Competing on Character: Old-Fashioned Ideas for Modern Agencies

May 8, 2019

By Adam Cahill

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Here's a hard truth that everyone knows, but no one seems to have an answer for: the legacy media agency model is broken, and things are never going to be the same again. Digital advertising will eclipse traditional advertising this year and account for two-thirds of total ad spend by 2023, according to eMarketer. That's one part of the problem, but it's something agencies can address by adding new digital capabilities, and many are doing just that.

A bigger challenge is the erosion of the trust and durability that characterized agency-client relationships under the old model. Most agencies have not devoted as much attention and as many resources to solving this part of the problem. That's too bad, because a potential solution is right there for the taking, available to anyone who wants to give it a try. I'm talking about character.

The truth is, no matter how many digital bells and whistles an agency adds, new capabilities will never amount to a meaningful competitive differentiator. It's just too easy for other agencies to duplicate them. But character — that's another story. In this situation, character boils down to an agency being honest, principled and truly customer-centric by putting its client's best interests first.

Trust's evaporation from the agency-client relationship didn't happen overnight. It built to a slow boil over many years, coming to a head in 2016 with the release of the ANA K2 report on transparency. With traditional revenue streams severely constricted by procurement-pricing models, agencies sought alternative sources of income in opaquely priced digital services and labyrinthine rebate arrangements with vendors of sometimes questionable provenance. Two years later, a McKinsey report found not much had changed.

The first step for agencies that want to compete on character is to be honest about how much money they are making, and how they are making it. If you can't explain — and justify — how you make money, then you don't deserve it. I'm not advocating that agencies stop developing new products and business models. They are entitled to charge for and make a profit on them, and agencies absolutely deserve to be paid more than they are today. However, new capabilities have to deliver some value to the client, not just create a new revenue stream for the agency. Otherwise, it's simply not honest.

Being principled is closely related to being honest. As legendary adman Bill Bernbach once noted, "A principle isn't a principle until it costs you something." Of late, however, too many agencies seem to have embraced W. Somerset Maugham's observation: "The most useful thing about a principle is that it can always be sacrificed to expediency."

If you're going to compete on character, stick with Bill's advice. Convey the value you will be providing to a client, and be willing to walk away if the client isn't willing to compensate you fairly. Agencies can make the argument that procurement-driven pricing undercuts margins, forcing them to find other ways to make money. But simply agreeing to cut-rate pricing and then taking hidden margins is not principled behavior.

Finally, competing on character means working in ways that are in your clients' best interests. Clients want more control and more visibility. In this time of expanding data privacy and protection regulations, they want and need to own their data. Many brands have adopted a churn-and-burn approach in their marketing partnerships, so agencies are motivated to make their relationships with clients as "sticky" as possible. It's tempting to use data ownership as a tool toward that end, but it's not in the best long-term interest of your clients.

It would be naïve to suggest that competing on character in this manner is likely to become a notable trend among the largest agencies. There are just too many conflicts and biases inherent in the holding company model for that to happen. Such a pivot is out of reach for big companies that have to answer to stockholders and financial analysts on a quarterly basis.

But it is happening. There is a new breed of agency popping up that's well positioned to compete on character. It's an expanding niche, and the agencies filling it are helping their clients leverage media technology in ways that best fit their needs by giving them ownership of technology and training them how to use it. Real transparency is baked into client-agency relationships when clients own the data, technology, and other elements of the ecosystem. As this trend expands, the idea of modern agencies competing on the old-fashioned ideal of character should continue to gain traction.

Adam Cahill is the CEO at and founder of Anagram.

The views and opinions expressed in Marketing Maestros are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.

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