Why Agencies Are More Like Baseball Managers?

Jan 21 2014, 2:10pm CST | by

Why Agencies Are More Like Baseball Managers?

Masayoshi Son, Asia’s top Internet venture capitalist, is a Japanese businessman and the founder and current chief executive officer of SoftBank. According to Forbes magazine, his net worth is $9.1 billion as of 2013 and he is the second richest man in Japan (and #45 on Forbes’ Powerful People list). Son is a brilliant thinker who once stated that he has a 300-year business plan for SoftBank.

Son, who  owns Vodafone Japan, has been on a buying spree in the past year, including the acquisition of more than 80% of Sprint for some $22 billion and appointing himself Chairman.

Within days of taking over the company, he reviewed its operations. He learned that the advertising at Sprint was not cost-effective. This made him, by is own admission, quite angry. Sprint spends a large amount of money on advertising every year, but its effects have been almost negligible. He immediately directed the Sprint executives to terminate all existing contracts with the company’s advertising agencies and start from scratch on advertising, with new agencies.

Agencies, like baseball managers, are hired to get fired. But the swiftness of this dismissal was particularly unusual. The act was harsh, and embarrassing. However, whether you agree with Son’s conduct or not, one has to respect his rationale for wanting a change. Agencies get hired to sell their clients’ products and services. When that doesn’t happen, and especially when a client spends large amounts of money on advertising, change is often called for.

No less an authority than David Ogilvy, who pronounced the dictum, “We sell. Or else,” would agree.

Client-Agency relationships used to last decades. Now they fray within a few years. We are moving toward a much more transactional state of relationships. The tyranny of the stock market and the pressure from the marketplace often dictate a new, short-lived state of mind. If they don’t produce immediate results, agencies can find themselves out in the cold in a quarter or two.

In fact, there is no longer something like a “safe” relationship. Agencies are now in a perpetual new business mode with their existing clients, fighting to earn approval daily, as every client becomes an “at risk” client. The C-Suite is more vigilant about advertising ROI than they’ve ever been, and that underscores how relationships are being evaluated.

The relationship used to be evaluated annually or quarterly. Now, due to technology, sales data allows marketers to assess customer acquisition and business results on a daily basis. In essence, Advertising became a retail business, if not in approach or philosophy, then as to how it can be judged and measured. Agencies are reviewed every 24 hours.

That is one of the less welcomed side effects of data – it makes advertising, and relationships, more short-term.

Agencies that can adapt to this new reality will thrive. Those that would continue to wait for the annual review to hear how they are doing, will be annihilated.

Sprint and its agencies have gotten used to not winning. It has been perpetually stuck in third or fourth place in the U.S. telecommunications market.

There is a need for a change in mindset, and bringing on new agencies with fresh thinking and a more confident attitude that are willing to push the envelope may be just what it must do to compete effectively with bigger companies. Sprint needs to start thinking like a leader – to become a leader.

Avi Dan is the founder of Avidan Strategies, a marketing consulting firm that specializes in business and marketing advice, managing agency search and compensation, and advertising strategy. Before founding the firm he spent 30 years in senior management and board positions with top global ad agencies.

Source: Forbes Business


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