Agencies talk about using creativity to drive business, but are mostly passive servants of their clients’ cost-cutting agenda. Does it have to be that way?
I’m no economist, but I guess I’m not wrong in understanding that a business has two basic ways in which it can grow profits: cut costs or increase income. Much of the time – and not just in a recession – the focus is on cutting costs. It is seen as the simpler, quicker and more achievable of the two options. It keeps the shareholders happy (too often the misguided motivation for many CEOs), satisfies the bean-counter instincts of the big boss (60% of FTSE 100 companies are run by trained accountants), and is the obsession of management consultants.
Even as a humble researcher, you can see the impact of the cost-cutting imperative within clients’ businesses. When your client contacts aren’t being ‘realigned’ out of a job, you mainly see it in the lack of investment in brand-building, as if this is a luxury for the ‘good times’ and that there is no cost in dispensing with it to focus on sales and promotions. And there is, of course, a great deal more cost-cutting going on out of sight, all an expression of the short-term perspective that puts profits today ahead of long-term growth. But once the costs are cut, what do you do then?
Most creative businesses working with marketing departments are sadly the passive servants of this process. Which is a shame, since they often possess the vision, energy and, yes, creativity, to see paths for growth, not merely serve the cost-focused agenda of their clients. Part of the problem is that they rarely have the ear of the chief exec. And the businesses that do, management consultants, are typically also run by bean-counters with a focus on cost management and reduction.
OK, I know management consultants are our favourite whipping boys, but their bad rep is given some credence in my mind by witnessing the ‘strategic’ recommendations given by one of the biggest and most famous to a major newspaper client of mine. These were built on an objective analysis of robust data… and were completely meaningless if you knew anything at all about how newspaper readers behave and what drives their patterns of purchase.
Last week I came across a consultancy with a rather different approach. Set up and staffed by former ad agency people, you might call Bow & Arrow a ‘growth consultancy’. Its focus is firmly on understanding a company’s assets in terms of its brands and capabilities, and blending this with an understanding of consumer behaviour and needs to identify opportunities for new revenue streams.
Management consultancies have long been trying to bolt brand and consumer specialists onto their offer, but it’s never worked because a focus on financials is written into their DNA and they don’t really get people. Interestingly, the strategic heart of Bow & Arrow is driven by former ad agency planners, applying their strategic skills to defining opportunities for business growth, something for which many planners are very well equipped, but also something that they will never have the chance to do within the conventional agency environment.
In case you wonder, I’ve not become Bow & Arrow’s PR consultant. I just think it’s a fresh and relevant application of classic planning skills that feels to me very much like an exciting model for the future.
I also think this focus has interesting implications for marketing. So much of marketing is about incremental gains, be it through a new bottle closure, line extension or trade marketing initiative. This stuff will never go away, of course, but shouldn’t marketing be the real driver of substantive business growth? Along with those Insight johnnies, these are the guys who know the brand and the consumer and have a handle on the latent power that lies within these assets. An explicit reorientation of marketing towards identifying, planning and implementing the growth opportunities that lie within its brands, markets and consumers would give marketing a much more powerful role within the business and maybe get the Marketing Director that long-coveted place on the board. Marketing needs to be integrated into business at the highest levels, as it becomes ever clearer that the business is the brand, not just in the service sector but for any business that sells to the ‘consumer’.
Maybe the ‘Marketing Department’ needs to become the ‘Growth Department’. But then who’s going to be responsible for the ‘2 for 1’ promotion?