Big advertising agencies want to sell firms their expertise in marketing. Big management consultancies have the same idea

Perhaps it is inevitable that advertising, a business built on dreams, is consumed by nostalgia. Three decades ago, when marketing was new and wonderful, advertising executives sat at the chairman’s right hand and whispered words of marketing wisdom into his ear. Those were the days when Jack Wynne-Williams of the Masius agency famously helped a drinks firm called Showerings turn a sickly syrup into Babycham, a huge global brand – and was rewarded with a white Rolls-Royce.

The golden age proved short-lived. As the value of brands has grown, management consultants have jostled with advertising agencies for control of marketing strategy. Nick Jackson at Bain, an American consultancy, says consultants are now involved in everything from allocating marketing spending to advising on brand positioning, pricing and service. The leftovers – buying media and marketing ads – may be enough for tiny adshops, but are meager sustenance for huge marketing conglomerates. Having turned themselves into full-service marketers, offering everything from public relations to brand valuation, they feel they have to be heard. But it will take more that sheer size to win back their place at the chairman’s table.

The struggle reflects several trends, which have moved marketing center-stage in management’s eyes. First, with inflation low, the scope to raise prices limited and cost-cutting opportunities already exploited, increasing market share has become the engine of growth in profits. Meanwhile, marketing has become a complex art. Technology and trade have increased the potential for global brands. The fragmentation of audiences and rising costs of television and print advertising are making other media attractive. And direct marketing and the Internet are rewriting all the marketing rules.

The changes are largely favouring the management consultants: companies want to know how to use data about their customers to market directly to them. Deregulation of monopoly industries has created a class of companies that for the first time must compete for customers. Tim Breen, of Anderson Consulting, says that more companies now realize that brands are complex – so getting the distribution, pricing and service right matters at least as much as a clever ad.

If advertising agencies and marketing groups are to control strategies rather than just make ads, Martin Sorell, chairman of WPP, one of the biggest marketing services groups, says they must smarten up. Management consultants have learned to speak the language of brands persuasively, but many agencies, he warns, substitute “creative hip-shooting” for strategic thinking. Niall FitzGerald, chairman of Unilever, an Anglo-Dutch consumer-goods giant, echoes Mr. Sorell’s concerns: “I see an alarming discrepancy between what our brands are going to need and what contemporary agencies

are good at.” Agencies are no longer the guardians of their clients’ brands. “All they are passionate about now is making the film and getting out the door.”

The agencies’ weaknesses are partly a result of their structure and billing. As agencies have broadened their services, they have become compartmentilised into separate profit centers. Confused briefings and petty rivalries are rife. Most advertising departments are still paid by commission, up to a lucrative 15% of the value of the advertising space acquired, which is an incentive to sell expensive TV ads. Firms are often suspicious of the advice given by their agencies.

The Economist

Notes

1. to smarten up - совершенствовать свои приемы (“ становиться умнее”)
2. they have learned to speak the language of brands persuasively – они научились убедительно доказывать преимущества своих брендов
3. WPP – an advertising and communications group providing services to local, multinational and global clients; a world leader in marketing and communications
4. creative hip-shooting – сиюминутные удачные решения (в ущерб стратегическому планированию); hip-shooting is a manner of shooting a gun (“от бедра”) popular among characters of American westerns. Often, the life of such a “hero” depended on how fast he could draw a gun out of the holster carried on the hip. Here, the phrase means the ability to impress a prospective customer with inventiveness in creating the stuff and, in this way, to overcome the competitor.
5. confused briefings and petty rivalries are rife – здесь процветают отсутствие четких указаний и мелкое соперничество

Vocabulary

to advertise– рекламировать; advertising –рекламный бизнес, реклама;advertising agency –рекламное агентство; advertising department – рекламный отдел; TV advertising – телевизионная реклама; print advertising – печатная реклама, реклама в прессе;specialty advertising – реклама сувениров; advertisement (ad) – реклама, рекламное объявление; adshop – небольшое рекламное предприятие

management consultancy – фирма, оказывающая услуги в области менеджмента; management consultant – консультант в области менеджмента;

to allocate spending – ассигновывать, предназначать расходы; allocation – ассигнование

to buy media – покупать рекламное время или пространство в средствах массовой информации

full-service marketer – компания, оказывающая все виды услуг в области маркетинга, по продвижению товаров на рынок

fragmentation of audience – сегментация населения (потребителей): разделение потребителей по уровню доходов, cоциальной принадлежности, предпочтений и т.п.

direct marketing – прямой маркетинг (без посредников)

billing – биллинг, выставление счетов; здесь: система оплаты услуг

profit center – центр получения прибыли: подразделение компании, которое самостоятельно получает прибыль ( является независимым источником конкретной части суммарной прибыли) и несет расходы

Product placement