Überlebenskampf in der Agenturwelt: anpassen oder untergehen?

[Musik] Herzlich willkommen zurück bei Agency Life Deutschland. Und damit auch zu einer ganz speziellen Folge. Wir verlassen heute unser Münchner Studio und geben ab zu unseren belgischen Kollegen und Kolleginnen Louise und Robin. Die beiden hatten einen ganz besonderen Gast bei sich, beziehungsweise über eine Fernschaltung, Michael Farmer. Eine echte Agentur-Koryphäe, der Agenturen und deren Umwelt die letzten 20 Jahre begleitet hat, analysiert hat und super spannende Learnings und Insights aus dieser Erfahrung teilt. Die beiden interviewen ihn in insgesamt zwei Folgen. Und wir nehmen das Ganze auch in unseren Agency Life Deutschland Podcast mit rein, weil wir der festen Überzeugung sind, dass auch hier spannende Erkenntnisse und Learnings für euch vorhanden sind. Kleine Vorwarnung, der Podcast findet in Englisch statt. Wir hoffen aber trotzdem, dass ihr alles gut verstehen könnt und von vorne bis hinten mit dran bleibt. Damit starten wir rein in diese Folge. Viel Spaß. [Musik] Bevor wir mit der heutigen Folge starten, möchten wir euch zunächst erklären, worum es uns und unserem Partner Teamleader in diesem Podcast überhaupt geht. Wir laden in jeder Folge spannende Persönlichkeiten aus der deutschen Agenturszene rein, die mit ihren Erfahrungen und ihrem Wissen andere Agenturen inspirieren und motivieren möchten. Und genau dort setzt Teamleader mit seiner leistungsstarken Agentursoftware an. Diese hilft bereits über 4000 Agenturen dabei, Terminfristen einzuhalten, Budgets zu kontrollieren, Gewinnmargen zu steigern, Kapazitäten zu planen und vieles mehr. Damit ihr euch voll und ganz auf eure Kreativität konzentrieren könnt, von Agenturen für Agenturen. Und los geht's mit unserer heutigen Folge. [Musik] Good evening Europe, welcome to Agency Life, the must follow podcast if you want to run a better agency. I'm Robin from Teamleader here in the studio with my ever so cheerful sidekick Louise. Hello Louise. Good evening Europe indeed and good evening Robin. As you heard it right for the first time, this episode we're switching to English. Indeed the language of Shakespeare, but why? Well, I hope our loyal listeners aren't too confused, but they don't have to worry, we're still just Robin and Louise. We're still just bringing you the conversations with the finest agency people in the business. But Robin, do tell, why aren't we speaking Dutch this time? Yes, so usually Louise, as you know, you and I have conversations with agencies from Belgium and the Netherlands. And then we have some other colleagues who do it with agencies from France and Germany. But today we're going all the way across the Atlantic. We have an American guest in the studio. It's all very exciting. Well, come to think of it, your good evening Europe in the beginning, it probably doesn't make a lot of sense to our guests. I think he's not in Europe. He probably just ate lunch. I don't think it's evening over there at all, so it might be all a little bit confusing to him. Yeah, you know what? Let's just ask him directly. Hello Michael, what was for lunch? Robin, hello, I'm still waiting for lunch. So I'm going to have a late lunch today. I'm delighted to be with you and I don't feel like I'm a stranger to Europe, even though I'm more than 3000 miles away right now in the States. I lived in Europe for more than 20 years in Switzerland, Germany, France, the UK and Turkey and did some wonderful work there, I think, with my great client. So I'm very happy to be with you and talking as if I'm sitting right across from you in Belgium. Yeah, thanks to the wondrous ways of the Internet. This is all made possible. Very cool. So thank you, Michael, and I hope we will not make you wait for your lunch too long. Before we really get started, Michael, in the final version, our Dutch speaking audience will hear a fan of yours, Peter, and speak very rivetingly about why he thinks you're such an interesting person for us to talk to. But for the uninitiated, could you quickly introduce yourself to our audience? Surely, I'm happy to do so. I am American, born in the Midwest many years ago. And I went to business school and got an MBA after serving in the US Navy for five years and began a consulting career, first with the Boston Consulting Group and later with Bain & Company. And it was with Bain that I ran the new Munich, Paris and London offices in the 80s when we were a new consulting firm. I left because I loved consulting and I wanted to do more of it myself. So I stayed in London, started Farmer & Company in 1990. And then, as it turned out, within two years I had my first ad agency client. It was Ogilvy in London that at the time was having some profitability issues right after they were bought by WPP. And we worked with them for some time. It was quite successful. We did improve their profitability with their fine leadership. And that convinced me that the agency business, which was just starting to go through so many strategic changes in the 90s, was an industry that I wanted to devote myself to. So I spent another ten years or so in Europe working with Ogilvy and Gray and Shell and what was then Thompson before moving back to the States in 2001 and continuing my practice. In 2015, I had just about 20 years of work behind me or more in the industry and I thought it would be a good time to summarize what I knew. So I wrote a book called Madison Avenue Manslaughter based on what I had learned working with a number of agencies around Europe and the States. And then, since then, I have written a second book called Madison Avenue Makeover, which is about the transformation of HUGE, a digital creative agency based in Brooklyn, but with a global footprint. Which had a new CEO who decided that he was going to change everything. He didn't want to be part of Madison Avenue's manslaughter. He wanted to do something different. That's the summary. But it's an industry I'm passionate about and frustrated with because there's so much more it could do, so much better it could be. And there are a lot of things that get in the way of that. So it makes for a very interesting consulting practice and I'm having a lot of fun. Okay, cool. Well, Michael, it's clear that you're the perfect person for this podcast, for this conversation. You have an impressive track record as a management consultant, but also at the agency side. So we're very interested to hear your perspective on the industry. It's an industry you've repeatedly called "broken". So can you explain to our listeners, what is the main problem in the agency industry today? Sure. I can best explain that, Luis, by saying, first of all, I did not understand anything about the agency world when I did my first work some 30 years ago. And that was often the case in a consulting assignment. You know, when you walk into an industry, whether it's an advertising industry or a chemical industry or glass making, automotive, you don't know what's going on. And it isn't always a great direction for the senior people to tell you this is the problem we have and this is the work that we need done. I found that it helps to develop a personal and data driven point of view about what's happening. And I came to the conclusion that the industry was broken after several years of discovering that ad agencies do not document or measure the amount of work they do with clients. And as a result of that, they do not use it to negotiate fees. And in fact, they don't even really know how much work they're doing for any given client. And that is a very odd thing, because the most simple ad agencies are very creative factories that make ads for clients. They make strategies and they make ads. So they are doing things and they are doing deliverables for their clients. And yet they don't use those metrics to determine how much they get paid. So in a way, they are agreeing to accept a certain amount of money and to allocate people for an uncertain amount of work. And at the same time, most of the big agencies are owned by someone who need increasing profits from them. So if you have an uncertain amount of work, which as it turns out is growing and fees that are being held down a bit by clients, you're really creating a recipe for disasters, because often the only way agencies can make a profit margin is to downsize. And there can't be anything worse than getting rid of people when the workload is growing. Agenturen müssen öfter miteinander reden und nicht nur über die schönen Dinge. Genau mit diesem Ziel hat das Agency Life Team die letzten Wochen und Monate damit verbracht, all das auf Papier zu bringen, worüber sonst viel zu selten gesprochen wird. Dabei herausgekommen ist das erste Agency Life Magazin, sozusagen ein Liebesbrief in Magazinform, das das Leben einer Agentur in 135 Seiten widerspiegelt. Dynamisch, vielseitig und leicht chaotisch. Darin verbinden wir Agenturen, klopfen ihnen auf die Schulter und liefern Zahlen. Haben wir dein Interesse geweckt? Dann bestell dir jetzt dein kostenloses Magazin. Den Link dazu findest du in den Show Notes. Denn wenn du mehr und mehr Arbeit machst mit weniger und weniger Leuten, wird es einen Effekt auf Qualität geben. All das führt zu all den verschiedenen Wegen, in denen die Industrie kaputt ist. Und es ist nicht permanent kaputt, es gibt Dinge, die damit gemacht werden können. Aber ich sehe keine Leidenschaft, weder in den Marketing-Departements der Kunden, noch in denjenigen, die Agenten runten, mit der gebrochenen Natur der Industrie zu kommen. Das ist das, was mich wirklich frustriert, wo die Dinge anstehen. Also denkst du, dass die Agenten nicht wissend sind von diesen Problemen? Von dem Fakt, dass sie mehr arbeiten für weniger Geld? Ich denke, dass die Agenten nicht über die Menge der Arbeit, die sie machen, denken. Ich denke, dass sie so unbekannte über ihre Beziehungen sind, dass sie schuldig sind, dass sie alle drei Jahre gefeiert werden. Das ist in den letzten 20 Jahren schon der Fall gewesen. Auch wenn die Agenten bewusst sind von diesem Problem, welches ich immer mache, wenn ich diskutiere. Eine der Dinge, die ich tue, ist, sie in die Arbeit zu analysieren und ihnen zu zeigen, wie viel Arbeit sie für jedes Klient machen. Und ihnen zu zeigen, wie wenig sie für diese Arbeit bezahlt werden, und wie sie die Arbeit untersteuern, weil sie das nicht können. Ich zeige ihnen das alles. Und es verändert nicht unbedingt ihre Behinderung, weil sie immer noch denken, obwohl sie es nicht sagen. Aber sie denken immer noch, ich bin mehr schuldig, als ich bin, die falsche Sache zu machen, wenn es um meine Agenten geht. Im Fakt wollen sie ihre Klienten nicht konfrontieren und sagen, schau dir all die Arbeit, die wir tun, und schau dir, wie wenig das Geld ist. Und wir haben jetzt eine Analyse, die der Farmer gemacht hat, die zeigt, dass es einen großen Gap gibt. Sie sind gefreut, das zu tun. Sie wollen ihre Klienten nicht konfrontieren. Sie wollen gute Leute sein und gehen mit ihnen und halten sie glücklich und servieren sie und halten sie für nächstes Jahr. Aber ich denke, sie spielen eine Loser-Game. Ich denke nicht, dass sie ein Spiel spielen, das sie gewinnen können, indem sie das tun. Was ich von Ihnen höre, ist, dass diese Agenten in etwas unheiligen Beziehungen mit ihren Klienten bleiben, anstatt die Probleme zu erheben, die sie für viel Arbeit bezahlen. Ja, ich glaube nicht, dass die Beziehungen unheilig sind, weil sie arbeiten, um ihnen gut zu fühlen. Aber was ich sage, ist, dass etwas gut fühlen und schlecht sein kann. Und ich denke, dass das wirklich wo wir sind in diesen Beziehungen. Sie fühlen sich gut an. Alle worrieren sich über die Analyse, die von Klientenbefugnissen gemacht werden, etc. Sie worrieren sich über all diese Dinge. Aber wenn man wirklich sieht, wie viel Geld verwendet wird an Agenten, wie viel Geld verwendet wird an Medien, und wenn man sieht, wie viel Arbeit in dem Umfang der Arbeit geschehen ist, und dann sieht man die Ergebnisse, die durch diese Befugung erreicht werden, und man muss sagen, dass das unheilig ist. Ich möchte etwas deeper in die Befugung der Arbeit nachdenken. Du hast es schon ein paarmal erwähnt, die Befugung der Arbeit ist ein Weg, die Analyse oder die Anzahl der Arbeit, die in den Agenten gemacht wird, zu analysieren. Kannst du kurz das Konzept der Befugung der Arbeit erklären? Ja, sicher. Und lass mich anzeigen, was es war, als ich mein erstes Befugnis mit Ogilvy London 1992 begonnen habe. Sie hatten damals 20 Klienten oder so. Sie hatten 50 Kreative, die in 25 Teams von Komponistin, Komponistin und Komponistin und Arztdirektor waren. Und sie hatten etwa 380 Adres im Jahr. Und sie waren alle TV-Adres, Print-Adres oder Radio-Adres. Und es war alles originelle Arbeit. Also, 50 Kreative waren etwa sieben Deliverables pro Jahr. TV, Radio, Print, originelle Arbeit. Die Arbeit hat viel von den Exekutiv-Kreativ-Direktoren geprüft. Sie haben alle einzelnen Teile angeschaut, die in die Agenten gegangen sind. Und sie haben, weißt du, während der Entwicklung eines TV-Adres oder eines Print-Adres oder eines Radio-Skriptes, die Arbeit der Kreativ-Teams geprüft. Und wenn sie sich um die Arbeit interessiert hatten, dann musste es sofort gemacht werden, bevor es zu dem Klienten kam. Jedenfalls, das war so, wie das Geschäft früher war. Es ist die Art, wie die Industrie sich selbst mythologisiert. Wir machen die Arbeit, die Arbeit, die Arbeit. Wir machen sicher, dass die Arbeit richtig ist, bevor es zu dem Klienten geht. Unsere Exekutiv-Kreativ-Kreatoren, die Millionen Euro pro Jahr verdienen, bringen ihre kreative Aufmerksamkeit zur Arbeit von jüngeren Leuten und bekommen es richtig. Das ist die Mythologie. Okay, zwei Jahre zuvor habe ich noch eine Studie für eine andere Olga V. Office in der Welt gemacht. Wir sind jetzt im Jahr 2023. Das ist im Jahr 2021. Und diese Office, die in einer großen Stadt ist, hatte auch 50 Kreative, so wie die Olga V. in den alten Jahren. Die Olga V. in den alten Jahren hatte 380 Stück Arbeit. Weißt du, wie viele Stück Arbeit von 50 Kreativen im Jahr 2021 gemacht wurde? 15 000 Stück. 15 000 Stück, von denen 13 000 Stück die Adaptationen von 2 000 Stück originaler Arbeit waren. Die average Kreativ war 300 Stück pro Jahr. Was sind sie? Facebook-Posts, Instagram-Posts, online-Video, Direct-Marketing, Banner-Ads, E-Mail-Marketing. Glaubst du, dass jemand immer die Arbeit sieht, die ein Kreativ macht, wenn sie einen Tag macht? Nein. In anderen Worten, die Kreativen Direktoren schauen jetzt auf eine sehr kleine Teil der Schöpfung der Arbeit. Die Schöpfung der Arbeit, für mich, ist die Summe der Arbeit, die die Agenzierung macht. Also die Kreativen Direktoren könnten immer noch die TV-Tasche schauen, sie könnten immer noch die bekannten Printwerke schauen, aber glaubt mich, außer von vielleicht in die Strategie für digitale und soziale Arbeit, können sie nicht die Ausführungen schauen, sie können nicht möglich sein. Und die Agenzierung hat wirklich in eine Fabrik gegründet, die Tausende und Tausende von Stück pro Monat. Es ist ein sehr anderes Geschäft. Ich kann mich nicht von einer anderen Industrie in meiner langen Konsultationskarriere denken, die so viele Veränderungen durchgeführt hat, und gleichzeitig so ignorant ist, wie dramatisch diese Veränderungen sind und wie es heute eine Rethinkung braucht. Und was ist die Rethinkung? Wenn die Kunden heute nicht wachsen, müssen sie in die Zukunft wachsen. Das ist der einzige Weg, dass sie ihren Preis von Teilen behalten können, Talente zu erzielen und im Markt zu sein. Es geht um Wachstum und Wettbewerb. Wenn Agenzier das nicht tun, müssen sie das tun. Klienten müssen mit besseren Schöpfen der Arbeit kommen, die eigentlich funktionieren. Und ich glaube, dass die 15 Jahre Investitionen in digital und sozial, so aufregend wie sie gewesen sind, die Ergebnisse nicht erzielt haben. Ich meine, kann jemand sagen, dass digital und sozial vielleicht nicht so gut sind, wie man immer gedacht hat, dass sie es sein würden? Auch mit besserem Schöpfen? Ich denke, es ist wert, diese Frage zu fragen. Es ist sehr interessant, was Sie alle sagen. Aber wir möchten über den Impakt Ihres Wachstumsausschusses hören, um den Preis und den Wert auf Ihren Arbeit zu setzen, denn das ist ein interessanter Teil Ihres Buchs. Okay, das ist der lustige Teil. Und es war wirklich lustig als Konsultant, zu finden, wie Sie einen Wachstumsausschuss messen könnten. Was würdest du als Metrik verwenden? Du kannst nicht sagen, dass wir 25 Kilo Arbeit machen. Du kannst es nicht zählen. Und ich dachte immer, dass die Weise, wie Sie einen Schöpfen des Arbeitens messen würden, ist die Weise, wie Sie Kalorien mit Früchten messen würden. Was ist ein Wachstumsausschuss? Wenn Sie Bananen, Äpfel, Zwiebeln, Graben und Schuhe haben, könnten Sie sagen, wie viele Kalorien in diesem Wachstumsausschuss sind. Du kannst das tun. Es gibt eine Art, das zu tun ist. Und weil die Ökonomie der Länder in Europa und in den USA die Tafeln entwickelt, die sagen, dass eine Banane X-Nummer von Kalorien pro 100 Gramm hat und eine Äpfel so viele Kalorien pro 100 Gramm hat. Diese Art existiert. All das, was Sie tun müssen, ist, das Stuhl zu nehmen, den Wert der Früchte zu messen, und Sie können auswählen, wie viele Kalorien in jedem Stück Früchte werden. Und das ist der Ansatz, den ich mit dem Schöpfen des Arbeitens gemacht habe. Wir gehen zurück zu 1992. Ich war mit OGLE. Wir haben endlich herausgefunden, dass sie 380 Stück Arbeit machen. Aber dann mussten wir fragen, wie man TV, Radio und Print macht. Ich musste die Kreativen fragen, wie es für Sie anders ist. Sie sagten, TV braucht mehr Zeit als Print und Radio braucht mehr Zeit als Radio. Radio ist nur ein Skript, das von einem Kopierer gemacht wird. Man hat keinen Artdirektor. Wenn Sie einen Print-Ad haben, haben Sie sowohl Fotos, Fotografie, Fotos, Alertionswörter als auch eine Videoproduktion, wie eine TV oder eine Filmproduktion. Sie haben Moving Pictures, Actors, Scenes und so weiter. Wir haben angefangen mit der Idee, dass das Wert relativ zu dem, wie viel kreative Arbeit betrieben wurde. Sie waren schnell, uns zu sagen, dass nicht alle TVs und Printen dieselben sind. Es gibt zwei Basistypen. Es gibt eine Originalarbeit und eine Adaptation. Eine Adaptation ist, dass man ein existentes Stück Arbeit hatte und es irgendwie verändert hat. Man hat die Sprache verändert oder es kurzer gemacht. Es gibt eine Originalarbeit und eine Adaptation. Sie haben einen unterschiedlichen Wert in Bezug auf kreative Zeit. Sie sagten, dass sie nicht alle dieselben sind. Es gibt wirklich schwierige, typische und einfachen. Wir dachten, wir nennen es "kreative Komplexität", "low", "average" und "high". Also fokussierten wir uns auf den kreativen Arbeitslauf und entwickelten eine Einheit Arbeit. Wir haben eine Kalorie, so zu sagen, geinventiviert, die "Scope Metric Unit", eine SMU. Eine SMU ist wirklich der Größe eines Deliverables in Bezug auf seinen kreativen Effort. Nun, es verändert sich von Mediatypen, es verändert sich von Originalarbeit und Adaptation und es verändert sich von kreative Komplexität. Du hast Michael schon erwähnt, dass sie auf einem großen Tag die Produktveranstaltungen aufgenommen haben. Sie entscheiden, welche Produkte sie offern und fragen für einen bestimmten Preis. Ich denke, das ist der eine Weg, um damit zu gehen. Managt die Agenz, die auf dem Schaum der Arbeit ist, also das heißt, dass man ihr Werk auf eine Produktbasierte Fee prisen muss oder kann man auch andere Optionen wie die wertgemäßige, die Leistungsgemäßige Prisung ausprobieren? Wie sind diese Geschäftsmodelle mit dem Schaum des Arbeits? Persönlich bin ich nicht für die wertgemäßige Prisung in Ordnung, das heißt, dass das Werk eine hohe Werte genutzt, die Kunden wachsen, sie machen mehr Geld, wir bekommen einen großen Bonus. Erstens, das existiert nicht in 99% der Industrie überhaupt. Es ist ein Myth. Und es beunruhigt mich, dass so viele Agenzien sagen, wir sollten bezahlt werden auf eine wertgemäßige Basis. Das ist falsch für die Industrie. Die Industrie erkennt nicht den Wert, den wir liefern, und sie bezahlen uns an mannenhauten und das ist falsch. Wir sollten bezahlt werden auf eine wertgemäßige Basis. Well, the truth of the matter is, I don't think the work's generating value. Prove it to me that you're generating value. Clients 21 out of the top 50 advertisers have not grown very much in the last 13 years. So stop dreaming about this fantasy. Clients don't think your work is delivering value, that's why they change every three years. Now look, what's better, Louise, is get paid fairly for the work you do. If that work delivers value, get a higher price for that work next year. That is what the consulting firms have been doing for 40 years. And today, today, Bain, McKinsey, Boston Consulting, AT Kearney, Booz Allen, Accenture, Deloitte, PwC, IBM, all of these consulting firms, they pay their or they charge their people out at five times their salary or six times their salary because the work delivers value. Agencies are lucky to get two times multiple on the cost of their people and their people are cheaper. So I think the secret to pricing is price for the work. That is a fair, you know, like we're doing 10 things for you. Here are the price of the 10 things. You're buying 10 products from us and here's a price of the 10. And by the way, clients, I have used Scope Metrics as the basis for a price. We charge a price for SMU for the work. I'm implementing that system at a major pharmaceutical company today. So I mean, but it makes sense. Pay for the work, not for a guesstimate of man hours. And then if the work generates value, pay more for it in coming years, because it's worth more. Louise, there's another reason for product pricing as opposed to man hour pricing, which is that artificial intelligence is coming in and will take away at least 20 percent of the man hours that are being used by agencies. And that could lead to 20 percent loss of income overnight. Now think about the Ogalli Agency that I mentioned that was doing 15,000 pieces of work, of which 13,000 were adaptations. And particularly ad banners and email marketing and Facebook posts and that sort of thing. Believe me, software, artificial intelligence software can replace almost all of that work. Now, 13,000 adaptations versus 2,000 originations doesn't mean that it's more than 40 percent of the total workload. The 13,000 adaptations are about 40 percent of the workload in that situation. And if AI only took half of it, that would still be 20 percent. So even before AI came in, I felt that agencies should move to productization, get paid for your work. But with the advent of AI, I now think that it is your house is on fire. You better do something about it right now. This is going to happen very quickly. So in your opinion, AI may be like the final thing that kills off the billable hour as the basis for pricing and for agencies to route. I think so. And I think many agencies will learn the hard way. I've been invited to sit with agency task forces that were looking at AI and they were asking questions like, how do we make money from AI? Almost like, oh, here's a new and shiny thing. There must be a way we can make money with it. And the advice that I've given to them is stop thinking about that. Start thinking about how what is the degree to which AI destroy our business in the next couple of years? And then let's develop a strategy to keep that from happening, because I think that if we waste our time thinking about how to make money, it's going to come in the door and destroy our economics. So, Louise, I am very excited about AI coming in, because it's creating a greater urgency about understanding the scopes of work and understanding the nature of agency economics. So it's like AI is like an ally for me now, because I can talk to agencies about the urgency of thinking about productization and pricing their services very, very differently to protect themselves. So I'm excited about it, but I think that it's going to be tough in the next couple of years, I'm sure of it. Agencies will not dominate AI, their clients will use it and they will replace agency work with AI stuff. On that relationship between agencies and advertisers, we already use the word unhealthy. You also use the word vendor. So how would you assess the relationship between these agencies and the advertisers in the industry in 2023? Okay, well, I think it has deteriorated. The relationships have deteriorated when digital and social came in. And then Robin, I'll come up to 2023. But if you remember in the old days, an agency like BBDO or TBWA or Ogilvy or JWT or Leo Burnett would work a very long time with a client and they would do TV radio print, they would do that. When digital and social came in around 2007, the agencies were not diversified. They could not do all that stuff. So their clients had to go out shopping and they then said, well, we'll keep Leo Burnett, but we're going to add a social agency, a search agency, a digital agency, maybe a programmatic agency. And they started dividing up the agency franchise and they dropped the idea of an AOR, an agency of record. So all of a sudden, and it didn't happen overnight, but gradually a single agency became a portfolio of agencies. And when that happened, the client said, we have to be in charge now. We have to decide which of these agencies get how much money and what work they do. If we listen to them, they're all going to be fighting with each other for every dollar or euro of work. They're going to be fighting for fees and fighting for work. They can't be trusted. So we have to be in charge. And then in addition, procurement said, yes, and I want to look at fees because I don't want to overpay for if we're going to work with 10 agencies, I don't want to overpay for that. So the net effect of 15 years of that is that now clients are in charge, clients decide scopes of work, clients decide the fees, client decides which agencies they keep and which ones they change every year. And the agencies are now order takers and order executors. They're just service providers. They're afraid of fighting back. They're afraid of disagreeing. They know they're in competition for a limited pool of money. They have a lot of people at the client to keep happy. And now agencies are passive, nervous and overworked. That's what I think has happened. And that's why it's even harder to bring about change because let's just go to the scope of work issue. If a client gives you a scope of work that has 4,000 deliverables in it, or if the total scope of work has 4,000 deliverables and history has proven that it doesn't deliver growth, the agencies should say, I don't think that's the best scope of work for what we need. We have our own view. This is the work that we think should be going on. And that's challenging the marketing people that are putting it together. I'm working in some situations where we are encouraging the agencies to create that type of conflict, to say we've got a 13-year record that the scopes aren't delivering value. We are going to come up with our own view and we're encouraging them to do it. It makes them very nervous because it's been years and years since they were in that position. And most of the people in the agency today have never had the experience of being a genuine partner. They've had the experience of being a servant. They've had the experience of servicing the client and doing what the client wants and trying to keep them happy. And so they even lack the disciplines that are involved in being the type of partner that challenges the assumptions in a nice way and provides the analysis that allows the client to see that maybe the agency's got a right idea. So anyway, 2023, Robin, I think agencies are service providers, nervous, overworked. And by the way, under pressure from their holding companies to deliver more money and more profit. That is another dimension that makes their lives complicated. Earlier on in this conversation, you were talking about having difficult conversations and being like the bringer of bad news and how people don't really like hearing that. Are we at the breaking point where in order to make an omelette, we're going to have to break some eggs for the industry to thrive in the future? Yes, you have to break. You have to break the eggs to make the omelette. And really, it's the culture of the agency that needs changing so that the operational practices can change. And what do I mean by the culture? This is an industry that has had one mantra for 60 years, which is. We're creative. Creativity delivers value. We're always striving to be more creative. It is not simple to be creative. If we are failing at our mission. It's because our creativity is lacking and that we need to upgrade, constantly upgrade the quality of the creative department in order to be more creative. And if you think about what we've been talking about here, you know, for the last hour or so, the truth of the matter is maybe it is creativity, it's lacking, but there are some fundamental business practices that are lacking, too. Like we don't know what work we're doing. We have not evaluated whether the work we're doing delivers value for the client. The truth of the matter is our clients are not growing, even though we talk about giving them all the creativity that we're capable of. And I'd say that the culture of the agency needs to recognize that being creative is important, but it must be within a healthy environment. If you make an omelette, you can't put the eggs in a pan that is too hot or it will burn. Or if you put it in a pan that's too cold, it will never develop a crust and the eggs won't cook. In other words, you have to do some practical things so that creativity can work. And I've always thought about one particular company, Burger King, which is, you know, a distant competitor to McDonald's, but has won more creative awards over a decade than any other known company. And yet, if you look at its own performance in terms of sales per store, sales per restaurant, it's one of the worst performers in the industry. So Burger King is lauded as their creative geniuses and they sell less than half the dollars per store or euros per store anywhere in the world. Why? Well, maybe their outlets aren't clean or maybe the product isn't very good or maybe the people are rude or maybe the locations aren't very good. There are a lot of reasons, but doing really creative ads for Burger King doesn't help them operationally. And yet the industry talks about what geniuses they are. They're not geniuses. They are underperforming in their marketplace. They're failing their own employees and their management, and yet they win awards. So I think that the culture of creativity needs to be challenged in a positive way, meaning, yes, we always need more creativity, but there are other things that we have ignored that we are not doing and they have to be just as important in our environment. Technology is one of them and good sound management practices are a third. They have to work as a team. And you know, the thing is agencies are still looking back to Bill Birnbach 1959, to David Ogilvie, the 50s, the 60s, the 70s and the 80s, to Leo Burnett, to all these great people that did astonishing work 60 years ago. But it was a completely different world. It was a world that was recovering from the Second World War. It was a world that where television was new and television advertising was new. It was a world where consumers didn't have many of the things they needed. They didn't have cars. They didn't take holidays. They didn't make financial investments. And they didn't have, you know, they hadn't purchased all the household appliances that they would purchase. It was a growing economy from 1945 to 1990 everywhere in the West and in Asia and Latin America and the States. And television helped to fuel that with creative work. That's not where we are today at all. And you know, the average household is well served with cars and appliances and vacations and education and many, many, many other things. Selling stuff to the market is harder and just pure creativity doesn't do it. It doesn't matter. You've got to do so many things. You've got to do what Amazon does so well. Total reliability, great customer base, overnight delivery, easy returns, you know, they make it so easy. And so it's a different challenge. And I think the first thing to bring about change is they have to look at what they've been saying about themselves and ask whether it really is enough. So there's a need for a cultural change and then put together the business practices that will make that work. Robin, does that sort of answer your question on that? In technical, yeah, perfectly. Thank you very much, Michael. Well, one thing I read that I thought was really interesting in the story of HUGE is I think the new CEO said we need to transform agencies into growth acceleration companies and we need to abandon the agency label. How do you feel about that? Well, he felt that as long as they told the marketplace that they were an agency, even if they said HUGE is an agency, but we're different. He felt that as soon as he used the word agency, his potential clients would put him in the same container as every other agencies they've ever worked with, but he wanted to get rid of the agency label. He did not impose this on his management team. In fact, I remember at the first retreat that HUGE had when they were debating what kind of a company should we be, I remember one of the executives said maybe we should stop calling ourselves an agency and that happened when they had decided they were going to be a growth acceleration company for their clients. And he said, I don't see how we can use the term agency because agencies are something else. Agencies are organizations that try to bring creativity to work. But that work doesn't have a purpose. So if the purpose is our mission, we can't use the word agency. We have to come up with something else. The graphic designers are going to have a hard time with all those letters, but we'll just have to have to make it. Yeah, you'll need a new website and everything. That would be something that will add like 8000 SMUs to next week. Oh, yeah, exactly. You've been very, very clear and interesting in this podcast, Michael. Allow me to try to summarize and then you can see if I got it right. So three things need to change in the industry. One, agencies need to change their mission. How brands perform better. Secondly, agencies need to be partners, giving an independent point of view instead of seeing themselves as vendors. And then thirdly, agencies need to be paid for the amount of work that they do based on SOWs. Did I get that right? You got that 100% right, Robin. And I think that if you were thinking about wanting to transform an agency as a CEO, you would say, I know that I need a new mission. I know that I need to develop the conditions for partnership with my clients and I know that I need to be paid for product, not man hours. So how by what type of change program can I bring that about? And I think that those three things will lead to other subjects that need to be addressed later on. But I think from a headline standpoint, you pick the three highest priorities. Mission, partnership, productization. Fantastic. Thank you very much, Michael. A lot of food for thought for our listeners. Also some talk about food, hashtag making omelets. But I can imagine, dear listener, that you also have some questions. You may recognize the issues that Michael describes, but what can you do to change things? How do you transform your agency business model? Yeah, I think it's a good thing, Robin, that we have another episode coming. Next time Michael will go a little bit deeper into the ways to get started in your own agency. How do you start working with Skoops work? What's the impact on your pricing? How do you start the discussion with your clients? All of that will go into that in our next episode. Yeah. So for now, Michael, thanks for sharing your ideas with us. And to our listeners, please tune in to hear Michael again in two weeks. And until then, don't forget to subscribe to this podcast on your favorite platform or sign up for our biweekly email update at agencylive.nl and .be. Or if you really like French and German, agencylive.fr and agency-live.de. That is also where you'll find all previous agency live podcasts. We have topics like mergers and acquisitions, offshoring, talent, scaling your agency and so much more. All great stuff. Robin and Louise, thank you so much for having me on this episode. It's been a real delight to talk to you and happy to come back anytime to continue our discussions. Yeah, the pleasure was all ours and we'll hear from you soon. Thanks, Mike. Thank you. See you. Das war die erste Folge aus dem Interview mit Michael Farmer. Es wird noch eine zweite Folge folgen, aber danach switchen wir grundsätzlich wieder in den deutschen Bereich. Solltet ihr aber Erfahrungen und auch Podcasts aus dem Ausland, aus dem Agenturleben mal hören wollen, schreibt es uns gerne in die Kommentare und wir fügen sowas immer mal wieder ein. Grundsätzlich freuen wir uns natürlich wie immer über euer Feedback in den Kommentaren, auch in Form von Bewertungen und Co. Natürlich könnt ihr uns auch immer schreiben, wenn ihr Gastempfehlungen habt, Anregungen oder auch Themenwünsche. Bis dahin, alles Gute und die zweite Folge mit Michael Farmer folgt in Kürze.