Many years ago, Cadbury’s sales of Creme Eggs collapsed.
From a peak of 201m sold between 1 January to Easter, sales had gone down, like an airliner in flames, to just 140m. So the company called a pitch.
I was on one of the pitching teams. We predicted that sales would be 127m the next year. An exceptionally clever account planner, Alan Cooper, wrote the equation on a whiteboard in the pitch.
He was wrong, though. Cadbury sold 127.5m. Well, what’s half a million Crème Eggs between us? We got appointed. Sir Dominic Cadbury did the deed.
When I was at Y&R, we had a professional mathematician, a German gentleman called Ludwig, to predict possible outcomes of changing marketing plans. At Ted Bates, now no more, we had a marketing department. Its chief job was to do the marketing for The Electricity Council (ECM), and for The Sun newspaper. We helped drive sales of 4m copies of The Sun a day. What is it now? 2.9m (ABC, Nov 2010)
At Leo Burnett we had Simon Broadbent. We ran regression analyses for SmithKline’s Lucozade and Macleans brands to identify precisely what the contribution was of every variation in marketing spend. We were helped by the fragmented structure of commercial TV at the time which allowed us to run area tests.
More recently, both JWT and Saatchi and Saatchi pitched for The National Lottery. I watched this with great interest because one of my clients then was Littlewoods Pools. We knew a successful lottery would kill Littlewoods. And it did.
Both Saatchi, which won, and JWT, which didn’t, had full-time statisticians to work out how the maths of the new lottery should work, including the structure, size and number of payouts needed to keep people playing, and also the necessary money needed to give to good causes.
Well, what every client should know is this: those days are gone.
How has this happened?
Digital has had a huge effect. It is very highly measurable. You don’t need to run regression analyses any longer. Google analytics do a pretty good job. There are plenty of other complementary proprietary programs to let you know what effect your marketing expenditure has had.
Digital has also slashed agency revenues, but not necessarily margins. Agencies got rid of the bearded sages over the last ten years, and hired enthusiastic young, cheap, people to run around a lot.
Clients have had a big hand in this. When I was running Vauxhall’s advertising in 1993, the budget was £40m. We took 10% commission. But now, the advertising budget is something like £10m. If you pay peanuts, you don’t get mathematicians.
So, finally, digital is killing quantified, mathematical advice and results-based recommendations from agencies.
It worries me. What’s a client to do?
The first thing for you, the client, is to remember is that your agency’s area of competence has dramatically contracted, so ask them what they can do for you.
The answer will be a mixture of vagueness and value.
“Well, we’re really in touch with the consumer/end-user/the inner zeitgeist.”
Maybe, but so are you. You are a consumer/end-user, too.
“We’re great with consumer insights.” Yes, and then what?
They might, however, come up with another, more serious and valuable, reason.
They are a fecund source of selling ideas.
This is encouraging to hear. It is ideas which move business and the world forward. So, ask them what their three greatest ideas in the last year have been. And what have been the results?
Then ask them what their three greatest cock-ups have been.
If they say that there have been none, walk away, and don’t look back. They will know where the bodies are buried, but won’t be telling you in a hurry.
If they do admit to one or two failures, ask them what they learnt and what action they have taken. It is better to work with someone who is honest about his own limitations than with one who promises the universe but comes up with a one-way Tube ticket to Barking.
Armed with this way of looking at things, you’ll soon know whether to stay or go.