Monday, April 27, 2015

12642: Kickbacks Trump Diversity.

Adweek reported a new 4As and ANA task force has been launched to investigate media kickbacks, an issue that 4As President Nancy Hill called the advertising industry’s “elephant in the room.” Um, adland has more elephants in the room than Ringling Bros. and Barnum & Bailey. Look for the trade groups to eventually recruit an army to tackle the corruption. Let’s hope the efforts are more effective than the half-hearted and half-assed attempts to end the exclusivity that’s plagued the industry for over 60 years. Hey, media kickbacks trump diversity.

As Firestorm Grows Around Media Kickbacks, the Industry Launches a New Task Force

4A’s and ANA vow to investigate marketers’ concerns

By Andrew McMains

It has been called (by 4A’s President Nancy Hill, specifically) the ad industry’s “elephant in the room.”

The issue? Allegations of media agencies pocketing discounts on volume media buys and not sharing the “kickbacks” with clients.

Well, now the elephant is finally getting the scrutiny many feel it deserves.

The 4A’s and the Association of National Advertisers today formed a joint task force to examine the accusations, and the 10-person group represents a who’s who in the media field.

Members include the heads of holding company media divisions like WPP’s GroupM, Omnicom’s Omnicom Media Group and Publicis Groupe’s Starcom MediaVest Group, along with marketing leaders from Unilever, Procter & Gamble, L’Oréal, and Subway. Rounding out the panel are 4A’s President Hill, ANA CEO Bob Liodice and Horizon Media CEO Bill Koenigsberg, who’s also chairman of the 4A’s board.

The group will start meeting next month with the goal of identifying “material issues” related to media transparency and “address them with constructive dialogue and pragmatic course of action.” Recommendations are expected later this year.

The idea of agencies profitting from volume-buy discounts is nothing new. In fact, the practice is common in certain regions of the world, including Asia and Latin America, where marketers generally are aware of it. The U.S., however, is a different story: ad holding companies maintain that they don’t pocket any discounts here.

Still, broader anxiety and distrust between agencies and marketers have given this issue legs ever since consultant and former media agency CEO Jon Mandel reignited the topic during a presentation at an ANA conference last month.

Mandel asserted that media kickbacks are widespread and that, despite assertions to the contrary, media agencies aren’t being transparent about them.

Of course, Mandel, who works for brand marketers, has a vested interest in pointing out problems with agencies. In short, marketers may hire him to investigate the practices of their shops. Still, transparency has long been a concern of marketers in their dealings with agencies, and merely suggesting that agencies aren’t being open with their clients was enough to set off a firestorm that continues a month later.

Three weeks after Mandel’s accusations, Hill made her “elephant in the room” comment at the 4A’s Transformation Conference in Texas. At the time, she said the 4A’s was already talking to the ANA about the topic and “we will continue to have those conversations to work toward what I hope will be some really good guidelines for everyone to think about.”

She further encouraged “everybody to have those conversations—agencies and clients—about the trust you need to have in each other because it’s very important in what we do.”

Since then, media commentators have fanned the flames, and analysts have questioned the extent of the practice of pocketing volume discounts, with one, Brian Wiener of Pivotal Research, going so far as to downgrade his outlook on some holding companies on the premise that losing such discounts would impact their profitability.

And as the companies reported on their first-quarter results this week, other analysts questioned their CEOs about the practice. The bosses, however, maintain that their agencies don’t operate this way in the U.S. and that in markets where they do collect discounts, they’re transparent about it with clients.

In Interpublic Group’s earnings call this morning, for example, CEO Michael Roth told analysts that his company addressed the issue 10 years ago in its drive to comply with then new federal standards for financial reporting that arose out of the Sarbanes-Oxley law of 2002.

“We embarked on a full transparency program within IPG to make sure that there’s transparency and that any rebates will be properly reflected in our contracts and given to our clients,” Roth said.

He added that in markets outside the U.S. where there are rebates, “our contracts are clear that those rebates belong to our clients (or specify) how we’re instructed to treat those rebates.”

Hill believes much is riding on the success of the task force, which she said must “ensure that the long-standing partnership between clients and agencies is grounded in trust and understanding.”

Liodice simply feels that “transparency concerns—real and perceived—need to be addressed and mitigated.” Now, conceivably, they have the stakeholders in place to get that done.

Sunday, April 26, 2015

12641: Mad Men Racial Recaps.

Decided to review the second and third of the seven final episodes of AMC series Mad Men by simply reading the recaps posted at the show’s website. New Business apparently provided another token cameo appearance by Shirley—the last Black secretary standing—who assisted Roger Sterling’s White secretary. The Forecast didn’t seem to feature any people of color, at least based on the recap transcript. Joan Harris visited Sterling Cooper & Partners’ LA office and met Dee, the receptionist. Can’t tell from the text is Dee is Black, but it’s unlikely, given the agency’s past opposition to letting Black women work in reception. Must admit that reading the recaps versus actually watching the episodes is a quicker and more efficient waste of time.

12640: Mad Men Secretary Severance.

In the first of the seven final episodes of AMC series Mad Men, Don Draper had a new White secretary, so it looks like Dawn Chambers is Black history. But Shirley is still around and made two token cameo appearances. Ken Cosgrove was fired and offered a generous severance, which he ultimately rejected. Did Dawn Chambers receive compensation for her dismissal?

12639: Rosetta Reductions Reek.

AgencySpy noted layoffs at Rosetta, the awful digital agency acquired by Publicis Groupe in 2011 and ultimately folded into the Razorfish Global turd pile. Since its acquisition, there have actually been quite a few Rosetta reductions and restructurings, as is often the case in such purchases—all of which makes Publicis Groupe CEO Maurice Lévy’s contention that there will be no layoffs resulting from the recent Sapient acquisition total bullshit spread on a stale croissant.

Saturday, April 25, 2015

12638: Ad Club Diversity Drivel.

Advertising Age published a fluff piece on diversity by The Advertising Club of New York President and CEO Gina Grillo. Um, has anyone checked the diversity at The Advertising Club of New York?

The Advertising Industry Needs Diverse Leadership to Thrive

As U.S. Nears Diversity Tipping Point, Ad Industry Needs to Take the Lead

By Gina Grillo

It’s been said for years that the demographic makeup of the U.S. is headed for a seismic shift—that the non-Hispanic white majority would eventually become a minority. A recent report from the U.S. Census Bureau shows that this is happening even faster than anyone thought before. Projections for the tipping point when non-Hispanic whites would no longer account for more than 50% of the population were initially pegged at the year 2050.

As reported in a recent Ad Age article, updates from the Census Bureau have pushed this date up to 2044. While the overall rate of population growth is slowing due to declining birth rates, because of years of steady immigration the country is diversifying at a pace never before seen in our history. In 2044, the U.S. will be 49.7% white (compared with 63% today), 25% Hispanic (compared with 17% today), 12.7% black, 7.9% percent Asian and 3.7% multiracial.

As an industry that exists to communicate with consumers of all backgrounds and walks of life, the advertising industry stands to benefit more than most by cultivating a highly diverse and inclusive environment that reflects the changing demographics around us. According to the Bureau of Labor Statistics, of the 582,000 Americans employed in advertising and communications in 2014, less than half are women, 6.6% are black or African American, 5.7% are Asian and 10.5% are Hispanic. Together, we can change this.

Diversity of thought is powerful. We need to become the industry that embraces a vast array of talent from different ethnic and racial backgrounds, while also making a real effort to recruit people of different cultural experiences, ages, genders, religions, sexual orientations and lifestyles. This will give us the insights and the skills to evolve alongside the massive demographic, technological and social shifts that we’ll see in the coming decades.

One company that has taken diversity very seriously and benefitted from it in interesting ways is Novartis Pharmaceuticals. Its commitment to diversity and inclusion in hiring and promotion is one of the many things the company has done that landed it the top spot on Diversity Inc’s Top 50 list, which assesses diversity management in corporate America and around the world.

But Novartis goes far beyond just hiring employees from diverse backgrounds. The company supports employees in their work and gains valuable business insights from them though voluntary resource groups that bring together employees of similar backgrounds—from ethnic groups to veterans, women, working parents and those affected by cancer. These groups benefit employees through career development and networking, and they benefit the company because they are an innovative way for Novartis to conduct research, gain new perspectives and find culturally competent insights without even having to look outside the company. A strategy like this would be powerful for any business, but could be a game-changer in the ad industry.

Encouraging diversity and inclusiveness in our industry isn’t only a matter of fairness and ethics—it’s also smart business. In a recent study by McKinsey and Co. on the effects of top-team diversity at a wide range of international businesses, the findings were incredibly telling: “For companies ranking in the top quartile of executive-board diversity, ROEs (returns on equity) were 53% higher, on average, than they were for those in the bottom quartile.” The same study found that U.S. public companies with diverse executive boards have a 95% higher return on equity than those without.

While the numbers alone should be a call to action for leaders in the ad industry in our community, I think the real takeaway is that by building diverse leadership teams that reflect where our country’s demographics are headed, executives can lead by example, showing their rank and file that they promote and support diversity at every level. For starters, diverse teams are more creative and innovative. New perspectives, constructive conflict resolution and fresh problem-solving approaches come to the forefront when people of varied backgrounds work together. Studies have shown that teams made up of people with diverse experiences outperform groups of like-minded experts. When this sort of thinking is allowed to flourish in a leadership team, that’s when companies see the real benefits of diverse staffing.

Diversity at the top also sends a clear message to employees. Corporate cultures that embrace diverse leadership in an authentic way attract and retain the best talent at all levels. This should be a wake-up call that hiring diverse employees at the entry level and filling quotas isn’t the best way to create a diverse and innovative team. There also needs to be grooming and promotion of staff from different backgrounds, generations and cultures all the way up the ranks, and executive searches need to look outside of the advertising world to attract fresh talent.

In advertising, building a staff with varied perspectives and knowledge about cultural nuances is crucial. Without it, there’s no way to communicate authentically in an ever more globalized business environment or in an America that grows more diverse by the day. We all need to do a better job of not just attracting talent from diverse backgrounds, but retaining and promoting them if we’re going to stay relevant going forward.

Gina Grillo is president and CEO of The Advertising Club of New York.

Friday, April 24, 2015

12637: DiversityInc Top 50 Hypocrites.

The DiversityInc Top 50 List for 2015—surprise, surprise—did not include any advertising agencies or advertising holding companies. However, the lineup featured major advertisers like Mastercard, AT&T, Johnson & Johnson, Procter & Gamble, Cox Communications, General Mills, IBM, Target, Comcast, Dell, Allstate, Walt Disney, Toyota, Colgate-Palmolive, Kraft Foods and Verizon. It’s astonishingly hypocritical how corporations can be so committed to inclusiveness, yet conspire with White advertising agencies where diversity remains a dream deferred and denied. DiversityInc should add a qualification requirement regarding a candidate’s relationship with White advertising agencies. They’d struggle to identify even five legitimate contenders.

P.S., not sure what’s up with the invisible company occupying slot 40.

Thursday, April 23, 2015

12636: Seeking White Rats…?

Adweek reported Chuck E. Cheese’s is seeking a new White advertising agency. The pizza arcade has recently worked with The Richards Group, who showed great creative versatility by handling talking mice and talking vaginas. It’ll be tough to find White rats that can top that kind of talent.

Chuck E. Cheese’s Seeks New Creative Agency

The pizza arcade chain spends $28 million a year on media

By Noreen O’Leary

Chuck E. Cheese’s is looking for a new creative agency to revive the fortunes of the faded pizza arcade brand, sources said.

The Irving, Texas chain spent $28 million on media spending in 2014, according to Kantar Media. Most recent reports have the account handled by The Richards Group, Dallas, but reps there haven’t responded to an inquiry.

In January Chuck E. Cheese’s brought in a new chief marketing officer, Michael Hartman, who was previously senior marketing officer at SeaWorld Parks & Entertainment.

When reached by Adweek, Hartman declined to comment on the agency review.

In addition to Richards, the brand has also worked with several agencies in the past, including Zambrelli for TV advertising, M/C/C for social media marketing and Apollo Interactive for website development.

Founded in 1977 by Atari co-founder Nolan Bushnell, Chuck E. Cheese’s was the first family restaurant to integrate food with entertainment and arcade games. (It has continued to use its namesake animatronic mouse mascot as a fixture in ads.) In recent years, the chain has also had the dubious distinction in the media for curious outbreaks of violence at its stores, including an incident last in month in Ohio where patrons beat employees.

While Chuck E. Cheese’s has done little to change with the times, it nonetheless has strong millennial brand awareness and had grown to 577 outlets as of March 2014.

Chuck E. Cheese’s is owned by CEC Entertainment, which was bought by an affiliate of turnaround investors Apollo Global Management last year, for about $950 million.

12635: Diversity Disconnect…?

Adweek reported on an ANA survey showing marketers and agencies disagree on key items including briefs, approval processes and compensation. Wonder how the two differ on the topic of diversity. Marketers are quick to declare a commitment to inclusiveness. Agencies, not so much. Interestingly enough, the Adweek story featured an illustration (depicted above) of two White men shaking hands. Perfect.

There Are Big Disconnects in This New ANA Survey of Marketers and Agencies

On compensation, briefing, approving ads

By Andrew McMains

A new Association of National Advertisers survey of marketers and agencies reveals (perhaps not too surprisingly) little harmony and much discord.

While marketing and agency leaders agree that agencies are valuable to marketers and help drive business results, they differ on how well they work together, the clarity of assignment briefs and the quality of the ad-approval process.

Specifically, just 27 percent of agency leaders polled found marketer briefs to be clear, compared to 58 percent of the marketers. Similarly, only 36 percent of the agencies were satisfied with how marketers approve ads, versus 54 percent of marketers, according to the ANA.

As you might expect, the biggest disconnect was in compensation. Nearly three-quarters of clients (72 percent) described their agency compensation as fair, while only 40 percent of the agencies agreed.

As ANA President Bob Liodice acknowledged, “There are disturbing legacy issues that continue to plague the partnership that have been further complicated by blossoming transparency concerns.” He added that the ANA is “committed to making tangible improvements and will be working in partnership with the 4A’s to actively address those issues.”

In all, the ANA polled 126 marketer executives and 105 agency honchos in its survey, which took place in January and February. Fifty-eight percent of the agency respondents work at full-service agencies, 23 percent at creative-only agencies, 12 percent at media shops and the remaining 7 percent are specialty players.

The full survey is available to ANA members.

Wednesday, April 22, 2015

12634: White Women’s Movement.

Adweek published a fluff piece titled, “The Boys Club of Chief Creative Officers Finally Gets Some Female Faces.” Based on the accompanying photographs, it appears to be predominately White female faces. Jumping on the Caucasian Chicks Bandwagon is nothing more than the latest diversity diversion.

The Boys Club of Chief Creative Officers Finally Gets Some Female Faces

Women claim 5 top roles in 6 months

By Andrew McMains

After years of withering criticism about the dearth of women leading creative departments, the industry finally seems to be listening.

Five women have been named to creative chief positions—at Young & Rubicam, Wieden + Kennedy, Ogilvy & Mather and Wunderman—in the past six months, with Y&R, for example, recruiting Leslie Sims from McCann Erickson to become chief creative officer in New York and promoting Pam Mufson to co-executive creative director in Chicago.

Award show juries also have become more egalitarian, with the Art Directors Club and the Clios mandating that there be an equal number of male and female jurors. Meanwhile, Cannes Lions will have five female jury presidents this year, which represents a third of the total pool.

The 3% Conference, whose name reflects the tiny percentage of female creative directors listed in the 2004 Communications Arts Advertising Annual, has seen creative chiefs rise to 11 percent.

Agencies acknowledge the imbalance in their upper creative ranks and are trying to address it. DDB in March launched Better by Half, an initiative that seeks to identify and remove obstacles that prevent women from advancing. The goal is to have 50 percent of DDB’s creative leaders (cds, ecds, CCOs) be women within five years. Currently, only 10 percent of top creatives inside DDB are female.

Mark O’Brien, DDB North American president, said the agency is working on identifying the hurdles that women face. “Barriers are there that we don’t see,” he noted. “We expect that if we remove the barriers, the rise will happen naturally.”

The obstacles are many: the lack of mentors, male leaders favoring men’s work over that of women and little support for mothers, observed Y&R’s Sims and Toni Hess, who became CCO at Wunderman last fall. These issues determine whether women stay and rise or leave.

“The emotional pull to have children and families really can’t be overlooked,” said Hess. “We work in a wonderful, amazing business that is a lot of fun but is incredibly demanding.”

With more women steering corporate marketing and an influx of millennials at agencies, Sims expects creative departments to evolve and become more amenable to helping women strike a better work-life balance, which in turn will allow them to compete on a level playing field with their male counterparts.

“Diversity of any kind on an agency leadership team is a real advantage,” Sims explained. “And given that there’s such a wide array of clients and even a broader diversity of consumers, making sure you have a mixture of perspective is really important.”

Industry headhunters predict that the influx of women creative chiefs would grow at a steady clip, given the healthy supply of seasoned midlevel talent. Agencies are “looking for modern leaders,” said Debra Sercy of Grace Blue. “And women increasingly are in consideration because they’ve risen through the ranks, they have proven their ability, they’re agile, they’re fearless, they’re strategic and they’re smart.”

Tuesday, April 21, 2015

12633: How Jimmy Smith Made It.

From The Los Angeles Times…

How I Made It: Advertising veteran Jimmy Smith

By Ronald D. White

The gig: Advertising veteran Jimmy Smith, 53, has orchestrated award-winning work for brands including Nike and Gatorade, the latter involving the adoption of the more edgy “G” in packaging and marketing the sports drink. Since 2011, Smith has been chief executive and chief creative officer of Amusement Park Entertainment, which he founded with advertising conglomerate Interpublic Group, to develop “branded entertainment” — industry lingo for making the product or brand the centerpiece of an app, game, event, television show or movie, rather than creating an ad that viewers can ignore.

Another gig: Smith has added more traditional advertising and marketing back into his playbook. His businesses will operate as part of a larger company called simply Amusement Park, formed with longtime executives from DGWB Advertising & Communications. Smith is chairman and chief creative officer of the new firm. Partners Mike Weisman, Ed Collins and Jon Gothold have taken on the jobs of CEO, president and executive creative director, respectively. The venture operates out of offices in Los Angeles and Santa Ana, where DGWB has occupied the town’s historic city hall. Combined, the businesses have nearly 90 employees.

Parental influence: Smith, born in Muskegon, Mich., points to the determination of his father, James, to leave factory work and run his own business, eventually acquiring a restaurant franchise. “It was the first time that I could remember of a black person owning something in Muskegon,” Smith said. “It stayed in my head that I could do that too.” His mother, Evelyn, was a teacher and his language guide. “I couldn’t speak or write or do anything, from a very young age, without being corrected on the right way to do it by my mom, in a healthy way.”

Becoming “Bewitched”: Branding and advertising was an early career idea, Smith said, that he got from “Bewitched,” a sitcom that ran from 1964 to 1972 about New York ad exec Darrin Stephens. In the show, Stephens marries a witch, Samantha. The only drawback was having an evil witch — Endora — for a mother-in-law. “Darrin’s wife was beautiful,” Smith said. “He had a big house and if it wasn’t for Endora, it seemed like a pretty easy gig.”

Fallback plan: Smith attended Michigan State from 1981 to 1984. He majored in advertising but still entertained his childhood dream of becoming a professional basketball player. Michigan State has one of the nation’s most successful men’s basketball programs. “After I was cut from the Michigan State basketball team three years in a row,” Smith said, “I thought, ‘OK, I think I need to make this advertising thing happen.’”

ABCs of advertising: “I went to New York, Detroit, Chicago, anywhere I could go to get a job interview.” At Chicago’s Burrell Advertising (now Burrell Communications), one of the largest multicultural marketing firms in the world, Smith forgot the name of the person he was supposed to see. Despite the mix-up, Smith got the job. There he met a young co-worker named Lewis Williams, now Burrell’s chief creative officer, who “taught me the ABCs of advertising,” Smith said. “The main thing he taught me was huge. ‘They try to act like it’s a secret. They act like it’s rocket science. Advertising is not rocket science.’ That gave me confidence. It allowed me to feel comfortable any time I was presenting an idea.”

Becoming a mad man: The business “was intimidating because mostly they don’t like what you are presenting,” Smith said. “You go in and get to be humiliated. It’s personal. It’s mine and my team’s idea and they are just putting bullet holes in it. That is the way it is in advertising.” Smith built his name as he moved from agency to agency, including Wieden + Kennedy, where he was a writer and creative director for the Nike account; BBDO, where he was executive creative director; and TBWA\Chiat\Day’s L.A. office, where he was Gatorade’s group creative director.

Appealing to all: Having been told that his ad ideas were “not black enough” or “too black,” Smith said he liked the atmosphere at Muse Cordero Chen in the 1990s. There, he said, one “could walk down halls and hear Mandarin at one moment, Spanish the next, someone else speaking Japanese. If you are only a black agency, then your ideas are only going to come from that culture, same thing if you are at a white agency. But if you mix all of those cultures together, that’s where the most powerful ideas are going to come from.”

Diversity: Smith said he has tried to foster creative freedom in his diverse team, which draws from the worlds of sports, art and entertainment. “Find that coach who is going to give you the green light, who understands what you do, the value that you bring,” he advises.

Family affair: Smith’s wife, Smoke, works at Amusement Park Entertainment, as do their sons, Sequel, 28, and Jarrel, 27. Work is never far away, even when he and his wife manage to get away to a concert. “When I’m at the concert, it’s always, ‘Maybe I can use Lil Wayne in that,’ or some other idea. You can’t help it.”

12632: Belated 10th Anniversary.

Managed to forget that March 6th marked a decade of blogging at MultiCultClassics.