Why Don’t Ad Agencies Advertise?

Why Don’t Ad Agencies Practice What They Preach?

by Tom McKay

If advertising is so effective, why don’t ad agencies advertise? That’s the question Simon Sinek poses in a recent issue of BrandWeek. After all, ad agencies recommend clients spend 10% their revenues on marketing. But do they practice what they preach? Sinek points out:

“According to Nielsen Monitor-Plus, Interpublic, Omnicom, Publicis and WPP spent a total of $3.7 million to promote themselves in the U.S. in 2005, down 15% from the $4.4 million they spent in 2004.”

That’s a paltry .01% of their combined $29.3 billion in global revenue. He says that’s proof that advertising doesn’t work, and that the agencies know it. But does it? Let’s dig a little deeper.

First, it’s a well-written article. I especially loved his crack about agencies’ “Faustian resistance” to using their own product. Great line. I also agree with his argument that most advertising, like the media they run on, have been commoditized. Nothing stands out. He says:

“In truth, it’s what’s IN the advertising that is not working. Ad agencies are doing a poor job creating messages that affect long-term value for their clients.”

Agreed. Here’s part of the problem, IMHO:

We’re all overwhelmed.

Our work and lives demand we juggle a flood of data, and we’re constantly blitzed by additional stuff like advertising “impressions,” sp@m, pop-ups and other annoyances.

And the media are willing accomplices. Cable news channels blitz us with multiple images: 2-3 lines of text crawling across the bottom, windows with the weather forecast in El Paso popping up next to the anchor who’s delivering the news. Are they deliberately trying to distract us from the news they’re reporting? (No wonder ADD is epidemic in the USA.)

But I digress. Sinek is right: Too many ads suck, and so do most of the shows they’re aired on. Too many stink of sameness, lameness and slickness. I’m no defender of ad agencies, but I have to disagree with his basic thesis.

Agencies have a very good reason for not advertising their services.

It’s simply not appropriate to reach the audience they’re targeting. Here’s why.

Every marketer begins by thinking about WHO they’re trying to reach. If you’re selling Chevys, there’s a couple hundred million potential buyers. Selling Porsches? Maybe a few million. But if you’re selling advertising services to the S&P 500, for example, your target audience numbers around, uh, 500. There are far more effective ways to get your message to an elite niche like that.

Using mass media to reach a non-mass market of 500 is expensive and wasteful. That’s true whether you’re a B2B or B2C business, by the way. Until you have a mass audience, stay away from mass media. You’ll go broke before you break through.

This reminds me of a former client. She insisted that we advertise on the market’s top-rated rock radio station, and only in the most expensive daypart, morning drive. But we were trying to reach a very narrow, high-level I.T. audience, looking for advanced technology training.

The campaign cost beaucoup bucks, and was a dismal failure. Why? The biggest reason: only about 1-2% of the audience were potential buyers of her services. 1-2%! The same money spent on a targeted direct mail campaign would probably have been much more successful.

Lesson: Carefully consider WHO you’re trying to reach before deciding on HOW.

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