Corrupted consulting services in the advertising and marketing industry
Consulting should be independent. Unfortunately, this is often not the case in the advertising and marketing industry. There are factors that clearly run counter to good consulting services—and thus to the client’s interests. A guest post by Luc Holzach.
What characterizes a good consultant? This is a question that can be answered in many different ways. Certainly, well-founded knowledge and interest, social competence, quick comprehension and an eye for the big picture are important. However, professional competence and methodology are the top priorities. These help him to work with the customer to find the solution that best achieves the customer's goals. And since there is no one-size-fits-all solution, the consultant needs an independent view of things. This sounds logical, but is often not the case.
Complete independence is difficult. However, there are obvious constraints and dependencies, especially in the advertising and marketing industry, which consultants should avoid at all costs. Because they make good consulting services impossible and move the client's success away from the center. The four most widespread problems in the industry are:
- Awards
- Advisory Committees
- Partnership, reseller and license agreements
- Investments in infrastructure
1. awards
What a bonus is to a banker, an award is to an advertiser. It almost seems as if all the awards and rankings are the lifeblood of the entire advertising industry. And this is exactly where the problem lies - apart from the incestuously staffed juries that lack neutrality. As long as awards are not also the client's goal, there is always a conflict of goals between "winning an award" and "efficiently achieving the client's goals." This goal conflict leads to inefficiency, frustration, and additional costs. An agency that is interested in optimizing its creative ranking will, at least in part, intend to develop a campaign that has the potential for awards on every assignment. This undermines the agency's independence and prevents effective consulting.
2. advisory commissions
An open secret are the so-called advisory commissions. They occur between publisher and media agency and between publisher and creative agency. Whether digital or offline - commissions are almost ubiquitous and vary depending on the channel. With Google DoubleClick's online marketing solutions, the level of commissions can even be set by the executing agency.
Depending on the media volume, this commission can also increase. This constraint is highly problematic. On the one hand, it leads to a lack of transparency in the agency's performance (e.g., agency A makes a low offer and collects commission via media, and agency B makes a higher offer true & fair and passes on the commission), and on the other hand, it leads to a dependency in consulting. The consultant is thus inevitably tempted to recommend to the customer the channel with which he earns the most.
3. contracts
Partnerships and cooperations are common in the advertising industry. If they are based on long-term contracts, be it countertrade, quotas, commissions, or reseller conditions, they endanger the independence of the consultant. For example, if a consultant is both a licensee and reseller of a CRM tool (a common model), he will hardly recommend another CRM to his customers. And if he can obtain his own CRM free of charge if he wins a certain number of new customers for it, then his independence is completely gone. How else will he achieve his KPIs?
4. investment in infrastructure
Investing in your own infrastructure is a double-edged sword. On the one hand, the agency has to buy fewer external services and cede the margin to others; on the other hand, it ties up the consultancy, since the investments have to be amortized. For example, if an agency invests in its own programmatic advertising infrastructure, it will incur significant costs in technology and expertise. In subsequent years, the agency will try to process every order via this infrastructure in order to amortize the investments as quickly as possible. As a result, consulting is geared to the constraints and not to the needs of the customer.
In summary this means: Consulting must always be examined from the perspective of self-interest. This is because self-interest means that customer needs and the efficient achievement of customer goals are no longer the focus of consulting activities. For clients, it is therefore all the more important to take a close look behind the agency scenes and not to be seduced by the agencies' salesmanship before placing orders. Because one thing is certain: anyone in the advertising industry can sell.
Luc Holzach (M.A. HSG) is a marketing strategist with a focus on digitalization and design thinking. As a senior consultant, partner and member of the executive board, he helps steer the fortunes of the Partner und Partner agency.
