Tuesday, March 15, 2022

Advertising economics: A tragedy.

Of all the strange economic quirks and corporate edicts of the Holding Company era in advertising, the strangest and most troubling is this: Agencies get paid when they concept and re-concept, vise and revise. They get paid when they present, when they produce 82-page decks, when they spin yarns about what the work will do when it finally runs.

When the work runs, however, they stop making money.

The industry, in its wisdom, has decided that the journey is more important than the destination. That the creating and internal selling of the work is more important than the work that actually airs. 

In other words--in sad words--the current structure of the business pays agencies for process and not for product.

This is a regimen that loves bureaucracy, meetings, staffing bloat, overthink, over-test, over-perseverate more than making something and running it. 

This is a regimen that gains profitability and success on the assumption of 17-rounds (thanks, Rich Siegel) of revisions, on democratizing and incorporating hundreds of gnat-stings of commentary, over the intensity of an original idea that moves, motivates and means something to people.

Years ago I read something about the Gallo wine account and the San Francisco ad community. Everybody wanted the Gallo business because it was just about the biggest-spending account based in San Francisco.

Ernest and Julio Gallo were notorious clients. They believed in the full 15% commission way of paying agencies and knew that until they bought something, they could keep the San Francisco ad community working for free. No media expenditure, no commission.

Here's the story from Hal Riney himself:

"When I was just getting started in advertising, Ernest Gallo was already providing some lessons about the business that would become my career. It was the ’50s. I was a junior art director at BBDO, and Gallo was one of our clients.

"At least twice a week, the account men would stuff their portfolios thick with layouts and make the four-hour round trip to Modesto, only to return rejected and dejected, with orders to start all over again.

"Approvals, which seemed to occur only once or twice a year, were a cause for celebration. Not only did an approval mean that something might actually appear in print or on the air, but now the agency would finally get paid."

Under these circumstances, no sleep till Brooklyn, no pay till it runs, Riney and cohorts set out to learn more about the wine business and the Gallo business than anyone else in the world.

They weren't paid to do that learning. 

But all that learning made possible a series of spots that ran for years. And they built something more important. Trust.

According to Riney, Ernest Gallo told him, "In just three months, you’ve learned more about us and our wines and our business than any agency who ever worked for us."

"Eventually," Riney said, "we found a direction Ernest liked. I wrote some spots about Gallo wines, most of which dealt with Gallo’s (surprising) success in international wine competitions. And we offered the winery a theme: 'All the Best.' Within a year, Ernest dismissed his other advertising agencies, and gave us all his business."

If Gallo spent $500 million on media during those years, Riney's agency would have earned $75 million. For spots that both ran and changed Gallo's business.

My point is simple. 

Riney had an incentive to learn, to create and to sell. If he didn't, he wouldn't get paid.

Today, the industry no longer has an A.I.--No Accomplishment Incentive. The more the industry spins, the more it earns. The more it produces, the less it earns.

At the risk of giving too much information away, GeorgeCo., LLC, a Delaware Company has a system that allows me to happify clients and myself and to create a scope of work in about 15 minutes.

I call it "3-6-3." 

I learn for three days; create for six days; revise for three days. After 12 days my clients get work they can use that we both believe will work for them. They're also rid of me in a jiffy which works too. From my point of view, I intensify my work. And I get paid. 

More often than not, one 3-6-3 leads to another. And another.

Despite the financial sleight of hand being perpetrated by the Holding Companies, getting paid for work is the basis of all business. We are not in arbitrage, futures speculation of selling vapor.

We're not supposed to run around on an advertising hamster wheel and speculate and prevaricate.

We're supposed to do work that drives business--in the real world. And get paid for it. Real work. Not deckage or meeting about work.

Call me old-fashioned.

Real work you get paid for.

That's the point.

Not good meetings. 

Not beautiful decks.

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