Sorting the wheat from the chaff.

Clients expect more work for less money to make up for budget cuts. Agencies are expected to do more work for free to win pitches and the pitch process is taking longer. This is having an impact on the quality of work and client servicing. More work is being produced for less budget, by a changing workforce that is less experienced in the agency’s specific approach and less knowledgeable about the clients.

“I wish that the design industry would get together regarding the issue of free pitching. The amount of work that is expected is shocking. It can put small firms out of the running and out of business”, explained one strategist.

A designer agency-owner added: “We are a profession and like any profession we should have a strong professional body to support the industry, lobby on behalf of the industry. The design agency world is guilty of continually under valuing itself and as such clients, including the public sector, are asking for more and more but for less and less fee. It’s a tough industry that in my view needs a strong professional body to stand up for the SMEs in particular. To my mind no such body currently exists.”

Clients asking for ‘safer’ work will do nothing to enhance an agency’s reputation as being at the forefront of innovation (or their own), and safer solutions may not achieve the client’s business objectives.

“This recession is sorting the wheat from the chaff. Which is a good thing. We’re still suffering the client backlash from over-selling to them pre-recession”, noted an account manager.

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Rose tinted challenges in the digital and design industry.

First published by Design Week on 3 January 2012.

UK digital and design agencies are facing a second year of talent exodus. Last year 56% of respondents to our Design Industry Voices survey were intending to leave their agency. These were not idle threats; in our 2011 survey 35% had been in their job less than a year. In the next twelve months 58% are intending to change employer. It is time for the industry to take this seriously.

The impact of churn

Churn has far reaching consequences that SMEs can ill afford in this uncertain economy. It impacts on reputation, profitability, quality of work, client and talent retention and acquisition.

Recruitment demands senior management time, fees, and further investment to train new employees on the agency’s approach and knowledge of its clients’ businesses. Over half (58%) of respondents told us their agency is employing less permanent staff, 43% that they are using more unpaid interns and 55% that they are using more freelancers. Is it any wonder that 32% say that the quality of work has declined?

Clients get nervous when the ‘A’ team pitches but an unstable ‘B’ team delivers. And feeling that you aren’t on the ‘A’ team is demotivating, giving employees another reason to consider leaving.

This uncertainty can encourage clients to put their account out to pitch again. Add to this that respondents say clients are expecting more work in pitches for free (71%) and once you’ve won the account more work for less money (85%). One agency owner told us “Yes, budgets are killing us, everyone wants something for nothing and without good reason and if you don’t agree they all go elsewhere.” There is “too much competition. Little opportunity” said one designer.

The movement of people between agencies can make or break reputation through word of mouth. This is increasingly true as a growing number of respondents are using the social web to talk about their professional experiences (30.4% in 2011, up from 19% in 2009).

Clients asking for safer work (54% of respondents) will do nothing to enhance an agency’s (or the client’s own) reputation as being at the forefront of innovation.
An account manager explained “There are a lot of clients demanding that something is just done the way they want despite expert opinion to the contrary… It seems lost that the clients are in fact employing experts for the skills they have and subjective feelings on the value of the work can dominate the management of project and dilute the end result.”

Safer solutions may not achieve the client’s business objectives. One design director pointed out: “It’s increasingly being dumbed down and made more obvious and commercial as the clients are frightened to try anything new. They tend to patronize the audience and don’t assume that the consumer can pick up on edgy subtleties.

A rose-tinted challenge

Agency leaders are wearing rose-tinted glasses. Owners are consistently more likely to rate their agency’s performance higher than their employees. This may be helpful if they are to successfully lead their agency through the economic downturn and back to prosperity, but they should be aware that their employees do not share their perceptions of agency performance.

Respondents rate ‘has management team that demonstrates strong leadership skills’ as the agency attribute with the second highest delivery gap: -53% in 2011, and -48% in 2010. (The delivery gap is the difference between the perceived importance of an agency attribute and the perception of how well the respondent’s agency actually performs against that attribute.)

Perceived agency performance is getting worse: there is too much poor leadership, that doesn’t value ideas and opinions, and fails to reward people for going the extra mile when there are excessively high workloads relative to staffing levels. Fewer staff than ever expect their agency to be a brand that is compatible with their own values.

Agencies appear to be running on empty, with staff engagement at an all time low.
What are digital and design agency leaders going to do about this?

A return to middle management

Elizabeth is an agency entrepreneur. An account director, she steers her agency and client team, always delivering innovative, creative, business results focused work. She is a middle manager: no responsibility for running the agency, total responsibility for her client’s satisfaction. Elizabeth is tenacious, she invests budgets as if the money were her own, worries about billability and profitability of the agency, is confident advising business leaders, and is a natural ‘farmer’ and business developer. A wordsmith, she always pushes studio to innovate creatively and knows when to nurture and when to begin again. Elizabeth knows the value of ideas and she doesn’t like giving them away for free.

If we can put that entrepreneurial spirit possessed by so many agency leaders and managers at the heart of the business we may yet find a way to stop the exodus.

It is time for a return to middle management. Middle managers have daily contact with clients, lead the agency team, manage the budgets and produce work that can make an agency’s reputation. They are the future leaders.

With middle management as the agency’s driving force, it’s easer to focus on profitability and engagement.

Teach managers how to increase billability and usage rates, reduce investment from overspend on pitches and projects. Improve their negotiation skills. Stop over-delivering in ways that the client doesn’t notice and instead make one-off investments in additional work that is groundbreaking, setting a new tone.

Give managers responsibility for the resourcing budget on their project so that they can staff up appropriately and allocate manageable workloads. Stop promising to clients more than your people can deliver during a normal working day for the budget. Take a percentage of the project profitability and allocate it to managers to use as a team bonus for outstanding work and for seeing the project through, helping increase quality and reduce churn.

When I see Elizabeth, or any of the other great senior manager or director level account managers, designers and strategists at work, it makes me wonder why we have executive teams. How are they helping if they are failing to lead, don’t listen to ideas and opinions, fail to reward people for going the extra mile, or ensure that workloads are acceptable? Here’s one way to save money – a slimmed down executive team and an empowered middle management.

Whatever you think of my ideas, this is an industry wide problem and it is time for fresh thinking and action.

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Design Industry Voices 2011 survey finds more employees than ever intend to change job within twelve months.

The headlines

  1. More staff than ever intend to change job (58.3%) within twelve months.
  2. Clients expect more work for less money to make up for budget cuts.
  3. Agencies are expected to do more work for free to win pitches and the pitch process is taking longer.
  4. Clients want ‘safer’ work.
  5. Agencies are employing fewer permanent staff, more freelancers and more interns.
  6. The perceived delivery gap has continued to widen across all agency attributes. (The delivery gap is the difference between the perceived importance compared to perception of how well an agency currently performs in relation to an agency attribute.)
  7. Owners have a rosier view of agency performance than their employees.

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Design Industry Voices survey 2010 perceived agency performance worse than last year.

The headlines

  1. Over half of respondents (55.7%) intend to change job within a year, compared to 38.4% last year.
  2. Staff are more discriminating about what they expect from their agency than they were in 2009.
  3. The perceived delivery gap (the difference between the perceived importance compared to perception of how well an agency currently performs in relation to an agency attribute) has widened over the last year.
  4. Age has an impact on what is considered important and how performance is perceived in an agency.
  5. Owners and executive team disagree that their agency ‘has good pay and benefits package’.

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Design Industry Voices Survey 2009 reveals 38% are planning exit when market picks up.

Industry employees voice dissatisfaction in their agency’s performance in the areas that matter most to them.

In late October 2009 we asked people who work within UK design and digital agencies to anonymously share their views on how it feels to work within their agency right now. The first Design Industry Voices Survey 2009 by Fairley & Associates, Gabriele Skelton and On Pointe Marketing was published in December 2009. Here are the headlines.

Day-to-day client satisfaction at risk

38% of employees responsible for day-to-day client satisfaction are planning their exit when the recession ends, with almost three quarters intending to stay in the industry.

36% of directors, 53% of managers and 47% of coordinators and assistants intend to change employer, compared to only 19% of the executive team. We found that strategists are least likely to change employer (21%) whereas designers (43%), account managers (44%) and those working in other roles in the agency (36%) are most likely to leave.

A substantial change in those responsible for the day-to-day client satisfaction and delivery may have an impact on the agency’s ability to service and farm existing clients. There is also a risk of losing knowledge and experience. Agencies are likely to face the need for financial and time investment in the recruitment and training of new talent, which they can ill afford.

Stef Brown, Managing Director of On Pointe Marketing, says: “Agencies are all about people. Building relationships and satisfying existing clients is one of the best ways to weather any downturn. If agencies start losing the key staff that deliver the work, they risk damaging those relationships to the point where clients may decide to look elsewhere. They also risk being so stretched that they’re unable to seize new opportunities as the market begins to pick up.” 

Perceived agency delivery gap is major factor in deciding whether to stay or go

We asked respondents to tell us how important a series of agency attributes were to them personally and how well their agency is currently performing against those attributes.

Across the industry, people agree on what makes a good agency.

We then measured the difference between importance and performance, which we call the delivery gap. We found that employees who intend to change job perceive bigger agency delivery gaps than those who wish to stay. The median gap is just 13% for those intending to stay and 36% for those intending to leave.

The five attributes in which there is the greatest difference of opinion between those intending to leave and those intending to stay are: ‘rewards people for going the extra mile’ (39% difference); ‘has a management team that demonstrates strong leadership skills’ (35%); ‘helps employees to manage stress’ (33%); ‘supports professional development and growth’ (32%); and ‘is quick to change in reaction to new situations’ (29%).

Rachel Fairley, Managing Director of Fairley & Associates, believes: “Employees agree on what makes a good agency and on how their agencies are letting them down. For two-fifths, enough is enough. It isn’t about money; everyone knows money is tight. It is about respect and appreciation. Agencies must empower their managers to lead, coach and nurture their teams so employees are involved in ensuring their agency’s and their personal success.”

Crucial deficits in agency performance in the psychosocial work environment

For those intending to leave, the greatest delivery gaps are in the psychosocial work environment such as job demands, job control and workplace support/training.

The perceived delivery gap for those intending to leave is significant: ‘rewards people for going the extra mile’ (64%); ‘supports professional development and growth’ (60%); ‘provides training’ (55%); ‘helps employees to manage stress’ (55%); ‘appropriate workload for staffing levels’ (53%).

Jobs with high demands and high control are generally considered the most rewarding whereas jobs with high demands, low control and poor workplace support are worst for mental and physical health. To retain talent, agencies need to nurture their employees. This may also improve their perception of the leadership skills of their management team.

Karina Beasley, Managing Director of Gabriele Skelton, says: “As a recruiter, of course we are reliant on people moving from one agency to another. However, we also want our agency clients to thrive, and from the results of our research, many are risking their future success by not paying attention to nurturing, and therefore, retaining their employees. Bearing in mind the level of redundancies in the first half of 2009, many agencies are now down to teams comprised entirely of their key people – the very people they can least afford to lose when the upturn comes. It is vital that they look at how to reward and recognise their people – something which doesn’t have to cost a fortune.”

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Pitch perfect.

Hiring the right strategic and creative agency isn’t easy. Here is some advice on how businesses can find the perfect partner.

 1. Do your homework

Don’t just consider your usual agencies. Find out which agencies are leading their field and most respected by their peers. Make a longlist in order of preference. Decide how many agencies you want to ask for pitch; but don’t ask any more than five.

Plan the process, which should take about four weeks start to finish:

  • You need a week to write the brief and selection criteria and secure internal sign off.
  • Agree who will be on your pitch panel: make sure you get a variety of experience, knowledge, ages and nationalities. If you have any important dissenters, make them part of the process. Secure their time.
  • Allow a few days to speak to the agencies to secure their commitment to pitch, then get confidentiality agreements signed.
  • Send them the brief.
  • Allow a minimum of two weeks for the agency to prepare, with a briefing meeting or call in the first few days.
  • Let the agency send you a draft proposal to review mid-way through the process to ensure they are on the right track.
  • Get the agency to send you their final proposal a few days before the pitch so your team has time to review it.
  • Don’t have any more than four two hour pitches per day.
  • Spend two hours after all the pitches are complete discussing and coming to a decision as a panel.
  • Notify the agencies of your decision.
  • Finalise contacts and terms and conditions.

2. Creative or no creative

The biggest dilemma at this stage is whether to ask for actual strategy or creative in the pitch. My advice is always no.

Part of the joy of working with external experts is to be part of the research, strategy and creative process. Without you, they have no real insider business expert on their team. They will work intensively on producing work, investing emotional energy on something that may or may not meet your stakeholder’s needs. You’ll find it hard not to react subjectively as you’ll have no real strategic criteria to judge their work against and they’ll no longer be fresh when it comes to starting at the beginning again.

It is also a huge investment for an agency to produce actual work when they have a 20% chance of being selected. If you want strategy or creative work at pitch then pay a contribution towards it. The DBA’s code of conduct expressly forbids its members to pitch creative for free.

Instead, ask them to demonstrate their strategic and creative thinking by showing examples of relevant work for previous or existing clients. Hear how they think and what sort of process they have. Be clear that you would like some insights into your challenge and that any sketched ideas, rather than fully designed solutions, are welcome.

In this tough market most agencies will over deliver.

3. Write a really good brief

Be as clear and honest as you can. Use normal language, not pseudo business speak or in house acronyms.

Make sure the brief answers as many questions as you can:

  • The business context driving change
  • Why you are doing this now
  • Who and what you are looking for from an agency
  • Your selection criteria
  • Pitch timings
  • Key project milestones and timings
  • Where you will be holding the pitch
  • Who the decision makers and influencers are in the process; roles and responsibilities
  • How you will measure the success of the work
  • The budget (see below)

Demand that the pitch team is the actual team with whom you will work. Agencies often field pitch teams consisting of highly polished, well rehearsed performers who are masters in the art of persuasion, but who may not work directly with you once appointed. Only the best agencies field your actual team, trusting that experience will win the day even if they aren’t the best presenters.

It is always simplest to give a ballpark budget, otherwise you may have to ask agencies to re-scope and rewrite their proposals. This is a complete waste of time and will significantly delay your ability to appoint an agency. If you can’t because you need their guidance on what would be reasonable, then make sure you discuss indicative budgets on the briefing call (see below).

Ask for the proposal a few days in advance of the pitch so you have time to read it and prepare questions to ask at the pitch. Don’t eliminate an agency based on their proposal unless it is clearly a copy and paste or doesn’t remotely answer your brief.

Agencies will want to know who they are pitching against so that they can work hard to differentiate themselves from the competition. I have never heard a good reason why this a bad idea, so give them the information.

4. Conflict and confidentiality

You are now ready to call (not email) the agency’s managing director or new business leader and ask them if they confidentially if they would like to be considered for pitch.

Find out if they have any conflicts of interests that may eliminate them. Tread a fine line on what would be considered a real conflict if you want to work with an agency with relevant industry experience. But do remember that even with the best intentions, it is really hard to have effective ‘Chinese walls’ within an agency.

If any agencies eliminate themselves because of conflicts then ask the next one on your longlist. You now have your shortlist.

Email a confidentiality agreement to entitle them to receive the brief. Remember, the agency community is small and tends to drink in the same pubs as industry journalists so you’ll have to go to great lengths for the trade press not to hear about it. If you want to control this, offer to work with the agencies on a news release about the appointment once a decision has been made, even if you have to be vague about the nature of the project.

5. Chemistry meetings

The recent trend to have pre-pitch chemistry meetings is a big mistake because it places emphasis on vague and subjective criteria. Chemistry is important, but all too often it is cited as the number one selection criteria. Don’t hire them just because you like them, but because they are the best in their field that you can afford and have shown their ability to deliver success for previous clients.

6. Q&A

Put your time and effort instead into spending an hour with each agency, preferably face to face but otherwise by telephone, so that they can ask questions to make sure they have everything they need to know to shine in their proposal and pitch.

Don’t take a short cut and do it as a group call because the agencies will be afraid to ask any questions which might give others competitive advantage, becoming a waste of everyone’s time.

To be fair, make sure it is the same person does all the briefings so agencies get roughly the same information.

Use any insights you have gleaned from how they handled the call to shape your questions in the pitch.

6. Decision making criteria

From your brief, write your selection criteria, so that everyone on your panel has the opportunity to evaluate as consistently and objectively as possible. Here are some suggestions:

Credentials:

  • Does the agency and specifically the people who will be on your team have relevant industry and project experience?
  • Is this the pitch team or the actual team? Is it the same team at pitch as outlined in the proposal?

Strategic and creative thinking:

  • Have they done their homework on you, your market and the challenges and opportunities you face?
  • Do they have a credible point of view on your challenges?
  • Does their creative work (for other clients) express a ‘big idea’?
  • Is their strategic and creative thinking original? Probe their case studies.

Implementation:

  • What testing do they recommend and how would they go about it?
  • What partners would they work with?
  • Where does their expertise start and end? Can they take you right through implementation?

Project management:

  • Do you trust them to deliver?
  • Is their proposal bespoke, comprehensive and clear?
  • Have they provided a detailed timeline?
  • Are they within your budget range?
  • Can they offering you a discount for volume, visibility or value?

Chemistry

  • Do you think you can work with them every day to deliver what you need?

7. The pitch

You need a big room with space around the walls for anything the agency wishes to display, as well as a good screen and projector for them to show their presentation.

Make sure they have at least 30 minutes set up time on their own and run the pitches as promptly as possible.

The presentation should last no more than an hour and a half, allowing you thirty minutes to have a conversation and ask each other questions. It does sound like a long time but agencies put a lot of effort into pitching and it isn’t often you get to spend time with experts who have an opinion on the market and your business, so make the most of it.

Make sure each panellist captures his or her thoughts on the criteria sheet so you can have a constructive conversation once you’ve met all the agencies.

8. The decision

Make a choice while the pitches are fresh. Talk through each one in turn to make sure that last is not best just because it is freshest in you mind. Be as objective as you can.

Once you’ve made your choice call each agency to let them know your decision and give them honest feedback on their pitch. They have made a significant investment pitching and will appreciate understanding how they might improve their approach in the future. Start with the winning agency but don’t put off having to share the bad news with the others. You never know when you might need them.

Stardom 2.0

Fifteen minutes of fame – that’s what Andy promised us. But he neglected to include a vital warning: when your big moment arrives, you might be the last to hear about it.

One warm evening in July 2008, I was walking past my local newsstand on the way home. I glanced at the main stories – most often, it’s the Evening Standard that can grab me with some wild headline. This particular time, they out did themselves. Their headline was about me.

Well, not about me personally, but about a one-minute film clip I’d shot, posted online for a few friends, and then promptly forgotten. “Bin Man ‘Ziggy Dust’”, shouted the newspaper, “Spins and Twirls his Way to Internet Stardom.”

How on earth had my grainy sixty-seconds ended up all over the net, and the headlines? I stood there in the middle of the pavement, trying to piece together how this could possibly have happened.

It had all started just two weeks earlier, while having tea with my Gen Whatever siblings. We’d noticed a street sweeper – how could we miss him? – turning his humble profession into a full-on Fred Astaire musical. My sibs gathered, smiling, as I filmed this little miracle, and replayed it on my camera. They insisted I post it on YouTube right away. Now here I was, glued to the pavement days later, the last person to learn that my film had become famous. Why hadn’t anyone told me?!

For one thing, because every time I launch a viral campaign, it’s part of a brand strategy, not by chance. But this time, it was my accidental launch that was taking off like a rocket. If my little film was going to benefit its anonymous star, I had to move even faster. Executing a spin worthy of Ziggy the street sweeper, I headed towards my office at a run. From somewhere beyond the grave, I could hear Andy clicking his stopwatch: “Fifteen, fourteen, thirteen…”

Breathless, I burst in and went directly to the source of all the trouble: the internet. Sure enough, the Evening Standard’s website led with the Ziggy story, linking directly to my video. What would the dancing street sweeper say about having been filmed – and turned into a star – without his permission?

To find out, I’d need to find him first. As I quickly discovered, that wasn’t going to be easy. Ziggy had no phone listing and, except for a certain sixty seconds of video and a comment in a local community chat room, no obvious presence on the web.

To catch a pre-digital man, use a pre-digital strategy: I walked his street cleaning route the next day, asking the local merchants if they could hand a note to the dancing street sweeper. Everyone knew exactly who I was talking about.

While I waited impatiently for Ziggy to resurface, his YouTube popularity continued to skyrocket. What began with a few of my friends had gone global, with internet, newspaper and television coverage all driving each other. Online hits leapt from thousands to a quarter million and showed no sign of peaking.

Now, years later, I see how important it was that I responded when that wave was still beginning its swell. It was the green grocer who put Ziggy and I in touch, early enough for us to claim the content and develop a strategy for harnessing it. As hits began to approach half a million, we sold the rights to an advertising agency, who wanted the footage to sustain another media brand.

In addition to payment, Ziggy and I added one condition: the ad agency had to donate £1000 to the charity of our choice. We did this, in part, because of Ziggy’s experience with both the positive and negative sides of internet stardom. In addition to autograph requests and guest DJ appearances, he had to contend with vandalism along his cleaning route, and an attack by thugs from the National Front.  So our choice was easy: our fifteen minutes of fame would also support Amnesty International.

What to do when you’re in the glare of stardom 2.0?

Every case is unique, but as with all brand management, it’s best to prepare as well as respond. Here are my top five suggestions:

1. Establish your rights

Even though some new media channels claim to exist entirely in the public domain, claim your content. Future dividends depend upon it. I was advised to use a fake screen name when posting the video on YouTube. My instinct to use my real name instead turned out to be essential later, in claiming and managing rights to the material.

2. Manage long term value

As author William Gibson famously observed, the internet was an accident. The military think-tank that invented it never dreamed it would become the open, global network we use today. This law of unintended consequences applies equally to internet content. Manage and index your archived content knowing that its future value may depend on uses you can’t foresee.

3. Deploy an early warning system

Which portions of today’s content will be tomorrow’s revenue streams? The first step towards tracking future value is simple and free. Use Google.com/alerts or one of several other free services to notify you every time your name, brand, or teatime videos are mentioned on the internet.

4.  Sustain momentum

The power of Web 2.0 is that a grainy video could catapult Ziggy Dust from zero to hero in two weeks. The power of branding is that a launch, whether planned or accidental, can be managed to become more sustainable.

5. Know when to relinquish control

Viruses mutate. So do viral campaigns. As a marketer who prefers to tightly manage brands and budgets, I had to overcome my natural resistance to hundreds of strangers editing my video, adding music, and reposting it worldwide. Effective brand management of Web 2.0 means understanding which channels you can control and which are valuable enough to accept the risks of consumer interaction, excitement and fame.

youtube.com/rachfairley

You can also search for ‘Billy Clean’ or ‘Ziggy Dust’ to read related articles.