NEW YORK The Advertising and Marketing International Network, a group of 42 small- to mid-size independent shops, is gathering at Le Parker Meridien in New York this week to hear from the likes of Bill Nicholson and Andrew Jaffe on their place in the industry landscape.
By AMIN's latest tally, nearly 70 percent of client billings are controlled by about 100 holding-company shops, with the remaining 30 percent split among more than 300 independents. Meanwhile, the group estimated that its members' profit margins have sunk from 9 percent to about 7 percent, calling into question some of the practices agency owners often take for granted, Jaffe and Nicholson said today.
Both speakers suggested shops improve their business literacy from the CEO down to the account-executive level and that small independents consider doing away with media-buying operations.
Media planning should stay within the agencies, said Jaffe, adding that network shops have one great advantage: As the regional agencies do not usually compete, they can share nontraditional ideas. "That's gold right there," Jaffe said.
Nicholson, vp of the American Association of Advertising Agencies, suggested small shops without media-buying operations are "traveling in good company," as neither Ogilvy & Mather, Arnold nor McCann Erickson has buying units. Such agencies "can compete on ideas, rather than critical mass" and reach consumers via relationships with media agencies.
Jaffe, a consultant and author of the book Casting for Big Ideas, added that some local media executives know small markets down to the most effective billboards and radio stations. But if those services do not sell, it may be time to part with the bundled model, he said. Many of AMIN's agencies buy media together through media-buying companies in an effort to get better pricing, said Millie Ward, president of the network.
Jaffe urged agency heads to stop over-promising services to win business, with the hope of building the business in the future. By not explaining the cost of creating the best work possible, shops lose out on that stream of revenue for the duration of the relationship. Account planning in particular is often written out of the cost of creating good work, said Jaffe.
"Don't whine about your overhead," Jaffe said. "Talk about what you think you need to be doing to do a great job" and what that will cost.
The conference, attended by shops from across the U.S., Hong Kong and Europe, will continue through Wednesday. Speakers throughout the week include MARC USA CEO Tony Bucci and legendary creative director Hal Riney.