Ian rocked into the office this morning, fresh from a PM magazine all agencies round table shindig with a number of agency leaders, MDs etc.
These mornings are a feast of fun for us in the office, a usually calm, collected and considered Ian, can barely contain his overnight simmer. He positively is busting for a chat, and Jas and I can almost feel him ready to boil over.
Anyone who encounters Ian will know it’s pretty hard to get a rise out of him (I can lay claim to managing to do this almost once – in an incident, involving my 6th Nokia N95 in 2 weeks and a pint of cider. Although Vodafone’s dismal approach to customer service is co-culprit)
This need for an outburst lasted all through our first-thing-Friday People meeting until he could take it no longer. No AOB? BANG. The topic of this rare eruption? Innovation, advertising agencies, the nature of conceptual creativity i.e. the ability to do a different more connective ad, versus innovation – the ability to provide solutions our clients are not expecting. Jas shouted INCOMING and we all hit the deck.
What stuck me – is the clear struggle Ian was having with wanting desperately for the industry, or more specifically agencies to grow up and evolve and stop boring each other with tales of clients, late adoption blah, blah (anyone still awake?), With the pleasure he was getting from seeing innovation being falsely encapsulated by an obsession with the ad, what goes into an A4 page, and whether illustrative style, or a bloody banner can be seen as ground breakingly progressive. blah blah blah.
I think what we were viewing can encapsulated by the term Schadenfreude. In fact I know it is because I have just spent ten minutes on Google trying to spell it. I was eventually able to confirm this is the case and that the term definitely isn’t German for pork chop.
I think one could argue that Communications holding companies buy ‘established innovation’ i.e change that’s margin friendly. Be that agencies that show high levels of creativity, an unusual regional speciality, or integration model. It certainly was the case with the three I have been under (although I can only speak for healthcare). Their model is set up to buy novel agencies at the top of their game, and make sure that they keep doing what they are good at, never deviating too far from a formula that got them purchased. No risks and certainly no investment without return.
I was told that the agency world’s approach to innovation was ‘bloody stupid’ by a clever guy, Craig, I often sit next to at the Company of Cutlers in Sheffield. He put it a bit like this; his world; the stainless steel industry is split into revenue from commoditized and specialist products. And all the players in the market know this. (To me it’s a bit like artwork, design, traffic and the sexier agency products services). They know that the commodity business is always under margin pressure and threat (when was the last time a page of artwork cost £400?). And they know that the specialist products migrate to becoming the commodised ones (conceptual writers at medical writer rates).
Sheffield steels answer to this reality is to set up R&D, cap the maximum margin and devote the remaining resource to innovation, partner with academia and the great and the good to push constantly what drives ultimate value – providing services and products that are first to market. Find ‘unused to’ products that meet existing needs but do so either more efficiently or in better way.
Given this I couldn’t figure out why agencies don’t have R&D. Why don’t they someone tasked with research, with finding new ways of solving established problems.
Is it because 20% margin and 4 out of 5 on the annual review is fine, and innovation requires investment and less short term returns?