Under the title “More gain, less strain: Optimizing marketing partner performance and value in a digital world”, the CMO Council published an analysis of how marketers are optimizing marketing partner performance and value in a digital world.

It’s not a pretty picture

• Just 9% of marketers believe traditional ad agencies are doing a good job of evolving and extending their service capabilities.
• 58% of marketers are unsatisfied with the current process of measuring their agencies’ advertising effectiveness.
• 55% of senior marketers do not systematically evaluate creative impact, and 58% are unsatisfied with the evaluation process associated with benchmarking their agencies’ creative advertising effectiveness.
• Only 36% of marketers are committed to their agency relationships, with 49% saying that they may consolidate or change their global agency rosters.
• 32% are looking at selective replacement in their agency rosters, 9% see increased turnover of resource, and another 9% are decreasing the use of agencies.

A small bright spot in a dark environment

Marketers are continuing their search for new insights: 48% consider the most important value and gain from outside agencies fresh ideas, analytics and perspectives. 39% are looking for new methodologies and creative approaches.

When reviewing and evaluating agency relationships, the majority of multi-national marketers look at strategic contributions (57%) and business value created (56%).

The frustration is palatable

The survey respondents also ranked the top five causes of pain and friction in their agency relationships: (in order)

• Lack of an agreed-upon set of analytics and metrics that defines success and failure
• Limited knowledge and comprehension of the client’s business
• Lack of value-added strategic thinking
• Pricing and budgeting issues
• Integration of marketing plans and services

Do marketers get what they pay for?

As we all know, marketing expenditures are under incredible pressure from CMO’s and procurement.  While marketers complain about lack of knowledge and comprehension of their business, they don’t seem willing to pay agencies to acquire this knowledge.

A lack of knowledge and comprehension will lead to lack of value-added strategic thinking. The agency might be able to give out some creative candy, but no filling, strategic meals.

Being so unprepared to market a client’s business, the chance of success is diminishing and there’s no benefit in succinctly defining failure and success.

Ultimately, resulting in pricing and budgeting issues.

It takes two to tango

Marketers have to understand that agencies are not lazy or disinterested in learning about the client’s business. Structurally, the client-agency relationship is not set-up for such a learning experience.

On the other hand, agencies need to set parameters for success and failure at the pitch. The pitch meeting should be the occasion where both parties set expectations, discuss challenges and solutions. It should be less about fireworks, grandiose creative and big promises. More about business decisions, culture check and partnership processes.

The current pitch meeting with all its confetti is best suited for a fling. As any married couple with a few decades under their belt will tell us, confetti gets annoying after a while. Long-term relationships are built on trust, transparency and authenticity.  No confetti needed.

My daughter is in an interesting phase: She can read but she can’t comprehend fully what she’s reading. A picture book with a few sentences per page is perfect for her developmental stage. No, she wants to read a chapter book without any pictures. She proclaims proudly: “I’m on page 55.” When I ask her about the content, the answer is very sparse.

When she gets her homework, she wants to get it done in a few seconds: “Easy peesy, lemon squeezy.” Once I note a mistake, she freaks out and never wants to touch any homework again.

Typical behavior for brands in the emerging marketing space

Many brands have not yet fully deployed all basic digital marketing tools. Instead of focusing on getting the fundamentals right, they rather develop a comprehensive Social Marketing strategy.

Others have deserted Facebook/Twitter/YouTube presences. Why bother improving these important platforms for their brand? Let’s just start a Google+ page.

The fancy commercial not matching the dirty store layout.

The radio spot not matching the horrendous attitude of your employees.

The list is endless.

We should strive for innovation and amazing ideas.

First, we need to clean-up the store.

Change the attitude of employees.

Get the fundamentals of marketing right.

Get the fundamentals of the business right.

Then, and only then, should you consider the newest platform aka toy.

While hosting a brand session in Kyoto, I was able to visit the Ryoanji Temple. Just like millions others, I didn’t come for the temple, I came for The Rock Garden. Built in the 15th century, the garden consists of raked gravel and fifteen moss-covered boulders, which are placed so that, when looking at the garden from any angle (other than from above) only fourteen of the boulders are visible at one time.  It is traditionally said that only through attaining enlightenment would one be able to view the fifteenth boulder.

No trees are to be seen; only fifteen rocks and white gravel are used in the garden. It is up to each visitor to find out for himself what this unique garden signifies. The longer you gaze at it, the more varied your imagination becomes. Some consider the garden as the quintessence of Zen art.

What do you see in the garden?

Some people see hills with their peaks poking above the clouds.

Some people see tigers crossing a river.

Some people see islands rising from the sea.

Some see a lake. Some see heaven itself.

Some people only see rocks.

What do you see in the garden?

What do you see in a brand?

Some people see a product.

Some people see a dream.

Some people see a bigger thought.

Some people see a passion.

What do you see in a brand?

Focus and simplicity.

Modern life is full of distractions. Our minds weren’t built to all the information coming at us constantly. Even when these temples and gardens were built, the outside city life was busy and full of entertaining distractions. Visiting a garden with a few rocks in it gives our mind just enough information to feel comfortable. It calms the mind, like calming water, allows the dirt to settle, and the water to clear.

Modern marketing and branding is full of distractions. We tend to to stray from the brand core, brand vision and mission – focus on diversions, things that have nothing to do with brand. The ever-changing marketing and technology landscape forces us to keep up, open new channels, engage and connect. Nothing wrong with that. But, once in a while, we have to go to back to the brand garden and calm the brand, like calming water, allow the diversions to settle, and the water to clear.

Perception is not reality.

Why is our thought deluded? Why can’t we perceive reality correctly? One reason is that we are usually limited to a single, subjective view. Our deluded perception constantly deceives us into making bad decisions. As mentioned above, at The Rock Garden 15 stones are arranged so that from any point, only 14 are visible. So how many stones are there? Like the stones, we can’t see everything all the time.

Why is our perception of brands deluded? Why can’t we perceive reality correctly? This is especially true when you are working every day on a brand. Because we’re so close, we’re becoming deluded. We’re projecting our own goals and objectives to our point of view. You might think you know your brand. Most likely, you’re just overlooking the blind spots.

There’s no “average”.

All things have an ultimate nature. A real existence that ordinary people’s minds are unprepared to see. When people see something, they immediately classify and label it. They are unable to make sense of reality without this process. This conceptualization process is based on our subjective experiences and always causes gross distortions.

Let’s say a new creature just arrived on earth. The creature doesn’t understand male and female, so you explain to the creature that women are on average shorter than men. The creature doesn’t understand subtleties like “on average” and will assume from now on that any shorter person is a woman. We’re all as stupid as the creature, constantly making incorrect assumptions about the world because of our limited system of thought.

All your focus groups, brand research and data analytics give you a “general” idea or an “on average” perception of your brand. You make assumptions about a brand based on subjective experiences working on it, and it will always cause gross distortions. When working on a brand, always assume you are as stupid as everyone, constantly making incorrect assumptions about the world because of your limited system of thought.

When facing a single tree, if you look at a single one of its red leaves, you will not see all the others. When the eye is not set on one leaf, and you face the tree with nothing at all in mind, any number of leaves are visible to the eye without limit. But if a single leaf holds the eye, it will be as if the remaining leaves were not there. – Takuan Soto

I’m amazed at how many brands and agencies think their competitors are only the ones who operate within their category. I’m even more amazed that brands and agencies tend to focus on one competitor as the one to watch.

Toyota vs Honda.

American Airlines vs Delta.

Colgate vs Crest.

Clearly, brands love to create this one enemy that will focus energy of the team and makes it easier for the public to create a faux war of brands: (Who is better? Michael Jackson or Prince?) While I see the benefits, I tend to believe that it’s not good enough to know who you consider as a competitor. You need to understand who considers you as a competitor.

Barnes & Noble vs Borders

While both brands were engaged in an intense turf war, Amazon stole their lunch. Forcing one into bankruptcy and the other brand to wonder: How did that happen?

Toyota was regarding GM as their biggest competitor. Honda saw Toyota the same way. Who’s outselling Honda now? Hyundai.

All the big networks were engaging in a battle for viewers while cable networks started to develop their own drama shows. Oh, and this little company called Netflix changed the game even more dramatically.

Your competition is anything that causes your customers not to buy your product/service. It’s anything that erodes or explodes your competitive advantage. It may not even exist today, but it could mean you won’t exist tomorrow.

In the end, you need to focus on improving your product/service every day and ensure that your source of competitive advantage remains robust and relevant. If you focus on the ‘competition’, you may forget to focus on your customers, and it is they who ultimately manage your brand. Brands often make choices that are more influenced by what their competitors are doing rather than what their customers want. Too many people regard differentiation as being different from their competitors, but it’s not much use if in your quest to forge your own identity, you do things people don’t want, don’t desire, don’t buy.

Our knowledge and understanding of the human brain has dramatically increased in the last few decades. We have come to learn that our behavior is mainly driven by emotion, not by rational decision-making processes.

Any modern psychology literature never uses the words ‘human’ and ‘rational’ in the same sentence. However, in the marketing world we still believe human beings are rational. They process through purchase funnels, rational triggers will change their behavior, whole campaigns are designed around the false construct of rational, human behavior.

It’s time to throw the idea of rational humans in the trash.

Let’s face it: We are emotional and social creatures. Even the head of chemistry at your closest college is. The head of IT. Everyone one of us is an emotional and social being. All our decisions are emotional, we just justify them rationally. That’s why focus groups are such a nonsense: We are incredibly good in making up stories to explain behavior. It’s not an outright lie. We just don’t know ourselves why we act the way we do. We don’t have the key to access the real reason behind our behavior – the subconscious mind.

We still focus on distinguishing between rational and emotional factors in communication development.

We act as if our two brain hemispheres are two brains: one is the emotional side, the other one the rational part. And we believe that emotion translates into brand affinity and rational factors into the final purchase decision. That’s why we get bombarded all day long with rational messages. Messages that don’t connect with us on a human basis.

And while we duck and dive, hide from snipers we call commercials and IEDs we call disruptive messages, we are longing for meaning. We’re starved for meaning.

This is an opportunity for brands that understand this reality and dare to be different.

People wants something different, something that stands out, connects with us, moves us and inspires us. While we see an advent in the art of storytelling, advertising is increasingly dominated by quants and algorithms. It’s almost impossible to tell a good story when the quants are trying to run the show.

A good story is always true.

We all want a good story to be true. That’s why gossip, rumors and conspiracy theories spread so quickly.

Stories don’t need proof of verification. When a story is well told, communicates inspiration and is interesting, it gains credibility and authenticity over time. We don’t question good stories, we love to listen to them and are saddened when they end. Just to hear more good stories.

Brand story telling requires time and continuity.

And it requires commitment, dedication and a long-term view. For most brands it means they have to break out of the rationality restraint and develop evocative and engaging stories based on brand philosophy and belief.

A great story takes time to unfold. You can’t fully enjoy “War and Peace” without reading the first 200 pages. Brands need to be willing to show the same patience while their brand story unfolds. Communicate cues that will come to a conclusion over time. All the clues, characters and chapters create a meaning we all so desperately seek. When we find meaning, it fills us with a sense of fulfillment and connects us closer to a brand. That’s what brands should be doing now.

What does it take?

Courage.

The courage to be honest with ourselves.

We’re not rational beings.

We’re emotional creatures.

Our industry has to move away from our obsession to hold onto logic and reason.

Let’s show some real courage.

I’ve met with a few CMO’s and agency heads in the last few weeks and was astonished how painful relationships between agencies and brands have become. This is not just a feeling, it’s a major data point in a survey released by RSW/US: A client’s look ahead at agencies.

I do recommend downloading the free report but in case you’re pressed for time, here are two facts that caught my eye:

- Only 55% of marketers state they would consider using their primary agency again if they were to put up their account for their review.

- A marketer’s tendency to look for a new firm is driven by general lack of satisfaction with an agency’s creative, their strategic thinking, or their general lack of proactivity. (…) “…”lack of proactivity” was one of the primary reasons given for finding a better agency partner. They were with a much larger firm and felt, because of their “small fish in a big pond” status, they weren’t getting the attention they needed – resulting in their desire to look for a mid-size Agency to better serve them.

The challenge for agencies

When the first agents appeared, the mission was very clear: Purchase advertising space on billboards/print on behalf of businesses.

Over time, brands wanted more: produce remarkable advertising that increases sales. To answer that demand, agents started to hire illustrators and copywriters. They transformed into agencies. And customers became clients. This hasn’t changed much over the decades.

The objectives of clients changed dramatically. It used to be enough to produce advertising that produces sales. We give you a coupon, you buy the product. You get an invite to test-drive a car, you head to the showroom.

The market changed over time. Everything became more complex and complicated – more brands, more media, more channels. Suddenly, you had to spend more to get some kind of lift. The placement game turned into an arms race.

No matter what: Clients still want to see increased sales. As they should.

Unfortunately, it’s complicated. In the old days, the guy with $20 to spend on advertising sold more than the guy with $1 for advertising. The ability to track results against communications activities has become diffuse. A campaign lives in too many channels, the desire to differentiate now means that there might be no direct, trackable call to action and the complex economic structure (pricing, distribution, competition, economic climate, etc.) cause signal interference for brands that advertise widely, sell multiple product lines, distribute through multiple sales channels, and face many competitors.

The complexity can be overwhelming

Clients have to muddle through this complexity and they don’t feel very empathetic when advertising agencies are not ready to join them through this struggle. On the contrary, the report suggests that clients feel a great deal of disappointment and bitterness about the failure of agencies to help them guide through complexity, while still delivering obvious, measurable results.

What agencies have to fix:

- Strategic Expertise:

Clients complain that agencies don’t think strategically, don’t have solutions that help clients gain market share, increase volume or otherwise steal sales from their competitors. They feel agencies don’t know their customers, their market, their competitors, their sales and distribution channels – in short: the complexity of the business. .

Agencies feel that clients don’t ‘get’ marketing, just focus on ROI and sales. They don’t get brand building and set unrealistic goals. Agencies don’t believe they are considered partners, just a commodity, ready to be thrown on the big pile.

- Transparency & Accountability

Clients believe agencies are bad at strategy and analytics. They can’t effectively measure the results they produce, or even worse, hide the real results. Clients desire more accountability from agencies: either sales, volume or ROI. At the least, they want to know how an agency defines success.

Agencies believe that there’s more to advertising than analytics and sales. While clients want deep analytics and strategy, they are not willing to pay for it. Clients just look at production and media costs, expect the strategy/analytics part to be a value-add.

- Creativity

Most clients believe their agencies are not creative enough. They don’t get enough brilliant and innovative ideas.

Agencies believe clients don’t get sophisticated create, don’t get new technologies and scared of new ideas.

- Trust & Service

Clients believe agencies don’t really listen to them, they don’t receive the desired attention and have to deal with junior staff after the initial pitch. Not enough unsolicited ideas, not enough interesting ideas, not enough fully developed ideas. They feel that agencies express a superiority towards the internal marketing team.

Agencies feel there’s no loyalty on the client side, trust being the main factor. Too often, they are being tested and not being seen as a collaborative partner. Clients can be abusive: passive-aggressive (delaying approvals) or direct (screaming/nasty emails).

- Costs & Capabilities:

Clients feel agencies nickel & dime them constantly on items that should be part of the project. They don’t know how to price a project and manage the costs throughout the process. Clients don’t want to deal with multiple agencies but they feel handcuffed assigning everything to one agency. They desire a more flexible and fluid model.

Agencies believe more clients want work for free or that clients just don’t pay enough. They often have to deal with procurement directly, a business division solely focusing on cutting costs. Clients often start out with one budget but get cuts later and expect the same results.

So, is the agency model about to expire?

The summary of the report is pretty devastating: Clients have business needs and objectives. They hope an agency can help them to achieve those through marketing and advertising. However, they don’t believe agencies are well equipped to surmount any of these challenges. That’s how the distrust cycle begins. And ends with a review.

There are two major challenges:

1. Nobody pays agencies a dime to become experts on the client’s business. That’s why agencies become experts on advertising. They don’t have the people, reward structure and procedures to explore the economic and market structures of the client and, if needed, challenge the client in his assumptions. Agencies are often limited interacting with the client’s marketing department, lacking insights from other divisions to develop the best recommendations. And the client doesn’t pay an agency to get that information on their own.
2. The fear factor: Let’s face it: Good advertising is not direct marketing. It’s based on good insights, hidden desires, based on lifestyle, develops cultural icons and builds a movement. When you found that nugget, that little hidden thing, you will do anything to defend it. Agencies will limit their research to prove their case. They will bring limited ideas to the table to make sure that the one idea will be bough by client. That idea is really the only thing they have, the only thing that keeps them in business. When the campaign is over, they will gather research that defends their idea, they often don’t gather the best data and don’t learn from campaign to campaign.

That’s why relationships falter: hurt feelings, unmet needs, disappointment, and an erosion of trust. That’s what happens when you misalign expectations with capabilities.

Nobody is at fault here

Clients ask agencies to solve problems they can’t solve.

Agencies are too married to the services they provide, not the outcomes of those services they created at one point.

It comes back to the old paradox: Agencies thought they were in the business of selling access to the development and placement of advertising, while their clients were trying to buy increased sales.

Clients don’t need agencies anymore.

They still need creative production and media placements/negotiation, etc. But not a full-service agency.

What they need now are business-model-seeking agencies that create roadmaps to carry out consumer, product, channel and marketing strategies. These agencies will facilitate the creation of assets that are placed into those channels or campaigns on behalf of their clients. They will be trusted experts who guide clients through the ever-evolving landscape of their market.

Capitalism is the art of creative destruction. Some agencies will prosper, some flounder, others disappear. Nothing is forever.

Marva Collins started in 1975 Westside Preparatory School in Garfield Park, an impoverished neighborhood in Chicago. She took these inner-city kids who had failed in public schools and started to treat like geniuses. Some of her students had been labeled  as “retarded” or “learning disabled.” Early in life, these kids had lost their enthusiasm and lust for life.

These “disabled” kids soon started to read Tolstoy, second graders recited Shakespeare and heated discussions about Kipling were common.

Marva Collins believed people’s qualities are not carved in stone.

This fixed mindset leads you to believe that you will never change. That’s the reason why you think you can’t draw or sing. Somebody told you once that you can’t do certain things, that you are the way you are for the rest of your life. As soon as children become able to evaluate themselves, some of them become afraid of challenges. They become afraid of not being smart. If things get too challenging – when people don’t feel smart or talented – they lose interest.

The growth mindset is based on the belief that your basic qualities are things you can cultivate through your efforts. Although people may differ in every which way – in their initial talents and aptitudes, interests, or temperaments – everyone can change and grow through application and experience. This belief creates a passion for learning. Why would care to prove to the world how great you are, when you can get better? Why try to hide flaws when you can overcome them? And why go for the stuff that worked in the past, instead of trying new experiences?

So, does your brand have a fixed or growth mindset?

Is your brand focused on validating itself all day long? Extremes like Enron and Lehman Brothers come to mind. The newspaper and music industry. Detroit. The graveyard of formerly great companies is littered with brands that had a fixed mindset. They never changed, never the let air in, adjusted to changing times way too late.

Brands based in a growth mindset communicate possibilities. They stand for innovation, they believe in human potential and development, stakeholders are trying to help each other. They embrace failures and cherish learning experiences.

Your company needs to overcome the fixed mindset.

Many successful companies develop fixed mindsets. They refuse to believe that a company with people less talented and not as smart as them can ever have the ability to surpass them. They still believe that attention and market share can be bought. They refuse to push, stretch and confront their own mistakes and grow from them.

They can change and overcome the fixed mindset.

Or they’ll die.

(The inspiration for this post came from “Mindset – The Psychology of success” by Carol S. Dweck, PH.D)

You invested years and millions of dollars developing a brand positioning. You sat through endless workshops and thousands of slides to come ahead of the competition and move your client/brand to the next level.

It took you gazillion meetings to get every stakeholder on the same page and everybody agrees to the new positioning.

And now it’s time to share your new positioning with the world. Millions of dollars are being invested to share your new vision with the ones that want to hear. Brain power that could light up Beijing is being used to developed integrated strategies.

And then the recall hit. A tsunami. An irreverent tweet. A customer service mishap that goes viral.

Millions of dollars: Gone. Wasted. Years of hard work: Gone. Wasted.

Your happy ads and smiling faces now seem so irrelevant and can’t compete with the reality of the news. That happy model doesn’t look like your customer service representative whose totally stressed out and can’t help but reverting to the script. Suddenly, your Alice-in-Wonderland-ad-world feels like a parody. The ivory tower of brand positioning while the world around you falls apart.

When life hits, it makes all your meetings and positioning documents look silly

The brands that survive these hits, these black swans, are the ones that live values and philosophies, not live them through decks and internal meetings.

These brands understand that life is not lived in the corporate ivory tower, it’s lived by real people dealing with reality. That means: stuff happens. Black swans will suddenly show up. And destroy your carefully developed strategy in one second.

A brand isn’t developed or positioned by sticking to a strategy document. A brand is developed by doing stuff that reflects your culture, your values, your beliefs. In a relevant way, tightly aligned with the needs of people.

It makes me sad to see how few Japanese companies have been able to turn the earthquake/tsunami into an opportunity to trust these companies for life. We read a lot about their supply-chain problems, they have given money but I don’t see anything that comes out of the core of the brand. Nothing that makes me believe or feels like it’s moving Japan forward.

People are fickle. We already started to move away from Japan and focus on Libya. The opportunity is slipping away. Your brand and reputation is built more in bad times than good, it saddens me that only a few have embraced this opportunity to live their brand values.

“We are all faced with a series of great opportunities brilliantly disguised as impossible situations.” –Charles R. Swindoll

Pardon my ignorance, but I thought Sizzler was a pure US brand. The Salad bar, the mediocre (I’m being nice here) steak, the plastic diner atmosphere. Oh, and the soft ice cream. Well, I was wrong. It’s a global brand. As usual: I know that I know nothing.