On how not to ‘disrupt’ advertising agencies

I spent quite a bit of my time this year on pitching ‘agency as platform’ idea. Over every iteration and every conversation the business case improved, the roadmap became more concrete. I now have a fairly robust idea of how it can actually be implemented, what we will need and what we can expect in return with what probability. And knowing thus, I have decided not to pursue the idea any further.

It seems a good enough time to contemplate on where I went wrong, what I did right and how can I improve myself. And along the way, I hope to convey what I feel about the business of disruption, which my idea intended to do.

So the essential promise of the idea is to expand access of creative and strategic services to SMEs and startups globally. The idea has huge potential. However, to successfully do it, to really make a user experience that becomes the new default of marketing personnel behavior, I identified key areas where we will need to build fairly complex AI algorithms. And this was the first big problem. We simply don’t have access to the kind of datasets and the AI talent we need. That is a HUGE problem. I don’t have that money or resources or the skillset to ‘Fake it till you make it‘.

So my real options were –

  1. Holding companies,
  2. Activist investors in the holding companies
  3. Private equity who can take over those holding companies and do the needful
  4. Platforms (Google, FB)
  5. Consultancies
  6. Companies like Adobe etc.

The proposition needed big investments which couldn’t possibly have come from anywhere else. Out of these options, I approached only the first one – holding companies. Firstly because, I assumed advertising agencies will understand advertising agency business of the future the best. Secondly, sitting in Sri Lanka/ India, I didn’t really have the wherewithal to reach the right people at many of these places. Thirdly, i don’t want to empower monopolistic platforms or flighty capitalists really. Screw them. Fourthly, all the others have markedly different business dynamics than that of advertising agencies. Lastly, holding companies do face an existential threat so they should be amenable to listen. Others don’t face such risks as of now.

Great folks make an effort to give constructive feedback

I contacted and was pleasantly surprised to actually get an opportunity to talk to some of the senior-most global leaders in some of the holding companies and one of the largest global agency too. (There is no NDA because I was giving out my idea voluntarily and they shared very little, but I think it is best not to let out names anyways.)

It was a deeply humbling experience. These were some of the nicest, kindest and sharpest people I have ever had the opportunity to converse with. I was quite surprised really. I learnt from these great leaders to be open to new ideas even if it comes from one of the smallest advertising markets and from somebody far below the pecking order. They not just listened to me but some of them offered constructive criticism too. And I know that useful feedback is hard work,  not everyone wants to do that mental work. I can’t thank them enough for their feedback.

Need to Set up Right Expectations

However, I wasn’t getting the kind of feedback I was expecting and conversations weren’t going in the direction I planned for. With hindsight I now realise that with each audience I completely failed to set up right expectations. For example, one leader spoke as if I was looking to raise funds from them for my venture, another misunderstood the scope of the idea. I was instead pitching to setup in-house/ work with their existing teams to build the new platform. I was foolish in not explicitly stating my expectations.

Lack of clarity

This told me a few things – none of them had really read what I had sent them beforehand. I started the phone calls with an assumption that they have a basic understanding of the idea – the publicly available part. I would then get into the details of it – what it entails, what is the likely payoff, what are the challenges, etc. I now realise that for the scope of problem I was trying to solve, it was foolish of me to talk to them through a year worth’s thinking in a 5-10 min pitch. It is by no means a simple business plan – it is a revolutionary idea that will require patient capital. For such a pitch, the conviction has to be earned first, before we get into details. I hadn’t painted the picture well enough, hadn’t gotten them excited, none of the things that we typically do for regular agency pitches. I did so partly because, I was talking to advertising folks and it felt a bit, you know, strange. I assumed that they knew what I knew, that they felt as I felt. Ofcourse, they must be under far higher pressure than I ever have been from the shareholders to return better profits and provide a convincing vision of the future for the industry. So I assumed, I do not need to string a story. These guys are the center of the problem I am trying to solve. Lets get to the solution quick.
I was wrong to assume. Assume nothing.

Old vs new:

What I didn’t realise was the fact that their perspective to solve that problem was the 20th century perspective, mine was 21st century perspective and i should have focused my efforts on convincing why they need the new perspective and how the old one would fail to provide the right solution.

I now realise that the existing Global leadership thinks in silos, even as they attempt to remove them. They cannot see beyond the logic of departments. Their thinking is – if you need some capability, hire the people with that capability; if you need to enter a new market, acquire a company in that market; if you need to simplify and organise, create a team/ department to do it. They have forever worked with such thinking. It is simpler that way, it is easier to delegate and ask for measurable results and it is cost effective in the short term.

So, when I propose a process solutions that improves capabilities and infrastructure to work together more efficiently, I am met with incredulity. ‘Why spend millions when there are off-the-shelf solutions?’ They fundamentally do not understand why platforms matter and how an upstart can steal their bread before they know what hit them. 

Helping envision alternatives to those who are unwilling:

AI can’t beat human creativity”. mic drop…

People who hear AI and advertising assume that the agencies perform only the creative process, forgetting that there are many other processes that agency folks perform.

Advertising process is notoriously inefficient. From discovering marketing problems/ opportunities to influencing consumers, there are a hundred processes at play which cumulatively can take eons. There are hundreds of inefficiencies in this process that can be improved with organizational restructuring, capability building and some bit of ML led digital infrastructure improvement. But that will require critical thinking among the key decision makers and an ability to envision an alternative.

Which tells me there is money to be made in helping these people envision alternatives and think clearly about it. And if I offer my ideas for free, it would be seen as worthless. I shouldn’t be giving it out for free.

Planning and rehearsals

I was pitching an idea with multiple moving parts. Complex ideas need proper narrative building to sell. And for that, one must plan and rehearse the presentation, prepare for all possible questions & remarks. I should have.

This is true of every pitch and every consequential meeting. If I must succeed, I must plan and rehearse. I haven’t done enough of it in the last year. I will hereafter.

Reading the room

I now realise that only a few of the people I spoke to really were in a position to do anything meaningful with the idea. A chairman may be enthused by an idea, but the CSO perhaps has incentives not to listen to an outsider’s strategy suggestions. Another top executive perhaps has been pushing an alternative agenda for years and can’t possibly shift gears now. Perhaps, all that the people in the meeting want to know is, how far ahead is the other guy come along. They just want to get a sense of possible competition. Perhaps, the people I talk to have incentives that are in conflict with what I am proposing. 

I am terrible at this and must try and get better at it. The trouble compounded since most of my conversations were on phone and not in person. Without a visual feedback of how the other person feels about what I am saying, a meaningful conversation was not possible. Hereafter, I must insist on in-person or in-video conversations atleast. If it can’t be arranged, it perhaps means that the other party doesn’t value the interaction as much. Which is a terrible place to be in. The other person must have read/ heard about what I am about to pitch. Work must happen to ensure that before the meeting ever gets fixed.

Making sense of it all

I read a very interesting article written by Tim Harford a few months ago, that gave me a valuable perspective to examine my experience through. He wrote about,

Why Big Companies Squander Brilliant Ideas

Tim helps us understand that ‘disruption’ is way too hard than the pundits would have us believe. Organisational architecture (and as such the established incentives and powers structures) is the key determinant of whether an organisation can change or not. As he quotes BP’s chief executive Bob Dudley, “If someone said, ‘Here’s $10bn to invest in renewables,’ we wouldn’t know how to do it.”

Essentially, it is easier for an organisation to adopt a technological change if it can be adopted within existing organisational architecture. For example, IBM adapted successfully from selling computational machines to companies to selling computers to companies. But it struggled with selling PCs to consumers. Or Xerox’s ability to sell laser printer fit in with its existing organisational structure, but selling GUI or personal computers did not.

So essentially, a holding company which essentially was a financial instrument that provided scale to branding efforts was relevant in 20th century. That need to scale is fully met now. Even then, the people who run the global ad conglomerates – the holding companies or the top executives of the constituent agencies, have no incentives to change. They are invested in status-quo. For a holding company to pivot to become a platform, the company will need a new set of leaders with newer capabilities. The old set will simply won’t do.

Hence, no such change is about to come from existing agencies/ holding companies. Publicis’ effort with Marcel is probably a PR project or a naive attempt at building a platform.

The platform idea, in this context, seems to be nonviable. It will require agencies to fundamentally change its architecture. Which is not going to happen. It will require patient & large capital. So it can’t be an upstart. And Googles and Facebooks of the world can’t enter this category without coming under regulatory scanner.

I guess the future is in the hands of independent/ relatively independent network agencies to pivot.

Future for me

“The people who bug large organisations to do new things are socially awkward, slightly fanatical and politically often hopelessly naive.” – Rebecca Henderson

Ouch. I can’t agree more. Must learn to be more pragmatic and diplomatically wiser. I will be on the lookout for independent agencies who have the capabilities, capital & willingness to shift gears. Until then, I am happy trying to do the best strategic planning that I can do for my clients.

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2 Comments

  1. I currently work at a holding company in a local/regional role and I could not agree more with you. That said, you got me interested.
    Certainly I am not the one who will be able to make this one work and get funding but if you are willing to go over what you’ve worked on with me, I’d be glad to hear it.
    In case you are interested, write me an email
    Thanks

    Like

    Reply

    1. Hey NN. Happy new year.
      And thanks for reaching out. Would love to discuss it. Share with me your email id. i can’t see your email id here. you can share it at ajinkyapawar at gmail as well

      Like

      Reply

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