Hilton review a sign of an endemic problem
I applauded Alison Fahey two years ago for her stand on the California Lottery fiasco. She nailed it again about Hilton [“Here They Go Again,” A&C, June 6].
A few agency heads still have some spine, not the faux testosterone they spew before meekly sucking up whatever rapacious clients dish up to them. Yet this is what we have come to: agencies underwriting mega-clients. And taking it lying down, in every sense of the word. And then grumbling about how clients abuse them, about how you can’t make a buck at the business these days, about how ethical standards in corporate America have never been lower.
All of which is true. But hey, clients are putting it out there, saying, “Take it or leave it.” And because there are far too many agencies chasing far too few opportunities, and because the appetite for growth is insatiable, agencies are taking it. The result: They get to work for clients who have no respect for them. And they overservice the account, because to lose it might trigger a run on the bank, with other clients saying, “Gee, if people are bailing, why am I sticking with them?” Or: “Those bozos are in trouble; let’s whack their compensation yet again. If they resign, there are plenty others out there to replace them.”
So, ultimately, who really picks up the tab for this? It sure isn’t the client. The client gets it all: the best creative that fear and trembling and economic panic can produce; bargain-basement prices for ideas and service; and a nice sharp Damocles sword to dangle over the agency’s head. No, the biggest cost is borne by the staff at the agency. Soon after “winning” this glamorous $100 million account, they learn that there will be no raises and no bonuses, but they will see a negative adjustment in their fringe benefits and maybe a salary giveback “until we prove ourselves to the new client and renegotiate our compensation agreement into the profit zone.” Which will happen, like, never.
The rest of the cost will be absorbed by stockholders in the agency. Those are the folks who have been mesmerized by agency chieftains that growth is the magic elixir. Stockholders see overall billings grow dramatically, but profits and dividends haven’t increased commensurately, if at all. Why? Because not all growth is healthy growth. Ask your oncologist.
That’s what we have now: clients who would exploit the oversupply of agencies and dearth of self-interested collegiality in the agency ranks; and who then seize the opportunity to bequeath their account to yet another new agency “partner,” an account which may be high in growth but low if not negative in the profit that is supposed to be the lifeblood of the agency business.
The cure? Agency heads who finally demonstrate some courage behind their espoused convictions. Who will just say no.
Yes, those agencies that have the courage to walk away from clients or prospects who would disrespect them will lose something. They will lose the opportunity to subjugate themselves to a lousy client and a chance to lose money while hating themselves for being so weak.
What they will gain—if enough agencies draw the line—is a return of the ad agency to a position of healthy, respectful partnership with the clients they serve.
Founder and CEO
For the Record: WPP Group CEO Martin Sorrell did not cut off chairman Philip Lader when the latter was responding to an investor’s question about succession specifics at the holding company during WPP’s 2002 annual meeting, as reported in “Lines of Succession” [Adweek, May 30]. A WPP rep disputes eyewitness reports that Sorrell responded with a withering glance and notes there was laughter in the audience, as an audio recording of the session confirms. According to the tape, Sorrell did respond to the questioning shareholder by saying, in part: “I’m not dead yet. Thank you for your cheerful question. … I would just echo, in relation to the succession point you make, what Phil said. Within our operations, we do have succession plans, and that includes the parent company, too.” In the same article, the name of Omnicom Group CFO Randy Weisenburger was misspelled. In a letter to the editor [June 6], the agency name Mendelsohn Zien was misspelled.
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Hilton review a sign of an endemic problem