Joseph George's blog: Value addition, proactiveness and other such expenses…

Many years back on a Sunday morning, I heard a rare commotion at the front door of my apartment. By the time I grudgingly got out of my bed, all I managed to hear was a loud slam and the look on my dad’s face. He looked amused and confused, but preponderantly infuriated and asked me in unmistakable rhetoric whether I knew what ‘compulsory donation’ meant. A few Sundays back, I saw the same look on a vegetable vendor’s face. He was being belligerently asked to improve on the amount of ‘extras’ (chilies, dhania, ginger etc.) that he had flicked gratis into his customer’s bag. What originally was intended to be a gesture of gratitude and goodwill on the part of the vegetable vendor had over time without much fuss transformed into a demand for ‘cost of patronage’ and that too with a righteous sense of entitlement.

Advertising agencies throw in these ‘extras’ too. I suspect though, that they were thrown in a lot more and a lot more frequently when agency remuneration was more rational. Consumer Surplus was a concept first propounded by Adam Smith. Simply put, it is the happy difference in the consumer’s mind between what he is prepared to pay and what he actually pays. It is my strictly personal belief that till not so long back, agencies earned more than what they may have been prepared to work for. And a combination of gratitude, righteousness and middle class guilt made agencies push their body and mind just that much more. In fact agency folks felt quite offended if they were referred to as the guys who for their clients, just did their ads or manage their ‘publicity’. Agencies went beyond what they were supposed to do. And happily at that. From distributing products in your neighborhood on a weekend so as to send out a proactive ‘product acceptance’ report on Monday to sitting in on interviews to choose franchisees to briefing the sales team on possible ‘sell stories’ to assuage fussy and coy retailers. And among many things, the most tangible and visible way they felt appreciated for doing so was by the way they were being remunerated by their clients.

Arguably, the current agency remuneration ecosystem disincentivises agencies to go beyond what they are being paid for. Young brand custodians in agencies may be growing up being reminded that every hour they spend on a client’s business needs to have been budgeted for and therefore any excess time spent would negatively impact client profitability. And young creative minds probably discouraged from experimenting because there just is no cushion built into the remuneration to do so. So while proactiveness, initiative and value addition is great, they are also being told that those laudable virtues are expenses for the agency if it ain’t being paid for. While most agencies are struggling to attract good talent given the dual issues of unattractive entry salaries and the fact that there are now many other equally cool and creative jobs in the market, what is more potentially damaging is that the ones who do come in or continue to stay on for the pure love of advertising, could well be asked to run with one eye on their brand and one on their watch. This could also then logically have a very painful bearing on the most often asked question in appraisals within agencies: “What did you do on your brand that was beyond what was expected of you?”

Can agencies afford to not go beyond what’s asked of them? Can they afford to ever not ask that question at their internal appraisals? HELL NO. Succumbing to this can lead to the very core of what drives advertising agencies getting damagingly altered. So there is no option but for agencies to figure out how to get out of this mess - on their own. More than ever before, it is the responsibility of the senior management of every agency to find funds for these ‘extras’. All types of costs not related to brands and clients need to be brutally interrogated and every available rupee needs to be diverted to recruiting right and incentivising talent to go beyond what’s expected of them. Being alive and responsive to changes in client expectations and what defines as ‘extras’ in today’s time and age. Clients are under pressure - all of them and without exception. And they will seek help from anyone who can help them save costs by achieving results faster and cheaper. Nope, it does not anymore define as value addition. It is today, basic hygiene. Peter Drucker had once said that the meaningful definition of a ‘generalist’ is a ‘specialist’ who can relate his own small area to a larger universe. Agencies today have lost the right to claim to be competent enough to be playing that role. And they have no one else but themselves to blame for this. This has resulted in clients having to hire the services of far too many people. And in today’s environment, clients see this as an irresponsible but unavoidable indulgence, besides it being a huge operational irritant. Clients have careers too - many of them compete with their own brands for fame and with their own colleagues for bonus. Agencies need to do their bit here too, more than they have been. And quickly at that, because like how their agency counterparts have been for long, clients too ain’t hanging around to their jobs for too long today.

Clients need to come half way as well. Enough and more has been said and written about how the equation between clients and agencies are similar, if not identical to that between two individuals in a relationship. In both cases you tend to go beyond what is expected of you when you care enough for the other person or for the relationship itself. But when the ‘extras’ are not appreciated, you start at first questioning and then eventually resenting the cost of providing those ‘extras’ to that relationship. Maybe an agency’s financial performance should be a metric that shows up on the client’s performance matrix. Just as agencies take pride in contributing to a brand’s success, clients should too in their agencies’. That to me then is true partnership; where both parties are contributing to and looking out for each other’s growth and success. Clients need to realise that irrational remuneration not just affects their agency’s ability to recruit the right talent on their business, but more impedingly, it disables the agency talent on their business to go beyond. And if ever there was a time when clients need their partners to go beyond, it is so now.

So, what’s the right remuneration for an agency? Let me just say, and say so at the risk of sounding simplistic, extremely simplistic – one that at the very least enables the survival of passion for the clients’ business within the agency. Because at the end of the day, advertising is a profession of passion. And when passion is on ration, it can’t be good news. For any one.

(Joseph George is CEO, Lowe Lintas and Partners. Views are personal.)