010;

downloaded February 7, 2010. http://bbh-labs.com/where-does-the-agency-end-and-the-crowd-begin; Jim Wolff , digital planner at The Leith Agency, commenting.


68

your turf.”203 Otherwise, you’ll find yourself out of business. Bob Greenberg, foun-

der of digital agency R/GA, concurs. “People struggle with how to change from

one thing to another; especially traditional agencies. [Agencies] will need to

downsize then build up again from scratch. To do that, they need a visionary

CEO.”204 If they keep the people that are part of the problem, then Greenberg

doesn’t believe change can happen.

I believe change will happen—that some of the large agencies will succeed in

transforming themselves (albeit in a far more porous/transient configuration) and

splinter groups from others will form boutique firms and fluid networks which will

in turn grow and shift and mutate…perhaps only to grow large again.

4.1.3 A word on holding companies

Holding companies per se are out of the scope of this thesis, but it seems impor-

tant to mention them here.

Tomorrow’s agencies may look nothing like today’s agencies—or they may look

very similar, with different labels on the department doors. Either way, the agency

itself is unlikely to disappear, and as long as agencies exist, holding companies

will too.

While they often position themselves as a way of bringing clients a fuller product

offering of “sister agencies,” implying creative synergy and cost savings, in truth

economics—the fact that each agency is ultimately responsible for its own bottom

line—currently works against any meaningful cooperation. As previously dis-

cussed, that could change, to the benefit of clients and agencies. However, hold-

ing companies’ true utility is as a financial instrument, a means of monetizing the

life’s work of the men and women who found and run independent shops. That

need—and thus utility—is likely to remain strong as long as people continue to

want to cash out of the businesses they start.

203 Conrad, Michael. Former Vice Chairman and Chief Creative Officer, Leo Burnett Worldwide; President of

the Berlin School of Creative Leadership. Interview January 20, 2010, New York City, New York. 204 Greenberg, Bob, Chairman/CEO/Global Chief Creative Officer, R/GA. Agency for the Digital Age. Lecture to

the Berlin School of Creative Leadership. New York City, New York. January 19, 2010.


69

4.2 A team of specialized agencies In May 2007, Adweek reported that the majority of brands want to use an “open

source” model of agencies instead of a one-stop shop. Danielle Sacks, blogging

on Fast Company.com, noted, “As both the media landscape and consumers

become more fragmented, big bulky ad agencies like the BBDO’s and Y&R’s of

the world can’t get at the nuance required by marketers. Instead, cobbling to-

gether a customized team of smaller firms that flaunt expertise in areas like eth-

nography and digital, is the new buffet-style roster of choice.” She adds, “This

isn’t exactly what the Omnicoms and WPPs had in mind when they went off on

acquisition sprees, and this certainly isn’t going to help their bottom line.” Her

benediction: “May the best idea producers and executors win.”205

Three years and a lifetime of cataclysmic change later, we see the model prolif-

erating.

4.2.1 Specialized agencies

“In general there is a trend towards people breaking into smaller specialized

groups.”206

Reed Deshler

Principal, AlignOrg Solutions

“ We need to be very specialized; there is opportunity between the frontiers.”207

Vicente Garcia

Planner & Creative Director, Kardumen Digital Sympathy

“It is hard to do it all in one place.”208

Amie Doran

Senior Vice President, Director of Advertising and Promotions

Citizens Financial Group

205 Sacks, Danielle. Report: The Open Source Ad Agency Model. FastCompany.com Posted May 14, 2007 and

February 8, 2008; downloaded October 14, 2009. http://www.fastcompany.com/blog/danielle-sacks/culture-vulturist/report-open-source-ad-agency-model

206 Deshler, Reed. Principal, AlignOrg Solutions. Telephone interview November 24, 2009. 207 Garcia, Vicente. Planner & Creative Director, Kardumen Digital Sympathy. Interview April 8, 2009 Berlin,

Germany, 208 Doran.


70

A corollary to the team of specialty agencies is the specialty agency itself. Indus-

try specialization has long been the norm; there are healthcare shops, tech

shops, consumer products shops. Now specialization has spread to delivery

channels. Not only are there brand specialists, digital specialists, CRM special-

ists, and production houses—but even groups that only do the creative concept-

ing, then let the client figure out how to implement it.

Commenting on a February 18, 2009 Advertising Age article Chris Arnold, of

Symple, London, writes, “A new talent incubator is about to launch in London. Not

only is it taking the best of the young talent and cultivating it, but it’s the first of a

new model of agency…a solus creative department (launching with 28

staff)…this new venture sells its talent worldwide to both agencies and clients

direct. It’s also set itself up as a ‘not for profit’ business, so it legally has to rein-

vest all profit back into talent…Within a week of its launch leaking out, over 200

grads had asked for interviews.”209

Anomaly is another type of specialty group. Founded 2004 they embrace an en-

trepreneurial business model, viewing creative ideas as intellectual property

which they license to clients, then find ways to execute. In some ways they are

similar to R/GA in having been created specifically to meet the new realities of

marketing; the difference is that Anomaly largely pulls together the resources

requisite for implementing their vision on a project-specific basis. As described by

Campaign, “[Anomaly’s] positioning sounds like a bunch of clichés, because so

many agencies are talking about the need to re-gear their approach around the

same principles: ideas-led, media-neutral, integrated, multi-disciplinary. Anomaly,

though, launched with these principles at its core.”210 As we noted earlier, in most

of life, when creating a new paradigm it is easier to start fresh than to recalibrate

old attitudes.

One Anomaly client remarks, “When they opened they were very unagency-like.

Now they have account people and structures and budgets—but their creative

209 Rooney, Jennifer, Laid-off copywriter turning blog site into job site. Advertising Age, May 06, 2009; Acessed

May 06, 2009. http://adage.com/results?endeca=1&return=endeca&search_offset=0&search_order_by=score&x=4&y=5&search_phrase=laid-off+copywriter+turning+blog+into+job+site

210 Anomaly website. Accessed January 3, 2010. http://www.anomaly.com


71

vision hasn’t gone away.”211 This calls into question the practical balance be-

tween fluidity and scalability—at what point do the harsh realities of conducting

business war with the ability to keep an operation lean and unique? As Anomaly

grows, will it calcify?

Of courses the impetus for such agencies has come from client desires. At the

September 30 Agency Evolution event, Will Harris, Marketing Director of global

telecommunications behemoth Nokia, stated, “We’re looking at smaller, agile

agencies with smart people and cohesive offerings…we see the right agencies as

partners, not suppliers.”212 Since Nokia is the kind of brand that the multinationals

used to count on, this pronouncement is particularly notable as a harbinger of a

true industry shift—or perhaps it simply feels like the au courant thing to say;

Nokia has just signed with Wunderman Worldwide as their digital agency, which

makes one wonder about the sincerity of their interest in smaller agencies.213

Marketing Merck Serono worldwide, Stacey Minton definitely does spread the

work among many smaller groups. “I like working with different groups because it

pushes us [and pushes our thinking]. We work with three good agencies, plus

specialty agencies [for projects] like branding or reputation audit. As we bring in

more specialists we are seeing levels of expertise that we really like.”214

Blogging on the topic, Brad Abare perhaps best sums the client’s view, albeit as a

plug for his own company. “Do you really want an agency advising you to invest

your dollars in the campaigns they are staffed to create? Or work with a group

that is not actually staffed to implement the work, but rather one that is staffed to

advise you on the most effective route—then connect you to the most effective

implementers for the choice.”215

211 Client of Anomaly. In-person interview November 20, 2009. 212 Agency Future. Agency Evolution Report. Published September 30, 2009; downloaded October 14, 2009.

www.agencyfuture.com 213 Connor, Matthew. Executive Director of Wunderman World Health. Skype interview March 7, 2010. 214 Minton, Stacy. Director Management Communications at Merck Serono. Telephone interview November 21,

2009. 215 Abare, Brad. Ad Agency Model is Broken, Duh. Think Personality.com. Posted April 9, 2007; downloaded

October 14, 2009. http://www.thinkpersonality.com/archives/2007/04/gency_model_is.html


72

Many clients—including Fortune 100 companies—apparently think in today’s

multi-channel world, assigning each piece of work to true experts is the prudent

move.

4.2.2 The concept in practice

“The marketing universe is expanding with the speed of light. Even multi-agency

groups find it too hard to keep track of the Big Bang that has been taking place in

channels and specializations. So, businesses need to work with multiple agen-

cies to obtain best-of-class solutions in each field.”216

Marc Amaral

Writing on the Forrester blog for Interactive Marketing Professionals

This trend towards signing an agency of record (or doing your key thinking in-

house) then distributing tasks among a series of specialty agencies is similar to

today’s approach to medicine: You need a team of specialists to solve a problem.

Below are the ways some companies have used such teams—both from desire

and necessity and with mixed results.

4.2.2.1 Procter & Gamble: Brand Advertising Leader

Procter & Gamble is the world’s largest multinational consumer goods company

and the eighth largest corporation in the world by market capitalization. Head-

quartered in Cincinnati, Ohio, the company operates from hundreds of locations

worldwide and employs more than 138,000 people with an annual revenue of $83

billion dollars.217

Procter & Gamble has initiated a new system of working with agencies that is

being adopted by most of their global brands. Known as BAL (or Brand Advertis-

ing Leader), it begins with an agency of record which serves as the primary orga-

nizer for ideas and execution. However, the agreement insists that the agency

engage specialist groups in each area. Chip Bergh a Procter & Gamble Group

President, explains that “they are like the general contractor building a house.

216 Corcoran; Marc Amaral commenting. 217 LinkedIn website. Accessed and cited throughout the editing process, February-March, 2010.

www.linkedin.com


73

They hire the roofer, the painter, the carpenter. They are expected to bring the

best talent to the business, and they are responsible for the result.”218

“We try for a network approach to solving our business needs. Our goal is to get

the best team we can get [for every brand] in every market. And it is a real team.

The players may come from different places, but they all have to play nicely.”219

The agency of record receives a single negotiated check to cover a laundry list of

initiatives. Their task is then to identify the best talent across multiple agencies to

ideate and execute the initiatives.

Bergh continues, “We have the right to veto a particular choice. Since we are

such a global brand it is important to have strong global capacity. Lots of these

specialized agencies don’t have the breadth; they may be really good in Northern

Europe but have no people on the ground in Latin America [in which case we will

insist on someone else]. Of course, in some specialties no one really has a global

reach, so we have two agencies.”

“Actually a lot of our best ideas are not from [the primary agency]—the traditional

source—they are from the other players.”220

4.2.2.2 McDonalds

McDonald’s Corporation, together with its subsidiaries, franchises and operates

McDonald’s restaurants in the food service industry worldwide. Its restaurants

offer various foods and beverages. As of December 31, 2008, the company op-

erated 31,967 restaurants in 118 countries, of which 25,465 were operated by

franchisees; and 6,502 were operated by the company.221

“If McDonald’s had their way there wouldn’t be 150 agencies,” states Matthew

Allen, vice President and Account Director, Arnold Worldwide. Allen is in charge

of Arnold’s work on the McDonald’s account throughout the Midwest United

218 Bergh, Charles V. Group President, Global Personal Care, Procter & Gamble. Interview December 15,

2009, Boston, Massachusetts. 219 Ibid. 220 Ibid. 221 BusinessWeek Company Overviews. Accessed February 9, 2010.

http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=27003


74

States. He explains that the Midwest includes 16 markets. Two large agencies

team with a patchwork of local agencies to produce the work, delivering truly tai-

lored promotions on the same product. Two additional agencies and a national

CM firm work on the account from a national perspective.

“The franchisees are really important, and Leo Burnett (one of three agencies

responsible for national advertising) doesn’t know that much about Boston, or

Nashville or Ashville. The local agencies do creative with a local feel. That is es-

pecially important for a brand like McDonald’s, which doesn’t feel very local.”

The agencies are expected to work together. “We share calendars, successes,

creative. If something is working well in one area. McDonald’s expects we will

share with the others. They own whatever we produce.”222

4.2.2.3 Citizens Financial Group

Citizens Financial Group, Inc. is a $160 billion commercial bank holding com-

pany. Headquartered in Providence, R.I., it operates in 12 states across the

northeast of the United States.223

Amie Doran, Citizens Senior Vice President, Director of Advertising and Promo-

tions, is clear that to reach today’s customer, the thinking has to be broad. “For

any company today to be thinking that they are doing a good job, they need to be

thinking of every media outlet.” She believes that is virtually impossible within a

single agency, explaining, “When we were paying for creative development, on-

line ideas were always out of scope and cost-prohibitive—they weren’t part of the

retainer, so the net result was [either we didn’t use them or they were very ex-

pensive].”224

Thus, after a ten-year relationship that never went under review, Citizens Finan-

cial recently decided to move away from their agency of record, a $1.5 billion

agency with offices in 75 countries. While they have retained a similar agency as

their agency of record, they have now decoupled media and production, citing

222 Allen, Matthew. Management Supervisor, Arnold Worldwide. Interview December 9, 2009, Boston, Massa-

chusetts. 223 LinkedIn. 224 Doran.


75

specialists’ ability to deliver greater cost savings and expertise. They also have

unique partners for merchandising (both interior fixtures and promotional sign-

age), direct mail, online and advertising AOR.

As Doran notes, while there is an opportunity for greater cohesiveness when

brand/marketing communications strategy is managed out of a single shop, in

reality specialized and boutique shops deliver greater competency at lower cost.

“This suggests a real opportunity to consider other models for managing and

outsourcing to partner agencies as ‘back office’ shops—realizing the best of stra-

tegic integration with expertise and efficiency.”225

4.2.2.4 TAM Airlines

TAM is the leading domestic airline in Brazil, flying to 42 destinations in Brazil

and 18 destinations abroad; it reaches another 35 destinations through regional

alliances and a subsidiary. 2006 annual revenue was pegged at 7,345 million

BRL. TAM was the first Brazilian airline company to launch a loyalty program.

Currently, the program has over 5.5 million subscribers.226

With destinations in 18 foreign countries and code-sharing partnerships that link

to 64 more, TAM Airlines needs to market broadly outside Brazil. But they have

found greater precision, flexibility and cost-savings by working directly in each of

those markets, rather than through a single global agency.

Manuela Amaro, TAM’s Marketing Director, explains, “It is a big mistake to talk

about the economics of being serviced by a global agency; the global communi-

cations are all that ‘blah, blah, blah.’ That is why I just broke my global con-

tract.”227

Instead, TAM has built a platform for partners to act locally, developing a single

communications strategy through their Brazilian agency, then giving it to the local

partners to transcreate.

225 Doran. 226 LinkedIn. 227 Amaro, Manuela. Marketing Director, TAM Airlines. Interview April 9, 2009, Berlin, Germany.


76

“Local partners will be true partners, a source of market intelligence. They can do

market research, identify PR opportunities, make sure our ads are culturally ap-

propriate and translated properly.” For Amaro and TAM that deeply localized ex-

pertise can make all the difference. The bonus: “It is less expensive than the

global agency because the overhead is much lower. By switching from a global

agency to local partners, I saved 40% of my budget.”228

4.2.2.5 An Apparel Company

This corporation designs, manufactures, and markets athletic footwear and ap-

parel for men, women, and children in the United States. It is privately held and

sales figures are not available.229

“Big agencies don’t offer out-of-the-box thinking,” states Alyson Young Magliozzi,

Director of Marketing Operations for this major apparel company. So even though

they market internationally, they choose not to use an international agency. “An

international agency would have no perceived value; their ideas are too staid.”

She continues, “[My company] is very non traditional. We do very little advertis-

ing. We don’t want to be seen as a mainstream marketer; we want to try new

things.”230 So, they develop a strategy in-house, then use an agency that devel-

ops the brand marketing platform.

“This year they are shooting a documentary on creativity around the world. They

pull together the team—director, crew, post-production ad promotion—and magi-

cally make it happen. We don’t look much behind the curtain.”231

The company uses a separate agency for their digital work and a team of re-

gional design agencies to offer local in-store support. Why? “The same reason

you put together teams: to get the best expertise for each job.” They have re-

cently switched digital firms. “The previous agency was small, but bandwidth

didn’t seem to be the problem. The issue was they were order fillers, not creative

thinkers. They didn’t understand the new tech. [My company] lives in the digital

space; we needed someone who could do that too.”232

228 Ibid. 229 BusinessWeek Company Overviews. 230 Magliozzi. 231 Ibid. 232 Ibid.


77

4.2.2.6 The agency perspective

Sara Sampson is Senior Vice President Marketing and Business Development,

for Incentium, a leading provider of employee, customer, and sales channel in-

centive and loyalty programs to the Fortune 500 and top tier emerging busi-

nesses.233 She both encourages her clients to use the multi-agency model and

has found it valuable herself. “We made a strategic decision that we don’t want to

do everything for everyone. So if our client wants complementary services, we

recommend other agencies they can go to for strategic consulting, back-end data

analytics and so forth. We do the actual program management, but we farm out

the bookend stuff. We do not currently get a revenue stream from our referrals; it

remains to be seen if we actually establish a revenue agency.”234

Sampson’s attitude is born of her own experience. “We are starting to get really

involved in revamping our enterprise website and when looking for help, even

there we found pockets of expertise. We found one person for content, another

for architecture and another for search engine optimization. It will require that we

hire someone senior to be able to mange the agency relationship, but I would

much rather do that then try to find it under one roof, I know that there are agen-

cies that do it all, but I am not sure that I am getting the best, especially in areas

like the web where everything is moving so quickly. I want someone whose life it

is, who has to stay current because that is their bread and butter.”235

Sampson’s bottom line: “Clients are smarter today, so they know what they need,

and they would rather buy specifics.”236

4.2.3 Analysis

Having seen examples of various configurations of teamed agencies—whether

under their own aegis or the client’s—we should examine how well those configu-

rations work against our established metrics.

233 LinkedIn. 234 Sampson. 235 Ibid. 236 Ibid.


78

4.2.3.1 Multiple touch points for the client

In this model, where there is a lead agency, the primary client relationship rests

with it. The other agencies will certainly interact with the client, contributing to the

overall client experience—and their own security on the team—but the burden

rests with the lead. Hopefully they are well-schooled in the care and feeding of

clients; if not, the relationship may be short-lived.

Of course, this arrangement perforce cannot be as seamless for the client. They

need to be involved in decisions around which other agencies to partner with, and

in some instances will be the one orchestrating the partnerships. However, Stacy

Minton, who has chosen a multi-agency model for biotechnology giant Merck

Serono’s global communications, doesn’t feel such juggling is any extra work. “I

am managing a host of projects that are quite different, so managing different

agencies is not a big deal. [I would rather have the right expertise] than the con-

venience of a single agency; I am not convinced that a single agency has the

best of anything.”237

4.2.3.2 The security of true expertise

The beauty of this model is that each part of the marketing plan is executed by a

group chosen specifically for their expertise and ability to deliver the best results

in that sector. It is, in essence, a model built on delivering security. As the model

attains longevity, strong lead agencies will arise as brands unto themselves,

brands that clients can turn to with confidence, knowing they understand how to

orchestrate multi-agency partnerships and get the best out of each team mem-

ber.

4.2.3.3 Long-standing teams that understand the client

Assuming the right agencies are chosen, the configuration works and the work is

strong, there is no reason the bulk of the “team” shouldn’t continue to work on the

account for years. Some agencies will add or subtract depending on the type of

work needed, just as departments may or may not be involved today. And some

personnel will move to new agencies—perhaps taking the account along with

them—again as happens today.

237 Minton.


79

4.2.3.4 A client-driven expectation of strong teamwork

As Michael Conrad observes, “Today you don’t have to have the expertise; you

have to have a huge appetite in terms of collaboration.”238 Teamwork is an essen-

tial factor in this organizational framework. Because the impetus here is client-

driven (rather than one agency selling in its expertise via sister-agencies on

which it then has to rely) inter-agency teams are strongly incented to work well

together. Presumably when partnerships work well, the agencies will team again

on future efforts, and team members will reap the benefits of continuity and prior

relationships. But even when they are single engagements, agencies cannot af-

ford to indulge in conflict, back-biting or passing the blame. Clients expect every-

one to be united on their behalf. Careful organizational structuring and appropri-

ate financial incentives will further ensure that all teams actually team.

4.2.3.5 Potential interagency cultural conflicts

Varying agency cultures provide a critical corollary to strong teamwork. When

working within a single agency, there is a single governing culture. Bringing to-

gether several agencies means multiple cultures need to interact. Open the busi-

ness section of any paper and you can read about promising mergers derailed

due to cultural conflicts; the same issue may occur in this model.

Agencies need to be partnered as much for their compatible cultures as for their

expertise—and the people who will actually be doing the work (rather than C

Suite to C Suite) need to be part of the decision process.

4.2.3.6 Leaner, quicker, less bureaucratic—and maybe more cost-effective

“I want to break up the agency into small boutique groups; even the big clients

want to work with small agencies now.”239

Adrian Botan

Chief Creative Officer, McCann Erickson Romania

Smaller agencies have fewer layers, processes and people. That means things

happen more quickly, with less red tape and likely lower overhead. Of course

someone—either internal to the agency or to the client and probably both—needs

238 Conrad. 239 Botan, Adrian. Chief Creative Officer, McCann Erickson Romania. Interview March 31, 2009, Berlin, Ger-

many.


80

to oversee and coordinate the efforts. That adds complexity, but complexity with

a clear purpose.

4.2.3.7 New-media savvy, media agnostic approach with global reach and

local knowledge

When you build the team, you get precisely the expertise you need. That’s the

whole point. If you need feet on the street in Shanghai and Des Moines, you find

a partner with feet on the street in Shanghai and another in Des Moines. If you

need to tell a story on mobile phones, you get master storytellers and mobile

specialists. And if you are looking for a great 30-second spot, you get the top

scriptwriters and videographers.

4.2.3.8 Conclusion

With the shifts in consumer-driven marketing, there is a need to integrate a wide

range of skills, with concurrent pressure to deliver them at the highest level. De-

scribing her bank’s advertising needs, Amie Doran says, “We need merchandis-

ing, online, direct, and advertising.” And that doesn’t begin to include all the other

services and touch points. She continues, “Agencies need to be really good at

the things they say they are good at. So pick a specialty.”240

Industry veteran Michael Conrad agrees. “It is a mistake to try to integrate all dis-

ciplines. Think about what we are covering in [the Berlin] School; it is not possible

to have it all under one roof and still deliver to the highest standards.”241

In Section 4.1.2.9 we concluded that agencies will always exist—but that many of

the large agencies will not exist in the same configuration as today. There is also

clearly a trend towards a smaller profile, and towards specialization.

So the idea that one agency will handle the organization and then parse work out

to the best specialists seems to work brilliantly to deliver the scale, the security

and the flexibility that the big brands need to market in today’s environment.

240 Doran. 241 Conrad.


81

Doran adds, “The ultimate goal for the client is to deliver a cohesive brand mes-

sage across all touch points. No client will be convinced that any one agency can

do everything with cost-efficiency and strong brand dynamics.”242

Holding companies may be able to transition into the model of teaming agencies;

they already have the talent in their embrace. But again and again people on the

inside say that an ability to intermingle strengths, sharing expertise among sister

agencies, is less valid in practice than in theory, primarily due to the economic

model; pressure to meet individual profit goals deeply undermines any interest in

expending resources towards someone else’s project. For the individual agencies

to team in this way, they need to approach the economics as though there is no

umbrella group, and negotiate deals that work in everyone’s favor financially. In

short: They need to build networked organizations, not simply be organizations

within a network.

4.3 Fluid Networks “All you need is an idea and a team.”243

Koichiro Tanaka

Projector

Winner of 2008 Cannes Lions:

Titanium Grand Prix, Cyber Grand Prix, Gold and Interactive Agency of the Year

“A few people who are very talented at getting the best creative out of others,

plus some administration—that’s your agency.”244

Shaun Abrahamson

Founder & CEO, Colaboratorie Mutopo

“The experience has been great. I have access to the people doing the work, I

work only with principal level people, there is no issue of dealing with ‘the chil-

dren.’”245

Iesa Figueroa

Marketing Director, Insulet Corporation

242 Doran. 243 Tanaka, Koichiro, Projector. Interview January 30, 2009, Tokyo, Japan. 244 Abrahamson, Shaun. Founder & CEO, Mutopo. Interview March 5, 2009; November 4, 2009. 245 Figueroa.


82

Specialized. Nimble. Media agnostic. Cost-effective. These are the watchwords

of the new marketing ethos. Answering the call: a burgeoning crop of fluid net-

works, organizations anchored by a few strategic thinkers and/or creative leads,

supported by a virtual army of ideators, creators and producers of every ilk.

4.3.1 The fundamental idea

“There are hundreds of marketing applications that can help build brands and

impact sales. But it takes a nimble, flexible enterprise that does not rely on the

payment of media commissions to bring these alternate vehicles to bear.”246

David Sklaver

former president of Wells, Rich Greene

As the roster of marketing options grows, clients are looking for increasingly spe-

cialized talent. It is neither economically practical nor realistically possible for

agencies to keep that deep a bench in house, simply awaiting possible deploy-

ment. Meanwhile, leading talent worldwide has discovered the adrenaline rush of

a workday spent untangling creative problems rather than red tape. The two

forces, underpinned by technology that enables people and projects to work as

seamlessly from neighboring continents as from neighboring cubicles, has given

rise to a new agency model, described here as the fluid network.

In this model, the agency has a lean internal team, people who attract and liaise

with clients, then build and direct the team. The team itself is entirely outsour-

ced—sometimes it is a “walled community” of carefully vetted contributors, some-

times an open call on the web. Whether other core functions—such as admini-

stration—are also outsourced varies from group to group as does the question of

how they work (whether virtually or in person).

From the client perspective, the model has the flexibility and cost savings of hir-

ing freelancers (or crowdsourcing), yet brings the strategic thinking, high-level

creative and single-touch-point convenience of an agency. With certain groups it

even delivers consistent teams that understand and nurture the brand, as well as

the security of a recognized and respected practitioner in the lead.

246 Sklaver, David. From consolidation to innovation. Brandweek; 05/10/99, Vol. 40, Issue 19; p. 36-37;

http://web.ebscohost.com/ehost/detail?vid=1&hid=114&sid=7e


83

Organizational design consultant Reed Deshler, a principal at AlignOrg Solutions,

explains the value from the customer perspective. “The networked or virtual or-

ganization model is common and I think it makes sense in many contexts. Virtual

organizational models are used for a couple of main reasons. The obvious one is

cost. It doesn’t make sense for firms to hold all capabilities in house. Second, you

meet a customer’s integration need if you bring experts together to deliver a

needed solution; otherwise the customer has to shop on their own to find ways to

meet all their needs.”247

Indeed, clients embrace the model.

Theresa Kaskey is responsible for John Hancock’s external communications.

Introduced to the fluid network model, she enthuses, “This is the perfect idea for

me; I get a diverse set of skills and a good price point. The reason that we don’t

use freelancers is that it is hard for me to manage my projects and manage the

freelancers…I just can’t do it—having to call the designer to make sure they have

talked to the copywriter. So someone who stands between me and the talent is

ideal.”248

Rebecca Peterson, Vice President of Corporate Communications at the Cam-

bridge-based biotech firm Alkermes, is responsible for presenting her company to

Wall Street, potential pharmaceutical partners, and the patient population. Facing

this fluctuating set of marketing challenges, she dislikes having to pay a retainer

to agencies “whether you are using the people or not.” But she is pleased to have

someone else spearhead the efforts. “I am a big advocate of [the model]. If I hire

someone to do the web design, I don’t want to have to find a host, an information

architect, a UI specialist, and a writer...being sent to a trusted resource (and not

having to do the legwork or organization myself) is valuable.”249

Ally Polly, who is in the midst of launching a fluid network of filmmakers—

appropriately named Filmaka—sums up the advantages. “Clients love that we are

247 Deshler. 248 Kaskey, Theresa. Marketing Manager, John Hancock. Interview December 16, 2009, Boston, Massachu-

setts. 249 Peterson, Rebecca. Vice President, Corporate Communications, Alkermes, Inc. Interview July 17, 2009,

Cambridge, Massachusetts.


84

virtual. Because there is no overhead for them, it allows us to work in a cost-

effective way. Yet, they don’t have to deal with the personalities and drama. The

whole process is still gone through, but we do everything for them.”250

4.3.2 Whence the workforce

“The most important thing is generating the right people and figuring out how to

incent them.”251

Shaun Abrahamson

Founder, Colaboratorie Mutopo

Of course, any endeavor is only as successful as the people involved. So two key

questions in a fluid network are where and how you build the team—the sources,

the filters, the incentives and the oversight.

Recalling his accession as head of Publicis, Maurice Levy remembers asking

founder Marcel Bleustein-Blanchet for advice. “I put to him the question, ‘What is

the most difficult thing in our business?’ He said, ‘Casting. Finding the right peo-

ple to put together on a team, and finding the right team to put in front of the cli-

ent. There must be chemistry, a good relationship, and one in which people can

work and trust each other. That is what makes our job more complex than any

other.’”252

Clearly, if that is true at the holding company level, it is even more true when the

team is custom-built. And before chemistry can be adjusted and relationships

built (both addressed later in this section) the first step is to find the right people.

For fluid networks, there are currently three excellent sources of manpower: peo-

ple fleeing the corporate world, people forced out by the economy, and people

who never wanted a “real job.”

250 Polly, Ally. Head of Strategy and Brand Partnerships, Filmaka Entertainment Studios, a virtual community of

directors, writers, actors, and other creative artists from over 150 countries. Telephone interview February 3, 2010.

251 Abrahamson. 252 Kanter, Rosabeth et al. Publicis Groupe: Leading Creative Acquisitions. Harvard Business School case 9-

506-010. Rev. May 17,2006. Pages 1-24.


85

To be crystal clear, in each of these instances, we are not discussing people who

are looking for part-time work. We are discussing people who work full-time, just

not in a traditional office setting (and not for a traditional corporation).

4.3.2.1 Hot Senior Creatives

“I had the dream job. The corner office, 175 people reporting to me, a company at

the top of its game. And it was soul deadening. I felt like a princess trapped in a

golden cage.”253

Karen Dawson

Principal, Two Blue Spruce

Former Executive Vice President, Executive Creative Director, Digitas

Writing for Brandweek in 1999, David Sklaver, former president of Wells, Rich

Greene, describes a dramatic flight of talent from ad agencies and marketers

alike, fueled by the massive consolidation in the ad industry. His view? As one

large marketer after another acquires brand after brand and agencies small and

large are gobbled up by global holding companies “the talented, risk-taking, idea-

generating executives…find they can make more of an impact working for them-

selves.”254

Sklaver continues, “Creating new paradigms for the agency of the future, we are

abandoning bureaucracies in favor of hands-on, down-and-dirty work, and we’re

hiring fellow exiles to help us. The allure is in the chance to work directly with the

decision makers without internal politics and to see their work produced instead

of reviewed, edited and ultimately deemed ‘too risky.’”255

Ten years later, the result is a robust talent pool of “big guns for hire,” senior-level

practitioners with the chops and credentials to impress clients and an appetite for

innovation. As Karen Dawson, a former executive vice president at the global

interactive pioneer Digitas, states, “As a creative person, if you are really doing

what you do best, a corporation is not the right environment.”256 Even a corpora-

tion (like the one she left) that is itself shaping the industry.

253 Dawson. 254 Sklaver. 255 Ibid. 256 Dawson.


86

According to Sklaver, clients are thrilled by having senior-level people dedicated

fulltime to problem solving for them rather than dealing with internal politics. “[We

are] getting some of the biggest welcomes from the big businesses we once

served.”

He concludes, “Innovation can be the best revenge.”257

4.3.2.2 The newly unemployed

“There are 50,000 people out of work in advertising, people who are talented,

hirable and don’t have jobs. The supply and demand is totally out of whack. Why

not harness all that power and keep the overhead part away?”258

Hank Leber

Founder, Agency Nil

“Ad industry cuts 18,700 jobs in December.”259 For over a year, the headlines

have blared the news that agency jobs are evaporating. Marketers of every stripe

and every level of seniority are finding themselves on the street scrambling for

work alongside seasoned freelancers.

Some may argue that the newly unemployed represent the bottom of the barrel—

not the engine of future greatness—but even the most cursory review of portfolios

shows that is not true.

As such, today they represent a fertile source of personnel for fluid networks.

When the economy recovers, some will immediately re-seek agency work. After

all, virtual employment isn’t for everyone. Despite recent experience, some crave

the theoretical security of a 9 to 5. Some like the camaraderie of an office envi-

ronment. Some need the structure of an office setting just to stay focused (and

maybe even to force them out of bed in the morning). But the creative tempera-

257 Sklaver. 258 Leber, Hank. CEO/Janitor, Agency Nil. Telephone interview July 9, 2009. 259 Johnson, Bradley. Ad industry cut another 18,700 jobs in December. Advertising Age, 80 (5): 1, February

09, 2009. ISSN: 0001-8899.


87

ment loves freedom—and many who have entered the “gig economy” unwillingly

will embrace it long-term.

4.3.2.3 Gen Y and Beyond

“There is a shift in employment from lifetime jobs to lifetime projects. The

generation coming up, they don’t want to be fully employed.”260

Michael Conrad

Former Vice Chairman and Chief Creative Officer, Leo Burnett Worldwide

President of the Berlin School of Creative Leadership

“I was 8 years full time with a major media outlet and have been 15 years free-

lance...No politics, no dreadful meetings, no blanket control over my week. I give

myself yearly raises which no one has ever balked at …you can give it a negative

spin, but the truth is: autonomy over your life—priceless.”261

Comment on Tina Brown’s “The Gig Economy”

In a 2009 article titled “Portfolio Working,” The Economist states, “There has

been a demand-pull as well as a supply-push operating in the market for portfolio

workers. Many young people now prefer to work in this way. They see it as free-

ing them from the drudgery of the job-for-life and full-time employment contract

that was frequently their parent’s main ambition.”262

Spend a few minutes talking to Drew Jones and you understand how deep the

generational shift is. With 60 million kids entering the workforce, Gen Y is about

to take over from the 78 million baby boomers reaching retirement age over the

next 10 years. And those Gen Yers are voting with their feet—refusing to work in

“draconian workspace environments with draconian policies.”263

260 Conrad. 261 Brown, Tina. The Gig Economy. The Daily Beast. Posted April 22, 2009; downloaded July 1, 2009.

http://www.thedailybeast.com/blogs-and-stories/2009-01-12/the-gig-economy 262 Portfolio working: a vision of the way people will work in the future. Economist.com. Published November 2,

2009; downloaded November 2, 2009. http://www.economist.com/daily/news/displaystory.cfm?story_id=14301346

263 Jones, Drew. Co-founder Austin Coworking; co-founder Shift 101 (previously AquiferDesign). Telephone interview November 10, 2009.


88

“We are telling our clients: You need to pay attention, because this is saying

something to you. The best and brightest no longer want to work for you; how are

you going to attract them to come back?”264

Jones spends a lot of time on this issue; he helps businesses tap into “the crea-

tive problem-solving power of independent entrepreneurial teams.” He is also a

designer and proponent of co-working spaces, office collaboratives where inde-

pendent contractors go to work.

“On a good day a co-working space is immensely more productive than working

alone. The energy of people jamming really feeds on each other. When you see

everyone else nailing down projects and doing them, you realize that you need to

follow up that lead.”

“People are constantly collaborating with each other. It is not uncommon for me

to get an email asking for something that is way out of my competency, say,

building a website. I will say to someone else, ‘Give these people a call, they

need this done.’ Maybe my friend will only do the programming, then find some-

one else to do the design. They might deliver as individuals, or create an LLC for

the project.”

“The goal is to stay independent—to keep enough food on the table to not have

to go to work for one of these companies.”265

There is one additional critical factor. Gen Y has grown up on electronic devices.

They text each other across the dinner table. They play World of Warcraft with

millions of peers they never met in person. They already thrive in a virtual world.

And they may never know anything else. That they are today’s drivers of creativ-

ity—as Sir John Hegarty notes, “Creativity has a ten-year life span”266—may be

most predictive of all.

264 Ibid. 265 Ibid. 266 Hegarty Sir John, Executive MBA Lunchtime Lecture Program, Berlin School of Creative Leadership, Lon-

don, September 17, 2009.


89

4.3.3 Emerging models

“You need to keep a core set of capabilities in-house—the skills needed to keep

the lights on and create the environment.”267

Shaun Abrahamson

Founder, Colaboratorie Mutopo

Within the framework of a core team supplemented by virtual resources there is a

wide range of possibility. Which resources are internal? Who curates the talent?

How virtual is virtual? Not surprisingly, at the incipient stages of this phenomena,

the answers are many. Here, I present six models, some only theoretical, some in

active practice. Comparing them enables us to consider their relative advantages,

and whether there is a difference in the type of work and client for which each is

suited.

4.3.3.1 Club Hegarty

“If I were starting an agency today, it would be like a club. We’d have a core

group of 20 and then 100-200 freelancers flowing in and out.”268

Sir John Hegarty

Chairman and Worldwide Creative Director, Bartle Bogle Hegarty

More than a decade ago, Sir John Hegarty, Chairman and Worldwide Creative

Director, Bartle Bogle Hegarty, wrote that “with the rise in digital technology, the

concept of where you work and how is being questioned…alongside this we see

people questioning the value of their employment.” He notes that the adage “I

don’t live to work, I work to live” is not only fundamentally true, it is particularly

true for those in creative organizations. And so, the organization must shift to

accommodate. “If creativity is at the heart of our offering, then being creative

about how we deliver it is essential.”269

His solution: The office as club.

267 Abrahamson. 268 Hegarty Sir John, Executive MBA Master Class at BBH, Berlin School of Creative Leadership, London, May

2009, as quoted on the Berlin School of Creative Leadership website. Accessed March 21, 2010. http://www.berlin-school.com/ideas/weekly-wisdom.

269 Hegarty, Sir John, The Future of Work, November 1998.


90

A core team of full-time, salaried people would run the club. A second group of

“members” would be paid a retainer, then additional per-project fees. Associate

members—carefully vetted, of course—would have full access to the facilities,

but only be paid for actual project work.270

Key to Hegarty’s vision is the place itself. With subsidized food and drink, orga-

nized events and outings, private meeting rooms and doubtless a sauna, it is a

place people want to be—one can almost smell the leather.

That alluring atmosphere is important to Hegarty, because he needs the people

to come into work; he is firmly against working virtually. “For the work to be good,

everyone needs to be under the same roof. Not just the creatives; everyone.”271

He believes eye-to-eye communication is crucial.

Hegarty’s vision is, in many ways, the ultimate fluid—though not virtual—network.

People with clearly identified talent are on call to form project-specific teams.

They are largely paid only for income-producing work. And because they have

glorious surroundings in which to do it, there is never a danger of not being co-

located.

It is interesting to note that a group in Australia appears to have put a somewhat

scaled-down version of this model into practice. Founded in 2005, FutureAgency

describes themselves as “a network model, comprising a core team that works

with independent professionals and industry partners spanning Sydney and be-

yond. This enables our clients to tap into our vast pool of shared resources, peo-

ple and expertise.” They have a project space in which their teams work (it is also

equipped for photography and film shoots) and they have sister companies in

Shanghai and Singapore.272 Asked why they chose this model, creative director

Lucky Huynh replies, “Mostly it has to do with the nature of how I lead [and] my

personal belief…that creative work requires stimulation from people outside your

team and your discipline…The end result is better value for money.”273

270 Ibid. 271 Hegarty, London, September 17, 2009. 272 FutureAgency website. Accessed February 8, 2010. http://futureagency.com.au 273 Huynh, Lucky. Creative Director, FutureAgency. Email interview February 8, 2010.


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4.3.3.2 Agency 2.0

“A thin agency consulting into existing structures allows more efficient use of

scarce resources.”274

Giles Rhys Jones

Global Digital Strategy Director, Unilever at Ogilvy & Mather

In August, 2009, Giles Rhys Jones published a manifesto for a new ad agency.

His thesis: Web 2.0 has produced Consumer 2.0—a consumer that is used to

control and willing to challenge, able to create and embedded in community. In

response, Rhys Jones believes, Marketing 2.0 needs to shift focus from product

to experience, from promotion to evangelism, from a single place to everywhere.

And a new type of agency, Agency 2.0, will be needed to produce that market-

ing.275

Rhys Jones finds the key elements of this new agency to be focus and fluidity.

Creative and strategic control remain internal, but ideas are generated via uber-

producers in the ecosphere—a form of crowdsourcing. Production is largely

farmed out to third party specialists. A “resource layer” of experts provides in-

sights as needed. One key to the structure: it is “thin.”276

For example, when building a microsite for an existing client, digital specialists in

strategy and creative direction join forces with the existing account team, then

hire a third party creative and production unit, essentially creating a project-

specific virtual team. Lean, nimble, cost-effective—and yet still within the comfort-

ing bricks and mortar agency framework, this is a solution clients across the

board could love.

4.3.3.3 Host Universal Ltd.

“We give people the chance to create great ideas very quickly with other people.”277

Steven Hess

Co-founder, Host Universal

274 Jones, Giles Rhys. 275 Ibid. 276 Ibid. 277 Hammonds, Keith H. This Virtual Agency Has Big Ideas. FastCompany.com Posted December 19, 2007;

downloaded October 14, 2009. http://www.fastcompany.com/magazine/29/host.html


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In 2005, Robin Smith had left his post as senior art director for Leo Burnett, Lon-

don. As he contemplated his future, here’s what he saw:

• The problem: Agencies are overstaffed and unwieldy, slow and expen-

sive. They survive by maintaining client relationships, rather than by nur-

turing innovation. Too many ideas are lost amid too much paper shuffling.

• The idea: Build a flexible organization that contracts work out to small, ad

hoc teams that offer the best available talent for any given project.

• The result: A network of 35 creative professionals who field projects for

clients like Kellogg, the Body Shop and British Telecom.278

At Host Universal the crowd is curated, enhancing client security, but their envi-

ronment is virtual, streamlining bureaucracy, minimizing overhead and enhancing

team satisfaction. Today, multiple iterations of this model thrive around the world.

4.3.3.4 Mavens & Moguls

“I feel like my role is to connect the dots…I’m a conductor of a world class or-

chestra.”279

Paige Arnof-Fenn

Chief Executive, marketing manager, team organizer, Mavens & Moguls

By 2001, Paige Arnof-Fenn had been Chief Marketing Officer at three start-ups.

As she exited the third, ZipCar, people started asking her to take on consulting

projects, She realized that there was a lot of available work, and that a consulting

business would be much richer if she collaborated with other professionals. So

Arnof-Fenn set out to create a business that would allow her to “work on cool

projects with smart people...I called all my contacts—former bosses, mentors,

colleagues. Before I knew it I had all these projects and all these people who

were available to do them.” And Mavens & Moguls was born.

Organized as an LLC, Mavens & Moguls has a straightforward structure—no of-

fice, simple agreements with clients and consultants. Arnof-Fenn finds the clients,

builds the teams and handles all administrative and quality-control activities; team

278 Ibid. 279 Arnof-Fenn, Paige. Founder, Mavens & Moguls. Interview July 10, 2009, Somerville, Massachusetts.


93

leaders run the actual projects.

At its founding, the concept was fresh enough that Harvard Business School

made the company the subject of two case studies.

Clients appreciate being able to draw on consultants who have executive-level

experience with such industry giants as Coca-Cola, Microsoft, Viacom, and Proc-

ter & Gamble. They also appreciate the range of expertise the group offers. As

Brad Gerstner, one of the company’s first and most steadfast clients, says, “You

don’t get ‘the McKinsey’ view on things—you get a number of strong, independ-

ent views on your marketing challenges. As a general business idea, it’s great to

be able to tap into this network without having to hire the people.”280

Arnof-Fenn agrees, “I form teams based on exactly what the clients need. Some-

times we handle their PR, sometimes we act as brand police, sometimes we are

back-filling for someone on maternity leave.”281

“Often we are their entire Marketing Department. Many of our clients are early-

stage, emerging market companies, $2M to $200M. They don’t really need a

$400,000 marketing director—and they couldn’t afford one, But they can keep us

on retainer for $10-25,000/month and we can [handle their needs].”282

Arnof-Fenn keeps about four dozen people in her network, deploying them as the

need arises. “If it is a multi-phase project it may be a different team for each

phase. People are all right with that; they want to be in a place where they feel

their skills are needed and well used.”283

From the contractor perspective, the group supplies the requisite structure of a

‘real job’ without the issues. “As a one-man shop, you realize quickly that if you’re

not working, your company’s not working. I needed a force multiplier,” explains

Richard Cleveland. “I liked the Mavens & Moguls opportunity because I was able

to do what I’m good at and not worry about the organization part. Paige had

280 Hart, Myra, M. et al. Mavens & Moguls: Because Marketing Matters. Harvard Business School case 9-805-

005. Rev. April 4,2006. Pages 1-11. 281 Arnof-Fenn. 282 Ibid. 283 Ibid.


94

rates, contracts, a name, a brand, a website, all of the things you need to have a

real business. The network also expanded my skill set and my set of connections

and repertoire. I may not have known direct marketing, but someone in the net-

work did, and that allowed me to take on projects I couldn’t otherwise handle.”284

As their tenth anniversary nears, the successes of Mavens & Moguls offer in-

sights to others just embarking on the fluid network.

4.3.3.5 Agency Nil

“This is an incentive based, value based system.”285

Hank Leber

CEO, Janitor, Agency Nil

In May 2009, Hank Leber graduated from VCU Brandcenter. And like many of his

classmates, he found the job prospects to be bleak. So he got to work and

launched his own agency, Agency Nil.

His talent is all virtual, sourced primarily from his fellow Brandcenter graduates

and their networks of hungry creatives. Once they get a brief, they chose the

team best suited to the project. Their hook is that they do the work, and the client

decides its value—sort of an inverse form of the normal crowdsourcing model.

“Agency Nil will work without a set price, with the understanding that agencies or

clients pay what they think it’s worth upon completion—no strings attached.”286

(As one blogger noted, “A brave and innovative way of thinking.”)287 For clients

that takes much of the risk out of the equation. As Leber wryly notes “The big

thing with this model is trust and being able to sniff out deadbeat clients.”288 And he does ask for 10% of what they think the value will be before the projects be-

gin.

284 Hart. 285 Leber. 286 Agency Nil works for what it’s worth. Posted May 20, 2009; downloaded October 14, 2009.

http://mymediamusings.com/tag/agency-nil 287 Agency Nil will work for all it’s worth. Posted May 20, 2009; downloaded October 14, 2009.

http://www.psfk.com/2009/05/agency-nil-will-work-for-all-its-worth.html 288 Leber.


95

Just as the bulk of his talent is fresh out of school, the bulk of Leber’s clients are

not blue chip. “A lot of small businesses are using us,” he says.

“Small businesses often don’t work with agencies because it’s not something that

they can afford or marketing is not even on their radar. But they have passion—

they have sold off their car and maxed out their credit card because they believe

in their business.” That makes them exciting to work for.

“The best part so far is that the clients who are interested in this model like the

idea because it is courageous and it’s different, not because it is a cheap deal,

which means when you put a team together for them they are excited. They un-

derstand what it is like to be a small business.”

Looking ahead, Leber says, “By hiring project managers under the same model

this thing could scale huge. We could have 100 to 1000 clients, as long as every-

one understands that the harder and better they work, they can make great

things happen.”289 He is also using crowdsourcing as a client referral system, and

mentioned adding a public client-rating system, which would certainly encourage

anyone hoping to be a repeat customer to pay fairly the first time.

When Leber launched, he received tremendous attention in the blogosphere. As

one pundit mused, “While this might sound insanely risky, it’s not like the guy was

passing up some wonderfully secure opportunity…It is a simple, put your money

where your mouth is, situation, and it is hard to see how he can lose. If he actu-

ally succeeds in any significant way, the model could become a real threat to

established agencies.”290

4.3.3.6 Victors & Spoils

“There are ways to control the self aggregating group; you use the people who

create value.”291

John Winsor

CEO, Victors & Spoils

289 Ibid. 290 Agency Nil works for what it’s worth. Posted May 20, 2009; downloaded October 14, 2009.

http://mymediamusings.com/tag/agency-nil. 291 Winsor.


96

Discussing the concept of fluid networks, Michael Conrad, former Vice Chairman

and Chief Creative Officer, Leo Burnett Worldwide, comments that “[The network]

needs to be really cutting-edge, but also has to develop a big picture point of

view. Then you begin to collaborate.”292

Victors & Spoils has exactly this pedigree. Founded by three people with impec-

cable marketplace credentials293 (and presumably equally impressive contacts), it

harnesses the power of crowdsourcing while retaining both the client contact and

strategic and creative oversight of a more traditional agency. Their website ex-

plains their point-of-view:

“The way we see it, companies need an alternative to both current ad agencies

as well as current crowdsourcing platforms. One that offers the strategic direc-

tion, engagement and relationship management that agencies deliver today, but

one that also delivers the engagement, cultural relevance, results and return on

investment that crowdsourcing (if managed and directed well) can deliver.”294

The agency considers every function to be creative (“You can’t succeed in an

agency anymore if you’re not creative.”295) and invites anyone to apply to join

their creative department. Just six months after launch, 750 people from around

the world have already “opted in.” The agency then uses an iterative approach to

harness that talent to solve specific client needs.

John Winsor, Victors & Spoils CEO, describes a recent engagement. “We put a

proposal out to all 250 people in the community who had expressed interest or

had an expertise in the field. In 20 minutes 80 people had gotten back to us; we

chose 20 and paid them for their ideas. From those ideas, we selected five semi-

finalists and spent a lot of time curating them. We took the results to our client,

discussed them and together we awarded a winner.”

292 Conrad. 293 Evan Fry, former Vice President/Creative Director Crispin Porter + Bogusky; John Winsor, respected author

and former Vice President/Executive Director, Strategy and Product Innovation at Crispin, Porter + Bogusky; Claudia Batten, a founder of Massive, the first company to harness video gaming as a full-blown advertising network.

294 Victors & Spoils website. Accessed March 6, 2010. http://victorsandspoils.com


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He continues, “Our vision is not to have a community of 30,000, but a community

of 5,000 strategy directors and creative directors. We then help brands curate all

this creativity. How? I think it is the same thing that is going on in social networks:

People become social editors of another’s output; they build their own brand

around what value they bring to that editing or curating.”296

Clients have been very receptive. In just six months, “we have already done 14

projects, all for global Fortune 200 clients. Every day we get calls saying, ‘I can’t

stand the old way of working.’ The clients are all psyched.” Winsor notes, how-

ever, that competitive agencies are significantly less enthused, “We definitely

have a lot of arrows in our back from traditional agencies. The agencies don’t

want to see their world come to the end—but advertising as we know it is over.

We are pushing that change forward.”297

4.3.4 Analysis

“The client doesn’t care if the person works for you; the client cares if the person

works for them.”298

Matthew Clark

Global Marketing Director, Strategy Practice, The Boston Consulting Group

“When Andy Law created St. Luke’s from the ashes of Chiat/Day London he be-

gan by phoning all his clients. He found that none cared much who owned the

company as long as the work was good.”299

Stevan Alburty

Writer, FastCompany.com

Marissa Mayer, Google’s Chief Experience Officer, regularly gives a lecture titled

“9 Principles of Innovation.” Two of her principles resonate in this context:

• Ideas come from everywhere.

295 Winsor. 296 Ibid. 297 Ibid. 298 Clark, Matthew. Global Marketing Director, Strategy Practice, The Boston Consulting Group. Interview

November 12, 2009. 299 Alburty, Stevan. The Ad Agency to End All Ad Agencies. FastCompany.com. Posted December 18, 2007;

downloaded October 14, 2009. http://www.fastcompany.com/magazine/06/stlukes.html


98

• Find the talent and use it.300

These are the founding tenets of the fluid network. However, the question re-

mains: How does the model stack up against the established metrics for suc-

cess—and is one iteration more effective than another?

4.3.4.1 Relationships still matter.

“It’s all about who you know. Sometimes I think that networking is more important

than talent.”301

Hank Leber

Founder, Agency Nil

Before you can do the work, you have to get the job. And as discussed in Section

3.4.1.1, work assignments are often contingent on personal and professional re-

lationships. In theory, this would seem to be no different for a fluid network than

for an established agency; in practice, the agency may have an advantage simply

by virtue of having a larger executive team, and thus more contacts and more

people to maintain them. Also, some people choose to work in the fluid model as

an escape from schmoozing, an opportunity to focus on the work rather than the

relationship. (“I don’t really want to socialize with the client; I want to do the work.

If they are looking for that socializing I am not the right person.”302 Much as I

sympathize, I am afraid that is a pipe dream. Clients use people they know and

names they trust. Moreover, clients are people; they like to be stroked. But if the

spearheads of fluid networks recognize those facts and act on them, the issue

becomes relatively moot. As Arnof-Fenn says, “I network because I enjoy it, I’m

very gregarious. I grew up in New Orleans which is a very social, active place…A

colleague once told me that he believes that my coming from New Orleans has

contributed more to my success than even my MBA from HBS (Harvard Business

School).”303

300 Salter, Chuck. Marissa Mayer’s 9 Principles of innovation. Fast Company.com. Posted February 19, 2008;

downloaded February 8, 2010. http://www.fastcompany.com/article/marissa-mayer039s-9-principles-innovation

301 Leber. 302 Suda. 303 Hart, Myra, M. et al. Mavens & Moguls: Creating a New Business Model. Harvard Business School case 9-

805-050. Rev. November 29, 2004. Pages 1-8.


99

A related issue—and one potentially far more challenging for the fluid network—is

securing the client’s trust. Being responsible for the advertising of a $160 billion

company, Amie Doran states, “A lot of my credibility rests on the work the agency

delivers.”304 Doran and her peers aren’t going to risk their reputations (or their

jobs) on a group of outliers, no matter how much they like the person or the pro-

posal. They need to be able to defend the choice to their senior management and

board of directors.

For some clients, then, the very fact of being virtual is a deal killer. As Maureen

Suda, who heads her own fluid network, notes, “Sometimes people like the com-

fort of a brand; they want to buy Chanel or BMW. If so, we’re not for them.”305

So how do the fluid networks attract clients? Some begin by stealing the clients

they were servicing at their agencies (see the quote above about Andy Law).

Others launch with a big name at their head—a name that is in its own right a

brand. Victors & Spoils is the brainchild of two highly decorated Crispin Porter +

Bogusky alumni; should Sir John Hegarty found his club, he would have no trou-

ble attracting clients. For anyone starting or running a fluid network, contacts mat-

ter.

4.3.4.2 You don’t need walls; you need infrastructure.

“It’s more disruptive for someone not to have a website, than not to have an of-

fice.”306

Ally Polly

Head of Strategy and Brand Relationships, Filmaka Entertainment Studios

No matter what form the agency takes, clients pay to have work well-executed

and delivered on time. That requires clear, intelligently designed processes and a

means of incenting people to follow them.

The processes can be as simple or complex as the task warrants, but should cer-

tainly include a brief, a schedule, internal brainstorming meetings, reviews, ample

304 Doran. 305 Suda. 306 Polly, Ally. Head of Strategy and Brand Partnerships, Filmaka Entertainment Studios. Telephone interview

February 3, 2010.


100

time for production and proofing—in short, all the checkpoints a traditional

agency would offer.

Incentives can be equally straightforward. In a traditional work setting, such in-

centives are clear: You do the work or you get the boot. Clients, particularly, ex-

press concern over how such incentives work in a virtual setting, when talent of-

ten has other clients competing for their time and mindshare. They fail to consider

that talent often faces those same dilemmas in agencies, and that fluid groups

have the same means of enforcement: people who don’t perform well or play

nicely get invited to leave the group. In addition, people who rely directly on their

customers for their paycheck often put more effort into customer service; that is

no longer just the bailiwick of the account executive.

4.3.4.3 Wait. You do need walls.

In discussing his club concept, Sir John Hegarty was very clear that members of

the team need to be physically together when doing the work.307 Not everyone

finds that necessary (and I believe it will become increasingly moot to people in

Gen Y and beyond). However, almost everyone thinks a business needs some

sort of physical office space to give clients the comfort that it is a “real business.”

Lisa Schiavello of boutique digital firm Red Door, recounts a revealing exchange

with one of her clients. “We had been working with this client for awhile, and had

always met at their offices. Recently they asked to meet at our offices instead,

saying, ‘We love you, we love the people we’ve met, we just want to make sure

that you are legit, that you are not working out of someone’s kitchen.’ They love

the work, the thinking, the strategy—why would they care if it came out of some-

one’s kitchen? But they do.”308 Even Victors & Spoils has an office housing six

people. John Winsor admits, “We want the touch and feel and smell of an

agency; it’s for the clients.”309

307 Hegarty, London, September 17, 2009. 308 Schiavello. 309 Winsor.


101

4.3.4.4 But does the team have to work there?

In a world where AIG and Goldman Sachs negotiate a $3 billion deal on a con-

ference call,310 the need to lock teams together in a room until they solve the

problem seems to have passed.

Certainly conducting all business aspects in the clouds is no problem. Describing

her company’s processes, Ally Polly says, “The client pays for access to our

community which comes from 150 countries around the world. It is all online.

Everything can happen conceptually without anyone ever meeting. It all happens

because of the digital age. We have a digital brief; filmmakers log in to read it;

they deliver the work digitally; all rights and legal issues are handled online; we

pay on line. It is all electronic.”311

The question is whether that degree of virtual communication works at the level

of teams, where the inter-personal dynamic may be a crucial factor in the suc-

cess of the work. Acclaimed creative director Lars Hemming Jorgensen talks

about handling decentralized global accounts. “We might have a team that is in

three different places; it doesn’t work brilliantly.”

He continues, “I struggle with my job when I don’t spend enough face time with

my people. There are so many things I can see in their eyes about whether they

are on board, whether they get it or not. I want to spark people’s creativity, ener-

gize them. I have to do that face to face; I can’t pep talk a crowd of 20 on a con-

ference call.”312

Keith Reinhard shares a similar perspective. “I recently spoke with a very bright

young account man from Crispin Porter who quit and joined Weiden Kennedy in

New York because (among other things) he says that coordinating a three office

team is not as effective and gratifying as having your account team, creative and

planning, all in one physical place so that social activities, inside and outside the

workplace, and other ‘family’ aspects can be integrated into the day to day envi-

ronment. Interesting that this is a young man totally savvy about all the new me-

310 Morgenson, Gretchen and Louise Story, Testy Conflict with Goldman Helped Push AIG to Edge, The New

York Times, Published February 6, 2010. http://www.nytimes.com/2010/02/07/business/07goldman.html Ac-cessed February 19, 2010.

311 Polly. 312 Jorgensen.


102

dia who prefers human contact and camaraderie and believes it makes for a bet-

ter product and better client relationships.”313

Working virtually also exacerbates the issue of keeping people on task: Even

crowdsourcing guru Shaun Abrahamson admits that “if people are remote, it is

harder to create urgency; people are more likely to respond when they can see

everyone else working on something.”314

Despite the virtual nature of her company, Ally Polly agrees, “With creative

teams, at some point people need to be bouncing ideas off the walls.”315 She

thinks technology may prove a barrier for that exercise, rather than an enhance-

ment.

The obvious solution here is to have a physical space you ask the team to be in

while working on the project—Sir John Hegarty’s model, for instance. However,

that either limits your talent pool to people within your geographic confine or else

greatly escalates the cost to the client as they pay airfare, room and board for the

duration of the project. Plus, as Peter Pappas of fluid network 8 Beacon Partners

observes, “Sometimes it is just hard to get people in a room together; it’s easier

to work virtually.”316

Karen Dawson, who left a big multinational power agency to organize her own

fluid network, adds, “With the virtual model, it is easier to see someone who isn’t

working out.”317 A lack of online communication, postings and participation is in-

stantly visible, whereas the person doodling on their notebook may be less im-

mediately obvious.

Of course, there is still the issue of chemistry. Dawson continues, “If the spark

between two people matters to the project, then you need to meet people ahead

of time. That is true whether it is an agency or a virtual team.”

313 Reinhard. 314 Abrahamson. 315 Polly. 316 Pappas. 317 Dawson.


103

Joleen McFadden of RAZR Marketing furthers that thought, “We do a lot of work

electronically and through phone conference. We have had people working from

a houseboat on a tour, people working all over the country. Remote works well.

But it works best if you have worked together at some point before.”318

Others concur with that thought: once the chemistry is established there is less

need to be in the room together; you speak the same shorthand and have less

room for misinterpretation. New technologies also support on-line collaboration,

enabling remotely located teams to see the same images and documents in real

time.

Bob Greenberg of digital powerhouse R/GA believes that these new technologies

will make working virtually the norm; “they will change the way we work as much

as the Blackberry.”319 Or the iPhone.

I firmly believe that the virtual trajectory will only increase. As described in Sec-

tion 4.3.2.3, today’s teens do not have the same need for face-to-face communi-

cations as people of previous generations. When they join the workforce en

masse, virtual communication will become even more normative.

4.3.4.5 Just who is the team?

“We would get nervous if we were reaching out to all new people that we don’t

know, so we look for recommendations from people we trust.”320

Elaine Leonetti

Director, Strategic Development at Six Degrees

Fluid networks have a second decision-point not faced by any other model—from

traditional agency to completely crowdsourced: How do they locate talent? Like

the question of working locale, the question of sourcing talent is inherent to their

neither-fish-nor-fowl status, and the answer relates to just how virtual is virtual.

Fluid networks typically form teams one of two ways: They either crowdsource

their talent, or they have a curated crowd, a group of “go to” people whose work

318 McFadden. 319 Greenberg. 320 Leonetti.


104

and working style are known. And while crowdsourcing is gaining momentum,

most of the folks I spoke with who are orchestrating fluid networks prefer the

“walled” approach, working with a known group of consultants, then adding spe-

cialized expertise by asking people in the inner circle for recommendations of

colleagues who have the requisite knowledge base.

Vicente Garcia, whose Barcelona-based agency Kardumen Digital Sympathy has

a core team of three, uses a member-bring-a-member network to add expertise

as needed. “We try to spend some time [with prospective team members] to get a

sense of the personal chemistry. We work only with people we like personally,

therefore they like each other too.”321

4.3.4.6 Presenting your dedicated experts on any topic.

“If you accept that every problem is unique, then surely a unique blend of

new/different skills/people will produce something better than the fixed (slowly

regressing) ‘creative agency team’?”322

Justin McMurry

Thinker and Strategist, Made by Many

As addressed in Section 3.2.1.2, the options and opportunities to engage cus-

tomers have expanded exponentially—and shift day by day. As such, true exper-

tise is hard to maintain—and almost impossible to maintain in more than one

arena. If the networked agency model enables brands to access media-

appropriate specialists, the fluid network provides equal or greater targeting op-

tions.

Maureen Suda has a roster of healthcare and biotech public relations specialists

at her fingertips. She notes that even within the circumscribed world of “people

who call themselves media relations consultants” there is a wide range of skill

sets. So even though she has “several go-to people, [when building a team she]

can look not just for a great media person but for the right media person. Some

have a natural capacity to do strategy, others are just tactical; some are better at

pitching hard news events, others are better at proactive media feature arti-

321 Garcia. 322 Malbon; Justin McMurry commenting.


105

cles.”323 Conversely, she observes, “If I were a firm and had a staff of ten, I would

just keep filling the teams with my staff.”

Other fluid network proponents agree. Elaine Leonetti recalls, “At [my former em-

ployer] we had to use who was available at the time—and sometimes that was

like putting a round peg in a square hole.” Her current firm often uses consult-

ants; “That gives us a stable of people we can pull from for expertise on specific

projects.”324

And when working in the rapidly changing digital world, having access to the

people who are actively creating the new generation products can make all the

difference to your deliverable.

4.3.4.7 Keep the team and the institutional knowledge.

“When you bring new creatives you can bring new energy and freshness—but

you end up spending a lot of time educating them.”325

Matthew Allen

Vice President, Account Director

Arnold Worldwide

One consistent criticism of the fluid network assumes that the team is new each

time, so the insight and brand knowledge gleaned on one project are lost on the

next.

This is not necessarily true.

Independent producers like a steady client; there is great security in knowing that

you are important to someone’s brand and great camaraderie in being part of a

team. When things are working well, the team may stay intact for a long time.

Conversely, with an agency there is still no guarantee that the team stays in tact;

people get pulled onto other projects and/or change jobs every day.

323 Suda. 324 Leonetti. 325 Allen.


106

As Leonetti says, “You can wish for full time, but even if you go to an agency,

there is no guarantee that the employee will stay on the project. Freelancers are

more likely to remain on the project because they need the work; [you are liter-

ally] their bread and butter.”326

4.3.4.8 Can there be a culture in a fluid network?

Defenders of the current agency model inevitably mention their culture as a criti-

cal component of success. It imbues the team interactions, feeds the work, estab-

lishes the definition of success. This begs the question of whether a fluid network

can have a culture—and whether it is inversely proportional to the networks’ vir-

tualness. As Ben Malbon, Managing Partner of the BBH global innovation unit,

BBH Labs, asks, “When does the definition of an agency blur to the point of in-

tangibility? When does JWT (or BBH, or Victors & Spoils, or IDEO for that matter)

cease to be JWT? When does JWT become Victors & Spoils? When does it sim-

ply become a set of senior and experienced curators of skills, talent and partner-

ships?”327

I believe that in any organization, culture is set by the leadership and disbursed

via the processes and expectations they put in place. Thus, an agency that con-

sists solely of “a set of senior curators” will still have a definable culture. How do

they chose the team? How specific is the brief (is it just the end goal or also the

method of reaching that goal)? How deeply are individual ideas explored? Is one

discipline’s voice louder than others? Is there an aura of mutual respect? Does a

Tuesday delivery date really mean Tuesday—or is Friday acceptable? What is

the definition of success, and how are people rewarded when they succeed? Is

there a star system? Are the jokes well-intentioned or at someone’s expense?

These dynamics exist within even the most virtual community. The resulting at-

mosphere—collaborative or competitive, buttoned-up or free-for-all, hierarchical

or collegial—is born of processes and incentives, rewards and recognition.

326 Leonetti. 327 Malbon.


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4.3.4.9 Being nimble and fluid means perforce less bureaucracy—and

lower costs.

“I am not intimidated by big agencies; I see them as big, slow, not getting it.”328

Lars Hemming Jorgensen

Partner, Chief Creative Officer, Story Worldwide

“When I worked at Burson-Marsteller we moved at the speed of clients. Our cli-

ents were large pharma and things were SLOW. When I moved to a boutique

firm, we had smaller clients, and the pace was faster. Now my clients are in bio-

tech and speed is a key selling point. They move at warp level compared with the

huge bureaucracy of a Fortune 500 pharma company, so they like that I don’t

have anything weighing me down. The feedback that I consistently get from cli-

ents is [that they appreciate] my flexibility and responsiveness. I am not writing

performance reviews; I’m not reporting to the powers that be how I am going to

meet my quotas; I don’t have all those administrative duties of a large firm; I am

just doing the work.”329

Maureen Suda, now proprietor of her own fluid network, speaks eloquently to the

value swiftly moving companies place on service providers who can keep pace.

By their very nature, fluid networks have less bureaucracy and hence less drag.

And, since time is money, that means the work is not only delivered sooner, but

at a lower cost.

So far, so good. Who doesn’t want something sooner for less money?

Well, based on Suda’s comment, large companies. They are slow, and the work

for them is slow. However, I would argue that it wasn’t always that way, that the

bureaucracy has grown over time [see RG/A’s description of the evolution of the

advertising industry http://www.rga.com/about/featured/our-model] and that now

there is a sense of inevitability about the unwieldy process, a sense that there is

nothing to be done.

328 Jorgensen. 329 Suda.


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Yet, many fluid networks describe how corporations turn to them whenever they

need something quickly:

• The agency of record “can’t turn around a 3D video in five weeks, but we

can.”330

• “[If it is a large, all-consuming project] their deadlines are my deadlines; I

am more flexible and able to respond more quickly. When we proposed

our rate, Pfizer increased it and said, ‘When we call we want you to say

“Whoo, Hoo!”’”331

• “They came to us saying, ‘We need a TV commercial on the air in 6 weeks

and [the agency] just doesn’t move fast enough.’ We did.”332

• “Clients want to see progress. Sometimes with big agency they don’t get

that progress.”333

While less bureaucracy means greater speed, is there a gating factor in the size

client or amount of work that is possible?

Maureen Suda says yes. “There is a certain size account I can’t take. I always

think back to launching Celebrex. My business could never withstand something

that size. The day of approval we had 15 people on the phone. That truly is an

agency project.”334 Yet after some probing, she agreed that she could easily build

the network to handle that sized project, she just doesn’t want to. Other network

doyens agreed. The larger the network, the more their effort has to go into run-

ning it and the further they get from the work. Whether that attitude will hold true

for a future generation—one that begins with a network model as opposed to

seeking it as a refuge from the large agency world—remains to be seen. I believe

it won’t, and that people raised in the fluid world will seek and seize ways of

maximizing their reach.

330 Leonetti. 331 McFadden. 332 Pappas. 333 Brett. 334 Suda.


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4.3.4.10 Conclusion

“There are opportunities to create magic for the client; you can only do that when

you build the team for the project.”335

Vicente Garcia

Planner & Creative Director, Kardumen Digital Sympathy

Fluid networks answer many of the needs of today’s clients and workforce. Prop-

erly orchestrated, they harness the opportunities afforded by the internet to en-

sure that every team has the best talent for the task at hand. They ensure that

people spend their time on the work, rather than the paperwork. And they can be

crafted to maintain all the key attributes of a bricks and mortar group, from strong

client service to consistent, dedicated teams to a culture that fosters teamwork

and great thinking. Moreover, as Gen Y enters the workforce—and as technology

grows even more robust—issues related to working virtually will become increas-

ingly moot.

But can the model work for a big client? I think so.

Keith Reinhard, chairman emeritus of DDB Worldwide, is a man with 15,000 peo-

ple across 96 countries in his back pocket. He asks, “How do you apply the fluid

model to ExxonMobil that needs service in 56 countries (and a different service in

many of them)? In Boston and New York how do you know who to reach out to in

Singapore and Abu Dhabi?”

His answer lies in creating a strong brand culture for the network. He goes on to

say, “The stronger the culture, the less need [there is] for structure. A brand cul-

ture that is understood has tremendous value to local entrepreneurs figuring it all

out. McDonalds has done that by empowering like-minded people in markets

worldwide; they could not sit in Oakbrook, Illinois and think of the programs that

have been having tremendous success in China—but the Chinese understand

what’s valued and provide direction.”336

335 Garcia. 336 Reinhard.


110

By extension, building a network of networks, bracketed by a strong, clear net-

work culture, will enable fluid teams to deliver consistent work at any scale and in

any venue the client requires. And it answers the local knowledge/global reach

conundrum beautifully. Of course, coordinating it will add some complexity, some

(dreaded word) bureaucracy. But a combination of technology and autonomy will

streamline many operations and because the model is more flexible, bureaucratic

infrastructure can come and go as the need arises.

For multinational corporations, the fluid network poses two other potential issues,

however. Based on decades of experience in servicing global clients, Michael

Conrad points out that “big clients may be concerned about their trade se-

crets.”337 We all know that nondisclosure agreements only go so far, and clients

might understandably feel that non-employees would have even less reason to

adhere to them. Still, like other virtual vs. bricks and mortar issues (a committed

team, a corporate culture, true collaboration) if the team is well-curated they

should be individuals who understand the importance of maintaining the clients’

trust—even if it is only out of self-interest. As LinkedIn graphically demonstrates,

we operate in a very small world.

A second, perhaps insurmountable concern, is that employment laws vary from

nation to nation—and so the model literally may not be possible as a global solu-

tion. I have not explored this issue, feeling it is outside the scope of this thesis,

and so cannot offer an educated opinion.

Notwithstanding these issues, I feel that the fluid network has a solid place in

today’s marketing realm, one that is growing exponentially (witness the numbers

of groups formed in just the last year), and one that will become ever more pow-

erful as it becomes increasingly normalized.

4.4 DIY: crowdsourcing by the client “Work is no longer a place you go but a thing you do.”338

Drew Jones

Co-founder, Shift 101

337 Conrad. 338 Jones, Drew.


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“Crowdsourcing is the act of taking a job traditionally performed by a designated

agent and outsourcing it to an undefined, generally large group of people in an

open call.”339

Jeff Howe

Wired

“It’s small potatoes.”340

Craig Markus

Executive Creative Director/EVP, McCann Erickson & Tag Ideation

“The ultimate endgame is companies crowdsourcing their work without agen-

cies.”341

Chip Bergh


Clients have always crowdsourced. They just call it pitches.

At ad:tech Chicago this past September (2009), a Sears marketing executive said

that, in general, he prefers the competition of ideas rather than devoting all his

business to one agency.342 And several client-side folk I interviewed admitted to

circulating RFPs occasionally just to see what is out there.

But now there is a guilt-free way to get far more ideas—at a far lower cost. Just

post your brief on the web and see what rolls in.

4.4.1 A plethora of options

When Fast Company blogger, Danielle Sacks first saw OpenAd.net, she de-

scribed it as “a sort of eBay for advertising, marketing and design ideas.”343 To-

day, the model is seemingly ubiquitous: Crowdspring, Idea Bounty, 99Designs,

339 Jones, Giles Rhys quoting Jeff Howe. 340 Markus. 341 Bergh. 342 Ebbert, John. The Virtual Agency Model. AdExchanger.com Posted November 16, 2009; downloaded Janu-

ary 2, 2010. http://www.adexchanger.com/agencies/the-virtual-agency-model/ 343 Sacks, Danielle. Another Ad Agency Disrupter? FastCompany.com Posted July 31, 2007; downloaded

October 14, 2009. http://www.fastcompany.com/blog/danielle-sacks/culture-vulturist/another-ad-agency-disrupter


112

namethis, Chaordix, kluster, eLance, openinnovation.org, PopTent, Filmaka, Your

Encore, GeniusRocket, bootb, BountyStorms, Denok, Spudaroo, designbay, des-

igncrowd, AdHack….in a few short years it seems the concept has spawned a

nearly infinite number of sites aimed at connecting clients with talent of all kinds.

And that doesn’t even count the crowdsource-based fluid networks described in

Section 4.3; for the purposes of this discussion crowdsourcing is limited to those

sites that simply connect clients with the crowd, adding no strategic or curatorial

eye.

The crowdsourcing idea seems tailor-made for Mom and Pop bodegas and the

like, businesses that don’t have access to or budgets for agency creative, but still

need a logo. What is striking is that marketing giants like Procter & Gamble are

harnessing crowdsourcing too. Their “Connect and Develop” innovation portal is

considered by many to be a gold standard; over half the proposals submitted

come from outside the company. “P & G has almost doubled its internal revenue

since this has been in place.”344 However, others caution that the model is “very

disrupted around intellectual property. It’s a problem.”345

Even Bartle Bogle Hegarty—which surely has some pretty good creative re-

sources at its fingertips—posted the brief for BBH Labs’ logo on Crowdspring and

got 2,367 submissions in the course of two weeks. All for $1500.346

Some agencies are even using crowdsourcing to boost their internal brainstorm-

ing.347 Normally that brainstorming would take up the billable time of, say, 15

people. Together, they might generate ideas that just two people wouldn’t sur-

face. The negative is that of the 15, probably 10 add nothing but their time. With

crowdsourcing you can get all those inputs at a low, low price.

Agencies aside, for client and creative, the allure is clear. “Companies can ac-

cess the best creative ideas from any corner of the earth, while creatives can win

344 Jones, Drew. 345 Abrahamson. 346 BBH Labs A logo project by Bartle_Bogle_Hegarty. Posted April 22, 2009; downloaded October 14, 2009.

http://www.crowdspring/projects/graphic_design/logo/bbh_labs 347 Jones, Giles Rhys.


113

business from brands that otherwise wouldn’t let them past parking lot secu-

rity.”348

Of course, not everyone thinks the crowdsourcing movement is great. Roars

have gone up around the creative community from people who feel like they now

live in a constant pitch state. Commenting on Tina Brown’s essay, “The Gig

Economy,” one writer posted: “The most frightening part of your column—

because it is so true—is, ‘The managers of all these disintegrating companies

tend to be mesmerized by the notion that…everyone is slave labor.’ Too many

business models are based on getting someone to do something for free or neg-

ligible compensation.”349

4.4.2 Analysis

“The wisdom of the crowd is not always wisdom.”350

Faris Yakob

Chief Technology Strategist, McCann Erickson, New York

“With tools to manage workflow and deliverables it’s now a marketplace for great

creative. People connect with the right creators at the right time.”351

AdHack Website

“Free is not in my vocabulary.”352

Elaine Leonetti

Director, Strategic Development at Six Degrees

Crowdsourcing clearly offers advantages and appeal. But how does it stack up

against the other options in meeting client needs?

4.4.2.1 Relationships—client or team—are more or less forgotten.

Some forms of crowdsourcing rely on the crowd to form their own teams, then

share their results. But largely, the very nature of crowdsourcing means working

348 Sacks, Danielle. Another Ad Agency Disrupter? 349 Brown, 350 Malbon, Faris Yakob, Chief Technology Dude, McCann, New York, commenting. 351 AdHack website. Accessed January 2, 2010. http://adhack.com/all-about-adhack 352 Leonetti.


114

solo, with the anonymity of the web as a protective barrier between parties. As

one industry veteran notes wryly, “Of course, it’s a long trust-building process

with both the clients and the network.”353

4.4.2.2 There is no trust, only results.

No one looks to the crowd for a trusted resource. They look for numbers, trusting

that among them the prized solution will shine forth.

4.4.2.3 Global reach? Local knowledge? You bet.

The crowd is, after all, everywhere. Whether you trust their information is a whole

other story.

4.4.2.4 Innovative, media-agnostic solutions live here.

For new media—and new ideas—your experts are all online. Should you need a

traditional ad or an integrated campaign your experts may be here too. But the

client will need to decide the strategy, for sure.

4.4.2.5 It’s all about cheap, fast, nimble.

At all times it is useful to remember that there is an 18-year-old in a garage

somewhere who can knock your socks off. He will do it by tomorrow morning be-

cause he doesn’t mind pulling an all-nighter, and he is happy to work for peanuts

because he lives with his parents. (Or in a third-world country. Or both.) And with

crowdsourcing, your client can find him and a few million of his friends instantly.

There is no denying that crowdsourcing leverages the power of the internet to

deliver work with alacrity, at a low cost and with no irritating bureaucracy.

4.4.2.6 It’s the bane of the industry.

Asked whether the advent of crowdsourcing risks commoditizing agency work,

Alex Bogusky, of Crispin Porter + Bogusky, replied, “Sites like Crowdspring are

probably the greatest risk…[still] people had the same fears with desktop publish-

ing, but they turned out to be unfounded. In the end, the categories that become

353 Jones, Drew.


115

commodities do so because they in fact are a commodity. So we shall see: Is

creativity a commodity?”354

Well, apparently, yes. At least, if quality isn’t a huge sticking point. “[With crowd-

sourcing, creative] has come down to a price war. When someone can do a logo

for $250, it has become a commodity.”355

Recently, a blogger wrote, “While there is clearly a level of quality that we, in the

business, all aspire to, we are in the midst of the ‘good enough revolution’ for

sure. Content is valued as much for speed, accessibility, and portability as for

polish and production.”356

4.4.2.7 Conclusion

While the metrics of crowdsourcing are indisputable—statistically speaking,

10,000 minds are 1000 times more likely to come up with a good solution than 10

minds are—the model lacks the cohesion and strategic oversight to supply more

than one-off solutions.

While I believe that crowdsourcing will remain a force as long as there are people

who like to solve problems and have time on their hands, I cannot see this model

subsuming the agencies large or small, stolid or fluid. Once the first blush rubs

off, I imagine its real niche will be in supplying specific materials clients know they

need and in expanding graphic design and analogous services to people for

whom they had previously been out of reach—rather like Kinko’s graphic design

services supplies business cards and slim jims to companies that previous used

Xeroxed fliers. As such, crowdsourcing will, however, encroach on the livelihood

of small-time freelancers, who now have to compete against their ilk worldwide.

4.5 Conclusion to Chapter 4 In Chapter 3 we examined a series of data points that interviews and articles had

identified as valuable contributors or influencers in agency success. In Chapter 4

354 Liebling, Rick. Agency Nil, Crispin Porter + Bogusky & BBH Labs on agency models. Eyecube. Published

June 2; downloaded October 14, 2009., 2009. http://www.rickliebling.com/2009/06/02/agency-nil-crispin-porter-bogusky-bbh-labs-on-agency-models/

355 Leonetti. 356 Malbon, Edward Boches commenting.


116

we analyzed four broad agency models against those data points to ascertain

where the strengths and weaknesses of each lie—for instance, traditional agen-

cies excel in nurturing client relationships, whereas crowdsourcing eliminates any

real human connection, relegating that client-agency relationship to a purely

commercial/financial transaction. Conversely, traditional agencies, no matter how

large, primarily utilize the talent they have on staff; via crowdsourcing clients can

access talent available throughout the world, choose the best, and pay a fraction

of the agency cost.

In Chapter 5, we will chart the analysis presented in Chapter 4, and consider the

relative importance of each metric in meeting the needs of a range of clients and

projects. Over time, as yet-unknown forces shift marketing needs, economic driv-

ers and work habits, today’s analysis will inevitably become moot. We will ad-

dress some of these potential shifts in Chapter 5; I also hope that agencies and

researchers can use this framework to reassess the efficacy of potential models

in the future.


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5.0 Conclusion: Which model works best?

“If you determine how you define success, then you can figure out the key [attrib-

utes of a] model to meet those needs. To get Apple messaging you need that

client/agency relationship. To sell Burger King you need field teams and franchi-

sees.”357

Craig Markus

Executive Creative Director/EVP, McCann Erickson & Tag Ideation

“It’s about effectiveness. Clients want outcomes, not outputs.”358

Ian Millner

CEO and Founder, Iris

Before we can determine the best path to success, we have to define success.

For many agencies, prestigious awards have long been the sine qua non. Awards

validate their efforts and bestow an aura of stardom. They dazzle some clients,

too. But for most clients, success means moving the needle on their brand—

increasing awareness, sales, or Wall Street valuation. Consequently, those are

the metrics on which they judge their agency.

In Chapter 3 we identified agency components that are valuable to clients and

those that aren’t. In Chapter 4 we considered four broad agency models, and

measured them against their ability to deliver on each of the valued components.

In Chapter 5 we will explore what that means today and in the future.

5.1 A quantitative rating of qualitative forces Since a quantitative analysis of results is beyond the scope of this thesis, let us

compare the four main models along the indices set forth in Chapter 3, assigning

weights in order to arrive at a sort of quantitative rating of qualitative forces. As

organizational design consultant Reed Deshler says, “I would define winning as

figuring how you are going to cause people [clients] to chose you over others.”359

357 Markus, Craig. Executive Creative Director/Executive Vice President at McCann Erickson & Tag Ideation.

Interview November 5, 2009, New York City, New York. 358 Agency Future, Agency Evolution Report. 359 Deshler, Reed. Principal, AlignOrg Solutions. Telephone interview November 24, 2009.


118

These indices are the characteristics, tools and deliverables agencies use to at-

tract and retain clients.

Tab. 4. A quantitative rating of qualitative forces

Using a straightforward +2 to -2 rating system (with points given according to

whether something is a strength or weakness), we find that networks of specialty

agencies and fluid networks of lone rangers rate highest. Some explication:

• Traditional agencies excel in nurturing client relationships, whereas

crowdsourcing eliminates any real human connection, relegating that cli-

ent-agency relationship to a purely commercial/financial transaction.


119

• Clients inherently trust established agencies, whereas the leads of virtual

models have to prove themselves and crowdsourcing only delivers faith

through volume.

• Traditional agencies primarily utilize the talent they have on staff; via

crowdsourcing, clients can access talent available throughout the world,

choose the best, and pay a fraction of the agency cost.

• Traditional agencies have too much bureaucracy; crowdsourcing takes too

much management on the part of the client.

• The two networked systems have the potential to retain many strengths of

a traditional agency, including solid client and team relationships, culture,

collaboration and consistency. Of course, in fluid networks, particularly,

the burden for instituting and implementing these attributes lies firmly on

the person or people spearheading the group.

• All four models can deliver on the local knowledge/global reach paradigm.

• Fluid networks, crowdsourcing, and, to an extent, networks of specialty

agencies outpace traditional models in three key areas: they are truly me-

dia agnostic; offer up-to-the-minute specialized expertise; and are (some-

times dramatically) more cost-effective.

Thus, in a purely quantitative analysis, networks of specialty agencies and fluid

networks prove collectively more effective than traditional agencies or crowd-

sourcing.

5.2 The move towards networked solutions John Winsor, the force behind fluid network Victors & Spoils, believes the digital

age precipitated a seismic shift from scarcity to abundance. “The agencies repre-

sent the world of scarcity: scarcity of knowledge, scarcity of expertise, scarcity of

technical equipment. When these were scarce resources, clients who wanted a

30-second spot had to pay. [Editing film—or later working on an Avid—took real

expertise and expensive equipment.] Now, we live in an age of abundance. Eve-

ryone has the same tools, and those tools are getting cheaper. Anyone can edit

[a 30-second spot] on their Mac.”360

360 Winsor, John. CEO Victors & Spoils. Telephone interview March 1, 2010.


120

“In the future, digitally connected networks that can be curated will get things

done [and provide tremendous] cost savings. Agencies are living on borrowed

time, because they are still charging high prices, and clients aren’t quite clued in;

it is just a matter of time before the system just collapses under its own hubris

and weight.”361

Presented with this argument, not surprisingly many agencies are begrudging. As

the president of a mid-sized agency sniffs, “I do think there are projects for which

you don’t need [agency] level overhead or service, for example if the client knows

they need a brochure and it needs to say ‘x.’ But the more far-reaching the need

(and probably the larger the company) the more you need an agency.” She con-

cludes, “You go to an agency when you need a higher level of skill set and when

you need a pair of outside eyes.”362 Interestingly, others say you only go outside

the agency when you need a fresh pair of eyes. (“Big agencies with long-standing

relationships hire outsiders to come shake things up. A virtual team brings a fresh

eye to the project.”363) A final agency defender vocalizes the standard criticism of

a virtual model. “From a creative standpoint, the looser model may come up with

a better solution, but in terms of sustainability, getting the message out across

global markets, you may need a combination of the two. Agencies provide smart

strategic thinking, and a global network that a handful of guys working out of a loft

can’t necessarily provide.”364

Yet what each of these critics fails to consider is that of late, the virtual model

includes strategists and implementers, people who think about the big picture and

those who can get the tradeshow booths delivered to four continents and in-

stalled on time. It can also access the most cutting-edge talent in any field—

including some fields that are still in the process of being invented. Networks can

extend anywhere an agency might and people tasked with getting a job done,

succeed. When the chemistry is right, continuity and extended mutual commit-

ment exist between the client and the network’s core team. In short: When the

network is properly organized and led, it delivers all the major advantages of the

361 Ibid. 362 Lotterman, Deborah. Executive Vice President, Managing and Executive Creative Director. LehmanMillet, a

HealthSTAR Affliliate. Interview November 10, 2009, Boston, Massachusetts. 363 Dawson, Karen, Principal, Two Blue Spruce. Interview November 13, 2009, Newburyport, Massachusetts. 364 Hughes, Charles. Group Director Creative Services at The Clarks Companies North America. Interview

November 21, 2009, Newton, Massachusetts.


121

traditional agency and addresses many of the short-comings, all for a fraction of

the cost. In the end, that is what matters to the client.

Mel Exon, Managing Partner of industry giant BBH’s global innovation unit states:

“Clients don’t really care how or by whom an idea got developed. They care that

it is good.”365

Increasingly clients are just looking at the work—not at how it is done. “Bricks and

mortar would not be a primary consideration,” says the Geneva-based Stacey

Minton of a global pharmaceutical company. “Rather, good work, smart ideas

with solid results, good chemistry and longevity with the account team, and a

respectful working relationship, where we can challenge one another and respect

the final decision of the client—these are most important. As always, cost can be

a factor, and certainly, the quality of work for money spent would be an important

factor in maintaining a relationship.”366

Agreeing, Jennifer Brett, partner in a two-man shop/fluid network dot•content,

explains why her clients are satisfied. “They see the work we have done and our

approach and they feel confident. It is irrelevant to them [whether we are an

agency or not]; it doesn’t effect them.”367

Certainly, some clients will always want the sense of security and solidity that

comes from a large office full of employees—just as some will want their agen-

cies to deliver Super Bowl tickets. Exon observes, “If the industry is slow to

change, what can we expect from clients? Smaller, younger companies will be

more inclined to adopt a non-traditional, transmedia cross-platform approach to

communication.”368 But, it seems the change is occurring at the other end, with

entrenched corporate behemoths too.

Chip Bergh has spent his entire career with marketing powerhouse Procter &

Gamble. He is now Group President, Global Personal Care. He rebuts Exon’s

365 Exon, Mel. Crowdsourcing clients: where Agency Nil went next. BBH Labs, Posted August 11, 2009; down-

loaded October 14, 2009. http://bbh-labs.com/crowdsourcing-clients-where-agency-nil-went-next 366 Minton, Stacy. Director Management Communications at Merck Serono. Telephone interview November 21,

2009. 367 Brett, Jennifer. Partner, dot•content. Telephone interview July 16, 2009. 368 Exon.


122

observation, saying “I don’t think it’s a big brand/small brand thing. Big brands are

moving away from the mainstream model; this should be a wake-up call. The

agencies have their thing they need to protect, so change is slow—but if they

lose the value equation they are dead.”369

5.3 Future fluidity To be clear: The need for a good agency isn’t going away. In fact just the oppo-

site: In this increasingly complex and constantly shifting marketing landscape,

brands will—more than ever—need outside counsel. Where before they couldn’t

produce a Super Bowl ad on their own, today they can’t keep up with all the dis-

parate options.

What changes is the definition of “agency.”

The digital era has altered the modes and messages of marketing—requiring new

skill sets on an almost daily basis. Yes, agencies effectively supplement with

freelance expertise until they are able to integrate the knowledge in-house. And

yes, while “print” may be distributed electronically, billboards are a moving-picture

medium and “spots” are limited only by how long you can hold the audience’s

attention, the creative thought behind producing them remains much the same.

But from a business standpoint, the advent of the crowd—and its concomitant

increase in breadth and decrease in cost—is a true game changer. Today, there

is no need to have the expense of keeping the talent in-house. And if your com-

petition is able to offer equal or better solutions for a quarter the price, because

they have switched to a fluid model, you will be out of business.

As a result, going forward, marketing groups will become increasingly permeable,

if not virtual. For many agencies, the transition to a network of experts (who only

bill for the work they actually do), will oddly make them truly full-service. As one

blogger elegantly phrased it, “Differentiation will be measured at the tip of the

agency spear in a combo of unique managerial skills and creativity—where ideas

369 Bergh, Charles V. Group President, Global Personal Care, Procter & Gamble. Interview December 15,

2009, Boston, Massachusetts.


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and their makers and managers merge. And, the virtual, just-in-time network be-

hind them will be more highly-skilled than ever. You’re not gonna get hired if

you’re not any good.”370

Of course, change is hard. Existing agencies may have trouble recalibrating their

structures, cultures and mindsets. Older employees—and clients—may hesitate

to accept this less tangible form of work. It might take an entirely new generation

to embrace this approach. Mel Exon observes, “It is much easier to create new

neural pathways in fresh young brains than it is to unmake old ones.”371 More

importantly, the generation that has grown up in a completely digital world will

become a workforce that is completely comfortable operating virtually.

Meanwhile, as the model evolves, the map for established brands will be different

than the map for newer or smaller brands. To serve these clients, independent

agencies need to streamline and specialize, then team together in truly net-

worked organizations, forming a larger more substantive version of a fluid net-

work.

Then as the network concept evolves and matures, new models will gel and form.

Agencies will test options, find issues, and build capabilities—and they will sur-

pass the old-school approach while decimating expenses. And as Chip Bergh

enthuses, “Who wouldn’t want the same work, the same caliber people, the same

thinking and insight and passion and hunger AND commitment at a substantially

lower cost?”372

5.4 But then what happens? There are some patterns to human problem-solving that are as true for firefight-

ers, line cooks and high school teachers as they are for marketers: People put a

lot of thought and energy into solving a problem once, even twice and sometimes

three times. Around the twentieth time they see the same problem, they just trot

out the solution that has worked before. Eventually, whenever faced with a prob-

370 Ebbert, John. The Virtual Agency Model. AdExchanger.com Posted November 16, 2009; downloaded Janu-

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124

lem, they assume one of the pre-determined solutions will fit. Which it does, until

the conditions shift.

Over the last few years, marketing conditions shifted.

Now, a new model has sprung up to answer the needs of the new paradigm. But

this model is still evolving, still finding its best form. Indeed, we may still be at

such an early stage of the revolution, that we still need to be asking what the

questions are, rather than trying to define the answers. Yet, we can be sure that

eventually a clearly delineated new model will emerge. And once it solidifies, be-

comes the status quo—becomes, de facto, the old model—what happens?

Clearly, the future is unknowable and the opportunities for research nearly limit-

less. While I strove to make it as representative as possible, my data collection

was perforce constrained by time and access; further inputs will inevitably lead to

further insights. Additionally, though I stand by my analysis and the conclusions I

have drawn from it, it is inevitable that further questions will arise. Bearing in mind

both these factors, I am hopeful that I have created a framework which both

agencies and researchers can use to advance the thinking over time.


125

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133

7.0 Interview subjects

7.1 Named interview subjects

Abrahamson, Shaun. Founder, Colaboratorie Mutopo, a New York-based five-

man firm that uses a proprietary framework to build environments in

which organizations collaborate with large groups of customers and

partners. Clients include Discovery Channel Espanol, McDonald’s and

NARS; projects include Social Media Week 2010 and BetaCup. Inter-

views March 5, 2009; November 4, 2009, New York City, New York.

Allen, Matthew. Vice President, Account Director, Arnold Worldwide, a full-service

agency headquartered in Boston; Arnold Worldwide Partners, a global

network with offices in 75 countries, is owned by Havas. Clients include

consumer brands from Clinique to McDonald’s to Volvo. Interview

December 9, 2009, Boston, Massachusetts.

Alvarez Téllez, Carlos. Innovation Consultant, Play Mexico, an eight-year-old

Mexico-City-based boutique consultancy that develops ideas and

strategies to drive growth and improve performance. Clients range from

Mattel to Domino’s Pizza. Interview April 6, 2009, Berlin, Germany.

Amaro, Manuela. Marketing Director, TAM Airlines, the leading domestic airline in

Brazil, flying to 42 destinations in Brazil and 18 destinations abroad and

linking to an additional 35 destinations through regional alliances and a

subsidiary. 2006 annual revenue was pegged at 7,345 million BRL. In-

terview April 9, 2009, Berlin, Germany.

Arnof-Fenn, Paige. Founder, Mavens & Moguls, a Boston-based eight-year-old

marketing strategy consulting firm with a 50-person global fluid network.

Clients range from start-ups to Fortune 100 companies. Interview July

10, 2009, Somerville, Massachusetts.

Bergh, Charles V. Group President, Global Personal Care, Procter & Gamble, the

world’s largest multinational consumer goods company and the eighth


134

largest corporation in the world by market capitalization; 2009 revenues

were pegged at $83,503 mm. Interview December 15, 2009, Boston,

Massachusetts.

Bjorgvinsson, Zo. Creative Director, Founder at New York-based Dotbox, a bou-

tique digital agency that forms equity partnerships with many clients.

Clients include Harry Winston and bff. Telephone interview November

23, 2009.

Bloemendaal, Bevan. Sr. Global Director-Creative Services, Timberland, the

Stratham, New Hampshire-based $1.5 billion apparel company with 244

stores and factory outlets across the United States, Europe and Asia.

Telephone interview December 4, 2009.

Botan, Adrian. Chief Creative Officer, the Bucharest-based McCann Erickson

Romania, part of the Interpublic Group of Companies. Clients include

Cadbury, Vodaphone Romania and MTV. Interview March 31, 2009,

Berlin, Germany.

Brett, Jennifer. Partner, dot•content, a Boston-based marketing consulting firm

that specializes in helping companies align Web efforts with their busi-

ness objectives via a fluid network. Clients include Motorola, Al-

laire/Macromedia and VIMAC. Telephone interview July 16, 2009.

Clark, Matthew. Global Marketing Director, Strategy Practice, The Boston Con-

sulting Group, a Boston-based private global management consultancy

with 66 offices in 36 countries; 2007 revenues were pegged at $2,300

mm. Interview November 12, 2009, Boston, Massachusetts.

Clevenger, Terry. President Continuum Health Communications, a bicoastal fluid

network offering public relations strategy and implementation to life sci-

ences companies and not-for-profits. Interview August 10, 2009, Boston,

Massachusetts.

Conrad, Michael. Former Vice Chairman and Chief Creative Officer, Leo Burnett

Worldwide, part of the Publicis Groupe; President of the Berlin School of


135

Creative Leadership. Interview January 20, 2010, New York City, New

York.

Connor, Matthew. Executive Director of the Asian-based Wunderman World

Health. The Wunderman network spans over 120 offices in over 50

countries, with 15 specialized companies; it is part of Young & Rubicam

Brands, a member of WPP Group. Clients include: Baxter, Microsoft,

Ford Motor Company and Nokia. Skype interview March 7, 2010.

Curran, Nicole. Principal, WhyDesignWorks, a boutique Boston-based design

agency that delivers branding and communications solutions for clients

of all sizes, from MIT to Trinity Church. Interview August 28, 2009, Bos-

ton, Massachusetts.

Dawson, Karen. Principal, Two Blue Spruce, a New Hampshire-based fluid net-

work focused on cross-channel marketing for clients such as Nestle,

Timberland, Wells Fargo, PUMA, Neiman Marcus and Harrods. Inter-

view November 13, 2009, Newburyport, Massachusetts.

Deshler, Reed. Principal at AlignOrg Solutions, a global eight-man network of

strategic and organizational design consultants to Fortune 200 compa-

nies. Telephone interview November 4, 2009.

Doran, Amie. Senior Vice President, Director of Advertising and Promotions, Citi-

zens Financial Group, $148 billion commercial bank holding company.

Interview February 4, 2010, Westwood, Massachusetts.

Dunn, Dick. Director, Coalition Marketing, BI, “The Business Improvement Com-

pany,” a privately held, Minneapolis-based, global marketing firm. Tele-

phone interview November 25, 2009.

Epner, Paul. Director, Healthcare Improvement, Abbott Diagnostics, an operating

subsidiary of the Chicago-based Abbott Laboratories; 2009 revenues

were pegged at $29,527 mm. Telephone interview November 11, 2009.


136

Figueroa, Iesa. Marketing Director, Insulet Corporation, a Boston-based medical

device start-up; 2006 revenues were pegged at $4 mm. Interview

September 30, 2009, Boston, Massachusetts.

Garcia, Vicente. Planner & Creative Director, Kardumen Digital Sympathy, a Bar-

celona-based fluid network targeting digital marketing for the consumer

goods industry. Clients include Club Iradier, mobifriends and CaiFor. In-

terview April 8, 2009, Berlin, Germany.

Heath, Michelle A. Vice President, Marketing, Currensee, a privately-held Boston-

based start-up social networking site for Forex traders. Revenues are

not available. Interview July 18, 2009, Cambridge, Massachusetts.

Hughes, Charles. Group Director Creative Services at The Clarks Companies

North America. Based in Newton Upper Falls, Massachusetts, the pri-

vately-held CCNA is a wholly owned subsidiary of C&J Clark, Limited of

Somerset, England. Revenue figures are not available. Interview No-

vember 21, 2009, Newton, Massachusetts.

Huynh, Lucky. Creative Director, FutureAgency Sydney, a fluid network based in

Sydney, Australian with partner groups in Shanghai, Singapore and

Sydney. Clients include Two Eights Wines, King Furniture, Darling Har-

bor Foreshore Authority. Email interview February 8, 2010.

Jones, Drew. Co-founder Austin Coworking; co-founder Shift 101 (previously Aq-

uiferDesign), a three-man international network (Austin, Texas; New

York City, New York; Sydney, Australia) that helps organizations shift

their brands, their workspace use and their mindsets. Telephone inter-

view November 10, 2009.

Jorgensen, Lars Hemming. Partner, Chief Creative Officer, Story Worldwide, a

London-based, full-service agency with offices in six continents and cli-

ents including Unilever, Lexus and RCI. Telephone interview December

2, 2009.


137

Kaskey, Theresa. Marketing Manager, John Hancock, a Boston-based subsidiary

of Manulife Financial; 2006 revenue was reported as 33,302 CAD. Inter-

view December 16, 2009, Boston, Massachusetts.

Leber, Hank. CEO/Janitor, Agency Nil, an utterly fluid network run out of Rich-

mond, Virginia, that primarily serves mom and pop clients. Telephone

interview July 9, 2009.

Leonetti, Elaine. Director, Strategic Development, Six Degrees, a boutique Phoe-

nix-based sensory branding agency. Clients range from the Air Force to

Fairmont Hotels to Siemens Medical. Telephone interview November

20, 2009.

Lotterman, Deborah. Executive Vice President, Managing and Executive Creative

Director LehmanMillet, a 50-person, Boston-based medical communica-

tions firm, a HealthSTAR Affiliate with offices in Boston, Massachusetts;

Irvine, California; and Great Britain. Clients span Abbott Nutrition,

Bausch & Lomb, Genzyme. Interview November 10, 2009, Boston,

Massachusetts.

Magliozzi, Alyson Young. Director of Marketing Operations at a privately held,

New Hampshire-based apparel company. Revenue is estimated at $2

billion. November 20, 2009, North Andover, Massachusetts.

Markus, Craig. Executive Creative Director/Executive Vice President at New

York-based McCann Erickson & Tag Ideation, part of the Interpublic

Group of Companies. Clients include MasterCard and the US Army. In-

terview November 5, 2009, New York City, New York.

McFadden, Joleen. Senior Account Director at RAZR Marketing, a boutique Min-

neapolis-based marketing firm. Clients include MasterCard Yale and the

Window Replacement Company. Telephone interview November 23,

2009.


138

Minton, Stacy. Director Management Communications, Merck Serono a Geneva-

based pharmaceutical company; 2006 revenue was reported as $2,805

mm. Telephone interview November 21, 2009.

Pappas, Peter. Principal, 8 Beacon Partners, a Boston-based fluid network. Cli-

ents include BMW, Comcast and Fidelity Investments. Telephone inter-


Peterson, Rebecca. Vice President, Corporate Communications, Alkermes, Inc.,

a Cambridge, Massachusetts-based biotechnology company; 2007

revenue was reported as $240 mm. Interview July 17, 2009, Cambridge,

Massachusetts.

Polly, Ally. Head of Strategy and Brand Partnerships, Filmaka Entertainment Stu-

dios, a virtual community of directors, writers, actors, and other creative

artists from over 150 countries. Telephone interview February 3, 2010.

Reinhard, Keith. Chairman Emeritus, DDB Worldwide, part of the Omnicom

Group. Interview November 5, 2009, New York City, New York.

Sampson, Sara. Senior Vice President Marketing and Business Devel-

opment, Incentium, a mid-sized Chattanooga-based provider of incen-

tive and loyalty programs. Clients include Coca Cola, GM and Trump.

Telephone interview November 22, 2009.

Schiavello, Lisa. Executive Creative Director at Red Door Interactive, a San Di-

ego-based boutique internet presence management company. Clients

include Overstock.com, Rubio’s Restaurants and Cricket Wireless.

Telephone interview December 4, 2009.

Shortt, Andy. Just One Project, a fluid network formed by Canadian agency Hux-

ley Quayle von Bismark in response to the economic debacle. Tele-

phone interview July 6, 2009.

Small, Carla. Principal Strategia Solutions, LLC, a fluid network offering market-

ing consulting and strategic project management. Clients include Biogen


139

Idec, Novazyme (acquired by Genzyme) and Insulet Corporation. Inter-

view April 17, 2009, Newton, Massachusetts.

Suda, Maureen. Principal, Suda Communications, LLC, a Rochester-based fluid

network that provides multiple aspects of public relations to the health

sciences industries. Clients include New York Biotechnology Associa-

tion, Infinity Pharmaceuticals and Carestream Health. Telephone inter-


Tanaka, Koichiro. Projector, a Tokyo-based fluid network that produces project-

specific work for clients such as Uniclo. Interview January 30, 2009, To-

kyo, Japan. Subsequent email correspondence.

Tataru, Felix. General Manager, GMP Advertising, a full-service, Bucharest-

based advertising and public relations firm. Clients include Millennium

Bank, Boom TV Channel and Traian Basescu’s presidential campaign.

Interview April 6, 2009, Berlin, Germany.

Winsor, John. CEO Victors & Spoils, a Boulder-based fluid network that provides

project-specific marketing services to Fortune 200 companies. Tele-

phone interview March 1, 2010.

Wos, Liz, Director of Marketing, Peoria based Better Banks and Quincy-based

State Street Bank, two five-branch Illinois community banks. Telephone

interview November 9, 2009.


140

7.2 Anonymous interview subjects

Client of Anomaly. In-person interview November 20, 2009.

Management consultant to Fortune 50 companies. Telephone interview Novem-

ber 24, 2009.

UBS AG, Senior Advertising Person. Zurich-based UBS is a leading global wealth

manager, investment bank and securities firm; 2008 revenue was re-

ported as $83.9 billion. Telephone interview January 5, 2009.


141

Addendum

I Analysis of Interviews

Although my interview questions were designed to be fairly general, in order to

allow conversations to develop organically, many of the responses were quite

specific. The charts below indicate opinions that arose naturally in the course of

discussion—not in answer to targeted “what do you think about…” probes.

Gauging Change

Twenty-five respondents specifically mentioned—prior to being prompted—that

the industry is changing.

Tab. 5 Gauging Change

What matters

Clients and practitioners often see different factors as being most important to

success. For instance:

• Practitioners of all sizes and models value relationships both among the

team and with the client, whereas clients barely mention relationships.

• Both large clients and large agencies value local knowledge, whereas

smaller groups didn’t mention it—presumably because with a more cir-

cumscribed target, they inherently have “local knowledge.”

• Large clients emphasize creativity, whereas practitioners hardly mention

it; perhaps they think it goes without saying.


142

• Small agencies and virtual groups value consistent teams; do they feel the

need to mention them because they are presumed not to be able to sup-

ply consistency?

• Everyone values category expertise—and everyone believes that more

cost-effective solutions are essential.

Tab. 6 What Matters


143

What Is Irrelevant or No Longer Functional

There also appears to be some disparity between what large clients deem irrele-

vant (the global network per se) and what agencies mention. Notably, though a

bricks and mortar presence was the most frequently mentioned item that is no

longer relevant, it would appear that sentiment primarily stems from virtual

groups—and that they underestimate the necessity of a physical office.

Tab. 7 What Is Irrelevant or No Longer Functional


144

II Sample Interviews

The following six interviews (three from practitioners and three from clients) give

a flavor of the information and ideas people shared with me. My questions are in

bold; bracketed comments explain the gist of a conversation or tangential infor-

mation, but are not quotes.

1. Karen Dawson

Principal

Two Blue Spruce

At New Hampshire-based fluid network Two Blue Spruce, Dawson forms project-

specific teams, leads internal creative teams and acts as a consultant/subject

matter expert in marketing, creative, interactive and ecommerce. Clients range

from local businesses to Harrods, Wells Fargo, PUMA and Bath & Body Works.

Dawson began her career as an Associate Beauty Editor at Harper’s Bazaar,

then became an award-winning advertising copy writer for Elizabeth Arden and

the Creative Director, Copy for Timberland. She then served as Executive Vice

President, Executive Creative Director for digital marketing powerhouse Digitas,

leading the 175-person integrated creative department in Boston including core

creative (art/copy/design/UI) and creative services (traffic/production) working

with Fortune 500 brands.373

In-person interview, November 13, 2009, Newburyport, Massachusetts.

Why did you leave the big agency?

I had the dream job. The corner office with fantastic views, 175 people reporting

to me, a company at the top of its game. And it was soul deadening. I felt like a

princess trapped in a golden cage.

373 LinkedIn.


145

For a creative, the sacrifice [of being in a big agency] is huge. As a creative per-

son, if you are really doing what you do best, a corporation is not the right envi-

ronment.

Why pick a virtual model?

For me, it allows greater flexibility to be with my family. It allows me to work with

people I respect. The work is tremendous and I pick teams that really fit the cli-

ent.

Agencies say they do that, but there are dogs in every agency who are shifted

around from account to account; someone ends up with them.

Pace:

• You can work extremely hard and then take a month off to refresh your-

self. At Digitas, I never took a vacation without my computer. My family

would be skiing and I would be writing job reviews.

Quality:

• You deliver a better product. The work is more thoughtful, because you

are not thinking concurrently about agency politics, or your time sheet or

the 16 other projects you have going. When I am with a client, I’m theirs.

• You use your time differently and your surroundings are more conducive

to getting work done. The bullpen chatter doesn’t work for most writers.

• At agencies people can spend months doing poor work, because all they

can do is talk about the possibility of layoffs. Everyone’s scared and it dis-

tracts them.

Team:

• You have to have the right individual contributors.

• At an agency you don’t travel alone. You have the art director/writer dy-

namic. That could be good, but it could be poisonous. The fluid arrange-

ment is a lot more professional.

• If the spark between two people matters to the project, then you need to

meet people ahead of time. That is true whether it is an agency or a vir-

tual team. With the virtual model it is easier to shed someone who isn’t

working out.


146

• People are people. Someone may have had a horrible trip to the dentist

and will be in agony for the duration of your project. That is true at an

agency or outside an agency.

• Most people who are really good have opted out of the agency world.

Where are the great ideas coming from? The Nike poetry ads may have

been thought up by an agency, but the lines are from a poet.

[Discusses the trend that ideas come from top people who have opted out and

then the agency implements them]

Can you give me an example of a project?

Right now I am building a fluid network for the Wellesley Admissions Department:

We came together to create a team. Within the RFP was a stipulation that a team

be put together with specific knowledge. We have a photographer, a designer, a

View Book Queen and I am the digital head.

The two cons to the group are that we have never worked together before and

how we explain a fluid model that doesn’t have an account team.

The pros: The people doing the work are all senior level; there is no swap out.

There is also no overhead.

How many jobs can you handle at once?

It depends.

I do a lot of work with Ruben, who was one of [the original] 3 SIG people [SIG

became Digitas while Karen was there]. He sold a lot of ecommerce. Now he

goes off for a year on big projects. When I follow him, it is all consuming; then it

takes awhile to get back on the radar. [We spoke a lot about Karen’s recent stint

with Ruben, leading a 35-person interactive creative group including design, copy

and photo studio, completing revamping website, email, viral marketing, catalog

and direct mail for harrods.com and harrodshampers.com]


147

But right now jobs are coming in faster than I can knit straw into gold, I am doing

work for a wealth management firm, a local computer services firm, a fitness cen-

ter—and now Ruben has a new gourmet food project: Golden Edibles.

What are the advantages and disadvantages of the virtual model from the

client perspective?

• The virtual model offers cost savings and time savings. With agencies, so

much time is wasted presenting ideas internally up and up and up a level.

• You have big groups that are sometimes overwhelmed and sometimes

have nothing to do.

• Virtual groups have a senior team that are fairly egoless. They are fast

and efficient because they have lives and they want to get back to them.

• Virtual teams also offer broader experience, vs. someone who was great,

but then got stuck on the Hummer account for 6 years.

• Virtual works for small, middle sized companies and break-through work

for big clients.

• Big agencies with long-standing relationships hire outsiders to come

shake things up. You think you know Power Bar, but you only know your

own experience. A virtual team brings a fresh eye to the project.

• If the client needs heavy service with lots of deep knowledge and tons of

ability to churn stuff through at the drop of a hat, the agency model may

work better. If you need an idea now, virtual is better.

• I agree that if you were doing a new footwear launch and you need to do

tradeshow booths and ship things to 4 countries you need an agency.

Agencies will always exist.

• An agency needs to keep everyone working all the time. [discussion of

how the good people have been signed up and had their time allotted by

the account people well in advance] When a new project comes in, that

client gets the bums because the good people are already taken and the

bums have to work on something.

• We can’t all do great work and all get along all the time. You move on.

With an agency that is harder.

How do you communicate with the client and among the team members?


148

I take my cues from the client and the budget.

• For greater economy I try to do everything virtually.

• With the team, we use tons of email; some meetings.

• It’s more friendly because everyone has access to the client; you are not

worried about “playing by the rules,” you are just trying to get the job

done.

• There are no rules of engagement and a lot of caring.

• I’ve never used any project management software. Depending on the

group, different roles are assigned (in some groups I may have the great-

est organizational skills; in others someone else does)

The deeper I get into this model, the more I use the schedule to manage the cli-

ent’s expectations (both in terms of turnaround and deliverable). The agency

model is: when the client has a contract, but then they get a surprise, [something

changes about the deliverable] your budgeted time is up and it is going to cost

more.

What issues have you found with the virtual model?

The virtual model gives me a lot of respect for the people in the agency who do

client management, account strategy people, planners, etc. Every creative per-

son should have to fight for jobs, do the soliciting, the scheduling, the billing—just

to know how it works. The real downside of being a creative is that you can’t get

promoted, because you don’t know the business.

What’s the downside? Sometimes people move on. [At Digitas] GM was smart in

terms of buying people out. They paid for all their teams’ time, so they never

heard ‘Someone else has to do your work, because this person is on another

account now.’ But that is expensive, so is not necessarily right for great chunks of

business.

How do you see things shifting in the marketplace?

The world is changing. Lots of big companies have in-house teams. They get

their big ideas from outside, then reach out to local teams to implement them.


149

Take Timberland for example. Every season a London Agency does a TV com-

mercial and print ad for them. But Timberland can’t pay for them to do all the

takedowns, so the in-house team moves it into DM, POP, buys the media, etc.

When they are tapped out they reach out to a boutique agency and individual

contributors. It is a model for strong creative that scales at a good cost.

So what’s next for you?

I’m not so worried about next steps. I just have to put that silly list together for the

upcoming years so ok, no time like the present, right? I want to earn my MFA

write a book, most likely a memoir. I know , “Snooze!”, but there are too many

Karl Lagerfeld, Naomi Campbell, Mohammed Al-Fayed, early internet and

ecommerce stories to go to waste. I want to teach college/graduate school and I

want to travel extensively—India, China, right now,

I adore having the freedom to flit from one interesting project to the next, seldom

getting sucked into the politics, losing a night’s sleep or destroying overall good

health. I love that being a creative has allowed me to spend important time with

my kids. But if I find something I believe in and want to build, learn and

grow...well, I’m there in full regalia (clown costume, underwater diving gear,

Prada fall collection, whatever). in terms of Ruben, he’s been a wonderful step-

ping stone for incredible jobs including Neiman Marcus, The Limited, Harrods and

now Golden Edibles, but he’s just one ingredient in bubbling cauldron. He arrives

and leaves in my life like a brilliant wizard—stays for a month and flits off again

for years. It’s sorta nice.

For the next 3 years I’ll teach and continue to follow this talent-for-hire journey—

where else would it be possible to touch wealth management, food, fitness, ap-

parel, beauty, computer services and insurance all in the same week?


150

2. Deborah Lotterman

Executive Vice President/Managing Director

Executive Creative Director

LehmanMillet, Inc.

LehmanMillet is a 50-person medical communications firm dedicated to the de-

vice, diagnostic and specialty pharmaceutical sectors. Boston-based, it has of-

fices in Irvine, California and Great Britain; it is a HealthSTAR Affiliate.

Lotterman has P&L responsibility and is the creative head. Prior to joining Leh-

man Millet as a Senior copywriter, she was an award-winning copywriter at two

boutique agencies, one specializing in healthcare communications, the other

specializing in direct mail packages for consumer publications.374

In-person interview, November 10, 2009, Boston, Massachusetts.

What is the value of the agency structure?

I think about the agency as an organism. It grows and changes. You add people

and shed people. But it has a process and a shared history, a shared knowledge.

Chip and I have worked together so long we can finish each other’s sentences.

So when a problem comes in, we can take it apart and solve it quickly. “Remem-

ber when we did xxx…” There is a value to teaming, so you complement each

other’s strengths and weaknesses. I know Chip will ask about X and he knows I

will forget Y so he covers it.

When I tell a client we can deliver, I know we can deliver because there is a level

of knowledge about the team and comfort in what they can do. When you pull

freelancers together, there is a ramp-up time and you don’t know if the combina-

tion will work. Whereas if I put the team together within the agency, I know it

does.

374 LinkedIn.


151

The real structure [of an agency] helps for ways to think about doing work and for

clients to meet.

How do you work with clients?

We used to get an assignment and go into a black box and produce the answer.

That doesn’t work anymore. Clients need to be part of collaborating with the plat-

form. Their insights, their knowledge of the market, the culture and the product

[joins with our knowledge] of creative—we really come together as two teams.

Maybe you could do that with a new group who might have great ideas and be

talented [but I don’t think it would be the same.]

That is also true of the planning and account team—they really need to know the

client’s business. You can hire a freelance project manager, but I don’t know that

you can have them know the client’s business and be a trusted advisor.

Is a consistent team important?

We keep the same people on an account. Most of our clients aren’t retainer-

based, but we still keep their teams on wherever we can. We definitely keep the

account planners, and we keep the creative team as much as possible. They

know how to use the logo and they know where the landmines are.

What’s the value of the HealthSTAR network (to the agency or the clients)?

Right now, there is no value for us or the client. We haven’t personally realized it.

Right now we have a project with a HealthSTAR Communications PR company; it

would be nice to have more.

Is there any place for a fluid network?

I do think there are projects for which you don’t need an agency’s level of over-

head or service—if the client knows they need a brochure and it needs to say “x.”

You go to an agency when you need a higher level of skill set and when you

need a pair of outside eyes. The more far-reaching the need, (and probably the

larger the company) the more you need an agency.

Will that continue to be true?

The world is changing very much and very fast and what agencies are now won’t

be the same in 5 years. Definitely it will be more virtual.


152

I will be working with someone in California and someone in Japan, but we will

have worked together a dozen times. We’ll have a shared commitment, kinship,

enjoyment, and trust.

That is something that I love about the agency. There are people who make me

laugh. It is hard to get that over the phone. People younger than I am will be com-

fortable doing it over Facebook. I’m ready to change, but there are certain values

I want to preserve.

But it doesn’t all have to be email/gchat and Facebook. What about Skype?

Video-conferencing? That will help; so much is communicated through the eyes

and the facial expressions. And I can’t talk without my hands. I know this: if I want

to keep a client, or sell creative, I go there. Big ideas can’t be communicated over

the phone; it requires face to face.


153

3. Keith Reinhard

Chairman Emeritus

DDB Worldwide

DDB Worldwide ranks among the world’s largest and most creative advertising

agency networks with 206 offices in 96 countries. DDB has won the most Grand

Prix in the 50-year history of the International Advertising Festival in Cannes.

A member of the Advertising Hall of Fame, Reinhard wrote McDonald’s “You De-

serve a Break Today” and tongue twister, “Two-all-beef-patties-special-sauce-

lettuce-cheese-pickles-onions on a sesame seed bun,” as well as State Farm’s,

“Just Like a Good Neighbor, State Farm Is There.”

In 1986 Reinhard was one of the architects of the three-way advertising industry

merger, creating Omnicom, which today ranks as the world’s largest advertising

and marketing services holding company with over 5,000 clients in more than 100

countries.375

In-person interview, November 5, 2009, New York City, New York.

What is happening to the industry today?

I believe the traditional agency model is really obsolete. We are competing to see

who can create the best horseshoes.

Hollywood used to have all these people under contract: the star, the crew, the

director. They discovered they didn’t have to do that; they could find talent suit-

able to the project. I think that is the model of the future. It has not yet been per-

fected on a broad scale.

What is important to retain?

At the core, an agency needs to have three disciplines:

• Planning

375 The New Denver Ad Club: Info about Keith Reinhard, Chairman Emeritus DDB Worldwide and President,

Business for Diplomatic Action. Facebook website. Accessed March 9, 2010. www.facebook.com/note.php?note_id=227729295312


154

• Sales

• Creative Direction, which might come in two forms:

‐ Leonard Bernstein type person who can play the instruments, but

mostly acts as a synergist (though he knows exactly when the kettle

drums, then the direct mail, then the PR should come in and how they

should all work together. )

‐ Reporting directly to him is a coordinator who connects the dots.

What is the biggest issue?

How the compensation works is still the unanswered question. We in the adver-

tising business brought this on ourselves; the commission system is flawed. Pay

based on media was stupid from the start.

Bernbach said that when creative is properly practiced, it can make one ad do the

work of 10. In the old system, bad creative that requires 10 ads means you make

10 times as much as good creative that only requires one ad.

There is a woman in California who wrote a song for Marcel Blum’s; it took her 45

minutes. Being paid by the hour is ridiculous; that 45 minutes took her years and

years of training and practice.

I tried to change the compensation structure in 1990. We called it: “Total Creativ-

ity, Guaranteed Results.” We wanted to cover our costs, but otherwise we were

paid by how well we achieved the objective.

We said: “Pay us for how much we sell.” The problem is that “guarantee” sounds

like a stunt.

To make it work you need the client and the creative director to agree on a very

specific goal. Just to say “turn the brand around” could mean:

• Get new users by expanding the client base

• Increase the perception of value so we can raise the price

• Steal the competition’s clients


155

Clients wouldn’t go through the rigor or share data, so we couldn’t make the DDB

role real.

In 2000 P & G was paying all agencies based on sales, not on time [hours billed]

or media buy. The client is taking a risk; we should share that risk—and also

share the reward. Then if we are not on track in 6 months, we make a correction.

The other thing clients aren’t willing to do is create budgets directly related to the

objective. The budget says advertising got X last year, so they get X this year. In

another room someone is deciding the objectives. There has to be a connection

between resources and outcome. With time and money, the more you have of

one, the less you need of the other.

As we are going through a transition, I see agencies digging in, figuring out the

procurement model, saying it is unfair, chopping off fingers and toes, reducing

costs, cutting out the people they need for creativity. [They need instead to think

about working with clients on a better compensation model; one that is fairer to

everyone.]

I’ve been interested in the P & G model, 1 brand is all handled by one woman in

Paris. She can go into any P & G agency and put together a global program for

her brand. [Keith can supply a card]

Can a fluid network work for big clients?

How do you apply the fluid model to ExxonMobil that needs service in 56 coun-

tries? (and a different service in many of them). In Boston and New York how do

you know who to reach out to in Singapore and Abu Dhabi?

If you are designing a network you need the model that best serves clients. How

you locate the best talent? Find someone who thinks like you in Sao Paulo, Syd-

ney, Berlin. Build a network of networks.

The ideal combination is to have [a distinct personality, a network brand culture].

The stronger the culture, the less need for structure. A brand culture that is un-

derstood has tremendous value to local entrepreneurs figuring it all out.


156

McDonalds has done that by empowering like-minded people in markets world-

wide; they could not sit in Oakbrook Illinois and think of programs that have been

having tremendous success in China—but the Chinese understand what’s valued

and provide direction.

ExxonMobil wants 1 throat to choke, 1 person responsible for bringing together

all direct marketing, all PR, etc. if you don’t like it there is only one person to

blame.

What changes do agencies need to make?

Other things agencies need to do—and they do it better in Germany than any-

where—is serve the client as a brand consultant 1st.

Go to non-clients and say, “We are not here to talk about an ad, we are here be-

cause we have been studying your brand and we have some observations to

share.” Go straight to the C level without insulting the lower ranks. Say, “Your

brand is in danger of becoming a commodity; here is what you could do.”

We used to be brand consultants in the 19060s; we just had to run a TV ad. Now

there are so many points of contact; people in the bank, people on the internet. [If

we are not brand consultants] we all become carpenters instead of architects and

people will buy carpenters at the lowest price.

Other examples and thoughts

• Peter Arnell did the whole Pepsi rebrand; he said “Your bottle needs a

new design.” He talks for 35 minutes then charges $10K for new idea. His

minimum to take on a client is $50K. He is not paid by the hour; he gets a

big creative consulting fee; doesn’t retain clients or people. He has a staff

of creative and account people who implement his ideas. He has connec-

tions in the entertainment world; sees himself as a rock star.

• It is for sure that if you were starting the business today no one would ever

come up with the model we have today.

• The important thing for many clients is continuity of service. They get to

know and trust a team. They want to see that team, and they hate it when

the team is switched.


157

• Frank Cooper is a brilliant young executive at Pepsi. Consumers are doing

the creative.

• We have a tool called brand foundations. For 300K we can do a brand

build that top executives feel they own.

• I no longer have a staff of 15,000 in 96 countries. I pick and choose a

graphic designer, [a copywriter, the team I want. It is a fluid network.]

• The question is how to get from one trapeze to another? If someone said

you have to takeover DDB. Right now there is DDB Worldwide and Tribal

DDB is part of it. They are the only digital agency in the network. But they

were Agency of the Year (not Digital Agency of the Year) and won the

Grand Prix at Cannes and film in the Netherlands. I would flip the model,

so that Tribal DDB Worldwide was the lead; I would lead with the digital

because that is where people are. It would be seen as radical for the

world’s second largest network to be digital first; there would be lots of

bruises and bruised egos and we would have to seek new management.

ADDENDUM

From a follow-on email

Thinking of your thesis subject and reflecting on our conversation, I have these

additional thoughts:

• I recently spoke with a very bright young account man from Crispin Porter

who quit and joined Weiden Kennedy in New York because (among other

things) he says that coordinating a three office team is not as effective

and gratifying as having your account team, creative and planning, all in

one physical place so that social activities, inside and outside the work-

place, and other “family” aspects can be integrated into the day to day en-

vironment. Interesting that this is a young man totally savvy about all the

new media who prefers human contact and camaraderie and believes it

makes for a better product and better client relationships.

• You asked about what the big agencies have that should be preserved or

that would be missed in a newer model: To whatever I said, I would add

“culture” and “continuity.” I was speaking with the head of one of the DDB

offices who said his top concern is still the DDB culture, preserving it and

building upon it, because he believes it is culture that most differentiates


158

one agency from another and he believes that culture is important to cli-

ents. As for continuity, clients still want the same “team” on their business

and resist and hate changes in personnel assigned to their business.

How to address “Culture” and “Continuity” might be considerations for

creating new models.


159

4. Michelle A. Heath

Vice President, Marketing

Currensee

Currensee is a privately-held Boston-based start-up social networking site for

Forex traders Health’s primary responsibilities include branding, community build-

ing, user acquisition, go-to-market strategy (pricing, packaging, promo), joint

marketing programs and oversight of Currensee.com.

Previously Heath was Vice President of Marketing at Matchmine, a Web-based

media discovery platform, and held executive and marketing roles at E*TRADE

Financial, JP Morgan Chase, Fidelity Investments and Manulife Financial.376

Interview, July 18, 2009, Cambridge, Massachusetts.

How do you choose the person, agency or group to handle your creative?

What is the deciding factor? Why?

The biggest thing for me is balancing expense and experience.

I work in a start up so cost presides; I have to look at how can I make the most

out of the resources I have and what is going to get me the best result. I found

that I can’t just go to an agency and say: “I have half a million dollars, how shall I

spend it?” Now I have to really articulate my goals. I look at my network through

LinkedIn, for instance, to find the best people for the job. For example, I was pro-

ducing a video, and I wanted to do it in a cheap and effective way. I asked “Who

knows some really good freelance videographers?” My friend from an agency

said “I can do it for half a million, but these two guys can do it for $35K.” I was

able to do a great job cost effectively.

Where do you find the candidates?

[through her personal network]

376 LinkedIn.


160

Who is involved in the decision?

It depends on the type of decision, but for the most part, I have a lot of autonomy.

I run marketing for our company; if it is a big decision my CEO is the other deci-

sion maker with me. We have tightly controlled decision-making so we can move

quickly.

How many different agencies have you worked with?

A lot. 10 to 20.

What has been your experience with agencies?

It really depends on the agency. I almost feel like in some ways, especially in the

world of social media [which is what her company does] the agencies are behind.

They are so focused on traditional media buys and pitching commercials and big

ticket items that they missed the ball and are all struggling now and trying to

catch up.

Because my company is so grounded in social media, I don’t see myself using

the agencies; social media has outgrown them. I am surrounding myself with a

hub and spoke model; I have a bunch of resources who can write, produce video,

produce podcasts. I am hiring for the expertise that I need at the time.

Do you think agencies work efficiently? Does that matter to you?; Would

you use a fluid network rather than an agency? Why or why not?

I have found how things have really evolved. When I was running marketing for

Manulife Financial we used a great agency and they did all our print; we had a

whole marketing and advertising system; it is so different now than it was 10

years ago.

I probably wouldn’t choose to use an agency in any case. If I were to use an

agency it would have to be the right type of agency [the right expertise]. I wouldn’t

want to spend the money to just have them push the work around. It would have

to be a unique type of agency that I haven’t seen before. Even if we were twice

the size we are, to spend half a million a year on a retainer for the sake of having

them [is stupid]. Agencies don’t have the expertise to help you grow a viral brand.

They are doing it via freelancers who can bring that expertise. It is more a capa-

bility issue than an efficiency issue. They weren’t bringing me anything that I


161

couldn’t have thought of myself. If I am spending that money, I am expecting you

to think WAY outside the box. I want to know what sort of thing should we be test-

ing and trying, and we have pretty high standards for what that looks like.

With the hub and spoke system, there are moments when it feels a little crazy,

but by surrounding myself with highly capable individuals I [am able to accom-

plish much more. I would] have to spend time [with an agency anyway. I have a]

senior marketing/pr person who is freelancing. She is so capable; we talk once a

week and she is able to do a bunch of things on her own. We got our Facebook

page up in a week, we got our Twitter up in a week. If we had an agency it would

have taken a lot longer. Its an efficiency tradeoff.

But as the person responsible for the brand I will always have to be pretty in-

volved with whatever we are doing, I won’t ever be in a place where I can just say

“the agency is handling that.” I think that is where brands get in trouble; they hand

too much over to the agency and they lose touch with who the people are touch-

ing their brand, with what the audience needs and what they don’t need, with

what is changing. If the agency says “This is great idea,” you need to decide

whether you agree based on what you think is happening in the market now—not

on what the agency thinks.

I guess it is sort of finding the right fit for your company and your brand and what

you need. In this world of social media and how messaging is evolving, the larger

agencies are having a hard time keeping up and making sure they are recruiting

the right talent and can compete with the smaller boutique agencies.

How do you judge good creative? Award winning or results?

It’s about finding the right answer for your company. [look at her personal blog;

are you marketing to stand out or stand back?] If everyone is vying for the same

attention; what are you doing to stand out? [The creative] needs to give me a pit

in my stomach. That is not for every company. I ask how is it pushing us forward,

and how is it creating something different for the target audience that is going to

make them pay attention? This is why capabilities are so important; you have to

have people surrounding you who are going to push that edge.


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I question: “Do people like it ? Will they think we are crazy? Will there be a back-

lash?” I am always pushing the boundaries.

How much of the strategy is internal vs. agency recommendation?

Currently it is all internal.

If your agency is part of a network, does that matter to you? Has it been

useful?

[Maybe as the company grows it could be useful. Company is expanding to the

UK and she realizes that there are cultural issues even when you “speak the

same language,” so she needs someone with feet on the street to advise about

tone, resonance, and even which social media will be impactful.]


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5. Stacy Minton

Director Management Communications

Merck Serono

Based in Geneva, Switzerland Merck Serono combines its complementary exper-

tise in new chemical entities (NCEs) and new biological entities (NBEs) to de-

velop and market innovative prescription drugs in over 150 countries worldwide.

Minton was previously Director, Neurology Communications at EMD Serono in

Boston; prior to that, she worked on the agency side—as an account supervisor

and publicist, respectively—at two mid-sized firms.377

Telephone interview, November 21, 2009

Please describe your job.

Today I handle management communications for the executive board at Merck

Serono. We use a few agencies [with specific areas of expertise] for specific pro-

jects; for instance, we are doing a branding project right now.

Previously, I was director of neurology communications [based in Massachu-

setts]. We used an agency for PR and had agencies do a lot of work for advocacy

groups like MS.

Everything about my job now is based in Geneva. Previously [ it was US-centric].

When I worked in the US we had one agency that handled all the PR and advo-

cacy. Here it is much more an agency that has a specialty. If we have a specific

need [that we feel one group can’t handle, we have other groups come pitch it.]

Why not use a single agency?

I like working with different groups because it pushes us, [and pushes our think-

ing].

377 LinkedIn.


164

We work with three good agencies that we tend to use a lot, plus specialty agen-

cies [for projects] like branding or reputation audit. All our agencies are really pro-

ject specific; [we don’t use an] agency of record model. It may be a project that

lasts for a year, but it’s very project based.

Here [in Geneva] we had one agency we worked with for a long time; we had an

established relationship with them. [But we had a new need in an area in which

they were not experts. We invited them to be part of a pitch, but we [were really

looking for someone with the existing knowledge base in this area.]

For example, the PR agency we work with does not have branding experience.

We did an agency pitch to branding agencies. We look for something very spe-

cific. [With pitches] even if you choose the agency you use a lot, it keeps them on

their toes and thinking about a project harder. Sometimes when we go to a pitch

we get a lot of good thinking, a lot of good ideas and energy around the project.

Using multiple agencies with no retainer, do you lose something in the

depth of the agency’s insight into your business /ease of the relationship?

Whenever you start out with a new agency it takes time to get used to people;

you need to build chemistry with different account people, so it is sometimes sim-

pler using the same agency all the time. If it is always for the same type of project

then maybe that works for awhile. Once we established a good working relation-

ship things worked, well…well, simply worked well because you have a relation-

ship.

Any cons?

You might make a case that we would save money if we went with one agency. I

am very focused with each project to make sure it stays on budget and that the

project stays within the outline.

I am managing different projects that are quite different, so managing different

agencies is not a big deal. [I would rather have the right expertise than the con-

venience of a single agency; I’m not convinced that a single agency has the best

of anything.]


165

If the projects are big enough, even with a single agency you will have different

teams, so it is the same management issue.]

[If you have quite a few things going on, you will still have multiple teams within

an agency]. The turnover rate in agencies is historically quite high, so you tend to

go through account managers anyway. You are constantly having to rebuild

these relationships anyway; certainly there are some exceptions, but in general

that is true.

Is this move to a more project specific model country driven (Switzerland

vs US) or a trend?

It is more about the agencies now: not a country-level issue. Historically we have

not worked with agencies a lot at the corporate level. My philosophy is to out-

source because I can do more things. I am directing more, rather than imple-

menting.

This is a little different than the historical approach for Ares Serono. They have

had more of a single relationship with an agency of record, though they would still

have different relationships for individual projects. Not a trend in the industry.

More how we have worked historically. We are carrying that to how we work to-

day.

As we bring in more agencies, we are seeing levels of expertise that we really

like. Then we might grow more business with them. We brought an agency in to

pitch a project last year; they didn’t win the pitch—there were lots of decision-

makers—but we really liked them, so next time we had an opportunity, we invited

them in. They did a great job. Whenever we have other projects, we invite them.

We say, “We would like to ask you to work on this project.”

As we get to know more agencies and develop relationships and know their lev-

els of competence we will move away from the pitching process. We could move

more to an agency of record model [but will continue to reach out to specific

agencies for specific expertise].


166

Since you are marketing internationally, is there any benefit to an agency

with an international network or presence?

Its less about offices and locations; it’s about having a good world view to com-

municate globally.

Most agencies in Europe are located in the UK, which is a hybrid of US and

Europe. I tend to find the agencies we work with are OK about being global con-

tributors, but still not there. It is something they need to work on. Having worked

over here for two years, it is very frustrating when they pitch a global campaign

and don’t even address the global aspect –translation, culture, how to handle it,

what are best practices, how you talk about things and how it will be perceived.

[In theory it] may be useful if they have a global agency network, but I haven’t

seen that they have found how to use the network effectively. I am sure the of-

fices they have in Japan do great job for their Japanese clients and the offices

they have in NY do a great job for their NY clients, [but they don’t seem to be

communicating to each other]. If they are talking about [the benefits of a global

network] they seem superficial.

If they do truly have these networks, [then they need to] come together and share

ideas about how to best communicate and say “Here is an approach that works,

here is the best practice,” and share what they do for other clients. And agencies

need to think beyond “Here is a great program that is going out to the world”; they

need to think about how feasible it is to implement these ideas.

I am constantly getting proposals that say “we should have a microsite,” but if we

have people around the globe, not all of them speak English, so it is going to be

complicated. No one has thought through those issues. They need to have more

discussions among the networks about realistic implementation, how do we do

this and how will it work.

How do you handle that?

I ask a lot of questions, push back, challenge the program.

[Last year we had a] huge sales and marketing conference, 30,000 people in

Greece; it was a tremendous success by all counts. We did an agency pitch. But


167

lots of the salespeople did not speak English. The burden was on [us] the client

to come up with the solution of communications issues in terms of translation. [At

the debrief I told them about those issues.]

I am constantly pushing back. I did a recap said, “This is a big area you missed.”

They are doing better now. Some is an issue of being a London agency and it is

too easy for them [to work in English—and too hard for them] to remember that it

is a big world. So I am pushing back, putting my ideas out there, challenging

them with my ideas, kind of pushing in that way.

Does it matter that an agency is bricks and mortar?

Bricks and mortar doesn’t matter to me. We work with one agency that brings in

people to build their team—as long as you can get the job done and implement

the ideas how you do it doesn’t matter.

It gets difficult if they are difficult to reach. There tends to be more focus in a

more traditional agency; these people work for the company [and the company]

wants to do good work for you. The concern [with an outsourced model] could be:

if these are people that you have just pulled together are you their key priority?

[they may have a million other things going on and can’t focus on you when you

need them] I don’t see any kind of a problem other than that.

How large are agencies you work with?

• One that strictly does PR media probably has 20 people

• One small specialized agency was part of WPP group: they were just 5

people but pulled in freelancers. [not accessing the rest of WPP]

• We worked with one that is part of WeissComm Partners; they just

opened a London office. They did great work for us in the US, so we gave

them a shot with a small project—and they were terrible. They had a cou-

ple of high level big strategic thinkers, but couldn’t implement.

• Brand Union is a fairly well known branding agency. We included bigger

branding agencies in the pitch, but we liked them better.

When you invite agencies to pitch, you say you get a lot of good ideas. Do

you use the ideas from agencies who don’t win the pitch too? (FYI, this

seems to be common practice).


168

We might use the essence of a tactical idea, but we would never use any direct

ideas exactly as presented. If we want to use creative/design ideas, we offer to

buy the ideas (this has happened once or twice.) In general, we never want to

steal ideas and if we really like something but the agency wasn’t chosen, we’ll

discuss using the idea with them, and often, for the sake of maintaining a rela-

tionship, they are happy for us to use tactical ideas. We try to always respect the

agency’s work though, and not just use it as a free idea.

Since you hire project-specific agencies, I assume that all the strategic

thought around which projects to do is developed internally; is that true

and if so, might you be missing something by not having an agency think-

ing of you all the time too? As you say, you get good, fresh thinking when

you bring new people in to pitch.

We usually have a strategic idea, but we do invite the agency to challenge the

strategy and to bring new ideas to the table. So, I feel we have the strategic as-

pect well covered both through our thinking and an invitation to chal-

lenge/refine/rewrite by the pitching agencies.

As you become more confident in the capabilities of some of your agen-

cies, you might move towards an agency of record; what would be the most

important qualities of such an agency? Would it have to be bricks and mor-

tar?

Bricks and mortar would not be a primary consideration. Rather, good work, small

ideas with solid results, good chemistry and longevity with the account team, and

a respectful working relationship, where we can challenge one another and re-

spect the final decision of the client. These are most important. As always, cost

can be a factor, and certainly, the quality of work for money spent would be an

important factor in maintaining a relationship.

How do you coordinate the various Serono messages among divisions

across the globe?

This is a challenge. We deliver a series of core messages to all regions and busi-

nesses, and we ask that people use these messages to underlie everything they

develop. We are in the process of refining the brand and are putting in mecha-

nisms to better deliver strong overarching messages, including a positioning


169

statement and tagline, along with core messages, and then ask that all groups

use these as the foundation. Monitoring adherence is another issue that we’ve

not yet solved and really treat on a case-by-case basis.


170

6. Senior Advertising Person

UBS AG

UBS is a leading global wealth manager, investment banking and securities firm,

and one of the largest global asset managers. Additionally, in Switzerland, UBS is

the market leader in retail and commercial banking.

This person spoke on condition of anonymity, but has spent her entire career at

multi-billion dollar companies. She is based in the northeastern United States.

Telephone interview, January 5, 2010.

What sorts of marketing do you do? (target market, media used, etc.)

My role is in advertising for UBS, so my focus is traditional or non traditional ad-

vertising. From the client perspective we are b to b marketing to corporate institu-

tions, b to c to affluent and high-net-worth individuals; in Switzerland we have

retail clients, too.

There is a shift in greater usage of nontraditional media that will change how we

market. There has been a shift for us based on consumption by our target audi-

ence; as their usage has changed, we have been forced to change as well. Print

and TV and the use of media is driven by target audience behavior; in any par-

ticular country there are different usage patterns; the US is fairly TV heavy,

Europe is much heavier in print. So we consider the target audience and the

penetration of media they use. Once you get out of the US market you see that

people read a lot.

Does a single agency handle all your work? If not, what is the arrange-

ment/division of work?

Publicis is our primary agency, and we use their creative agency and Starcom

MediaVest. We use one big global network; occasionally we use smaller agen-

cies for different product areas.

For us it is a matter of efficiency and consistency; when you have a single brand

that you want to ensure has consistency around the world, it is more efficient to

have one agency. We don’t have huge budgets, and it is more efficient to work


171

with a single group in terms of spreading our money vs having different agencies

with different cost structures around the world.

Why give anything to other agencies?

It is more of a question of expertise: some products are fairly technical, and are

not worth the time and energy to get people deep in a product area; a specialist is

just more efficient. For derivatives, for example, it is much more efficient to go to

a trade agency with great expertise in the vertical area than training a generalist.

Why have you chosen to work with your agency(ies); what were the key

considerations in your selection?

The issue is where they were located from a hub perspective. We started out with

UBS in Switzerland, so we wanted a company that knew Switzerland particularly

well. [Publicis has] a good footprint in Europe and secondarily in US and Asia.

We decided to focus in terms of being a global player, so we moved the running

of the account from Switzerland to London; basically, if we are going after global

clients in major financial capitals, then it is prudent to have our communications

come out of one of those capitals. It signals that you won’t be driven out of Swit-

zerland (independent thought). There are healthy checks and balances.

I am in the US, our agency is in London, the boss is in Switzerland. I have a great

boss, and I am a firm believer in having the best talent wherever they are; it is not

a US perspective—we are really global in our approach.

How do you work together?

When times are good we travel, when not, we don’t. We operate virtually pretty

well. Our functioning isn’t dependant on seeing each other, though there is al-

ways value in terms of face-to-face operations.

What do you expect the agency to bring to the table?

We are looking for good creative not only on the creative side, but also on the

media side. You pay people for their talent, their brains, being able to have the

insight and communicate it in a way that is impactful.


172

Does it matter that your agency is part of a larger network? Has it been use-

ful?

It is nice that they were together [creative and media], but not critical. It was con-

venient that the media company that was selected was in the same family. The

bigger issue is that there are other resources that we have been able to use—for

example they have a great arsenal of digital that we can access.

Great analytics, different companies within the group, we go there in the first

place. That makes things very efficient; it is easier for them to work together. And

they do work together.

I remember once having a digital away-day, we had three independent digital

companies that all were under the Publicis umbrella participating. It worked out

very well for us. We ended up using one other agency to do some work that

wasn’t our traditional agency—they were glad we kept it in the family; when they

can provide a value-add to the client it’s a win.

How much of your strategy is internal vs. agency recommendation?

The business strategy always comes from the client. The agency decides how to

bring it to life from the communications perspective. We are responsible for posi-

tioning, they are responsible for how to communicate in a way that helps gener-

ate business. There is a difference in terms of what each participants’ role is. We

involve them when we do research. They have smart strategic people that have

great insights, so we don’t keep things so close to the vest that we don’t get good

ideas.

Are agencies efficient? Does it matter?

We can work efficiently in terms of our communications around the world. We

have people in the agency that can execute a single brand campaign in China,

the US, Germany, etc. Are all agencies efficient? No the [big agencies] have to

have more people to do things you wouldn’t need in a smaller agency; there is a

cost to running a global account.

The question of how you do things more cheaply without losing quality is not a

new one.


173

Is there change occurring in the industry?

There is huge margin pressure on the agencies, in terms of client budgets. I am

sure there are very smart people who are trying to figure out how to configure

their businesses, if clients want more and want to pay less. And there is margin

pressure. I don’t think anyone has figured it out yet.

What we are thinking about is value-based compensation: the new way to think

about it: change the thinking from one based on labor to paying for what you con-

sider value. A pay-for-performance component, which I think most agencies want.

It’s a fairly slippery slope, though. Coke has been the lead force in terms of this

approach. We are considering changing to that approach.

It has to be measurable by metrics; now, the key is what is the appropriate metric

that you as a client and agency agree on. For creative that is more challenging

than for media. Yes, we believe we should pay for performance, but both parties

need to agree on what the metrics are and do it. From the creative standpoint, for

example new work [can be measured] based on copy testing. It needs to break

through, it needs to have recall—those are fair things. The intent is that there has

to be a scheme where both people agree.

What things need to change?

How agencies get compensated, how they staff their accounts to get the work

done. There is a traditional way of agencies having a hierarchy of talent of differ-

ent levels who get trained; [agencies] have to figure out a way to train their own

people, but not necessary make it the clients job to be part of the training pro-

gram

I am less interested in the assistant AE; I want access to the right people. More

clients are going to be like me, so agencies need to look at the model to make

sure how they grow their talent, but it can’t be the assistant product manager fac-

ing off the with the assistant account executive. There are too many layers that I

don’t need to pay for.

What things are important to retain?

You pay people for their talent.


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There is an agency environment that fosters a level of creativity. How necessary

that is depends what you want the skill set to be.

Depending on how long the account has been at a shop, the people in the

agency have more of a history than the people in the marketing department. It is

good that someone has it [the history]! In the agency it gives you some staying

power.

I believe in paying for brains.

Would you ever consider a virtual company or one that outsources much of

the work (i.e. Victors and Spoils)?

If we have an idea we need to make sure that it works around the world; having

resources that can face off against resources in all those countries is valuable.

Particularly when we are talking in Asia, we want to know if the idea works in

China, we want people on the ground there is—it is different. You can’t have

people who are not Japanese attempting to take an idea to Japan. You need

someone who understands the culture, who understands UBS, who really wants

to make the communications relevant. Working with a local agency may be

cheaper, but from a consistency standpoint it doesn’t work.

You need a global network to protect a global brand.

It is a question of centralized control vs. the entrepreneurial sprit (I can do it

faster, cheaper). The answer lies somewhere in the balance; almost every global

brand has that challenge.

English is the global language. In the company we start in English. You start in

one language and don’t translate, you transcreate, don’t do a direct translation.

Pan European press, pan Asian press—it is all in English. That is a very efficient

medium for us. Then we test work in native language; it is an interesting tension.


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III Acknowledgments

I am grateful to all my many interviewees, people who generously gave their time

and insights—and often their own contacts—to provide the raw data that enabled

me to write this thesis at all.

To Doug Guthrie and David Slocum for tireless and gracious responses to seem-

ingly endless questions, both macro and picayune; their answers shaped my

topic, my research and my final product.

To my thesis buddy Matthew Connor for his willingness to trudge through an un-

edited version and offer his critical eye and supportive commentary.

To Nicole Curran and Frank Henkel at WhyDesignWorks for helping me translate

words into graphics.

To my husband John, whose immediate response to harebrained schemes like

graduate school in Europe is always, “How can I help?”

And to my son, Cole, who, notwithstanding his relief at having me more focused

on my homework than on his, has been hugely patient, generous, endless cheery

and outstandingly supportive.

Thank you.

Fluid Networks: The Next Agency Model?

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