it’s about the (thin) margins

it’s about the (thin) margins

In my previous agency, ‘Advertising is a senior people’s business’ was a maxim – a true one at that. And senior people from both sides need to talk strategy and chart out an execution plan, which may involve use of all kinds of media – traditional or digital (the lines are blurring, in any case).

It calls for generalists, who have a grasp of the basics of marketing, brand building, and the role of media and platforms in achieving business growth. Just as they needed to know the best practices and strengths of, say, radio as a medium, they need to appreciate the same of social media, new technologies and platforms. Again, it calls for nothing more than common sense and a willingness to learn, adapt.

In my view, the desire to position prefer young talent over senior folks (positioned as ‘has-beens’, who don’t get digital) is directly linked to the ad business’ compensation structure. With media spend-linked 15 per cent agency commission a thing of the past, timed with the separation of the media planning and buying entity from the ‘main’ agency, agencies only have retainer fees as a source of income.

The procurement departments of clients then see the agency as just another vendor, and question the need for an expensive senior resource. Agencies also have to make sense of the math to retain some sense of sanity with the margins and, hence, can’t afford too many senior folks in a business. Of course, everyone has to prove their worth, and the pressure to deliver a great ROI is higher on the senior resource.

With competition willing to be price warriors and undercut each other, loss of a business puts even more pressure on senior resources and, thus, a vicious cycle starts. On the other hand, it is common for consulting companies (which have either acquired, or built a digital practice too) to charge a premium for senior talent. I am sure even branding agencies such as Landor, Saffron Consulting, or specialist design agencies charge a premium for brand identity projects, which select clients are willing to pay. I wonder if collectively, the ad industry enjoys the same perception of being premium and worth it.

The pressure is definitely on senior talent to prove their worth – that they have it in them to deliver business-building marketing communication for the digital world. Even if they do, the odds are stacked against them, as they are likely to be sacrificed to preserve the already thin margins. It’s a business imperative, and nothing to do with who is better equipped to make a voice-based campaign for a pizza delivery brand, or set up a tactical social media post linked to COVID-19 safety measures.

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