How Coke views big agency networks

The August issue of the UK's Creative Review features an article titled "Coke: a simple story" which features Pio Schunker, Coca-Cola's "senior vice president for creative excellence, North America." Schunker, who used to work for Ogilvy New York, oversees a roster that includes Widen + Kennedy, Mother, Crispin Porter + Bogusky, and Turner Duckworth. He's also responsible for approving Coke's new look and "steadily piloting the idea through the Coke labyrinth."

"Their biggest battle, convincing Coke marketers that, no, it wasn't necessary to have a picture of some bubbles on the side of the can. People know Coke is a fizzy drink."

Two ideas about agencies really stood out to me in this piece:

1. Schunker (remember a former Ogilvy guy) deliberately went with independents like Wieden and Mother. "The big networks, he says, were just giving Coke what they thought it wanted, not what they themselves believed in. He wanted to work with agencies and design studios who would, rather than simply 'stick around for the pay cheque', believe in what they were doing and walk away if they didn't get to do it."
   
2. Schunker sees a problem with big agencies because of their well-intended, but fractured departments. "Big networks, he has said, typically present themselves as the 360 degree solutions ' but tend to be a loose confederation of completely disjointed companies that are so busy fighting with each other to figure out who gets the business, they can't be bothered to figure out how to solve our business.'"

As recent posts have shown, more agencies are diversifying their interests when they can. They buy design or interactive shops, or branch out into product development. But having "360 degree solutions" isn't really a solution if each tentacle is grasping for its own interest instead of the client's.

The Long Tail of Agencies

When I left portfolio school, the hot shops to work for were Wieden + Kennedy, Goodby Silverstein & Partners, Cliff Freeman & Partners, Fallon McElligott, and TBWA Chiat/Day. Places like VitroRobertson and Loeffler Ketchum Mountjoy rounded out the boutique-y list.

Most of those big shops are still on top after a decade. But I think this list has vastly expanded. Ask one portfolio student where he wants to end up and he may give a similar list of tradition agencies.

But another may say his top picks are R/GA, AKQA, Anomaly or Atmosphere BBDO.

Another may say she wants to end up at BBH Labs, Lean Mean Fighting Machine, Poke or Dare Digital.

I wouldn't be surprised if some students graduate portfolio schools wanting to work at Google or Facebook.

Suddenly, Chris Anderson's Long Tail is beginning to make a lot of sense in the world of job-hunting students, as well as the kind of agencies clients need, and the kind of work agencies want to do.

How Can Agencies Make Money on Free?

I've been listening to Chris Anderson's new book Free: The Future of a Radical Price (which I downloaded free off iTunes).

You can hear what Anderson has to say about free here and here. You can read Malcolm Gladwell's dissent here. And Seth Godin's counter here.

But if you're in a hurry, the synopsis is that more and more companies are making more and more money giving things away for free. And the book is full of examples from Google to Webkins to Radiohead to Ryanair to the UC Berkeley.

But there are no examples of advertising agencies (unless you count Google). And if Anderson is right, sometime in the near future, someone is going to figure out how advertising agencies can adopt free. Maybe it's an agency giving free brand consultation. Or creative. Or strategic planning. They already do this to painful extremes when pitching new business. But maybe there's a way to do it with paying clients.

Here's a noble attempt rising from the primordial soup of the free economy. True, they're a creative team and not an agency. But it's a start.

If this all sounds counterintuitive, read Anderson's book. It may change your mind. And if you're willing to share any ideas on how agencies can use "free" to their advantage, I'd love to hear them. I'll post mine as soon as they come to me.

Agencies vs. VCs

William Charnock is the co-head of strategic planning at JWT, and recently presented his ideas on advertising’s new business model in this Adweek article.

Charnock says that a year ago, while attending TED people would ask him “Which clients do you work for?” He answer was “We don’t really start with clients anymore.”

Charnock writes, More and more these days, we look for ideas we think people will be interested in and help to get these up and running…Some of these we create from scratch and some of them we find in places like [TED].

He continues: Now, I know agency-generated and intellectual property is nothing new, and JWT is only one of many agencies exploring this business model as an alternative to working for clients and handing the intellectual property over to them. My recent experience with JWT’s innovation and incubation venture, called Sector 64. Had proven to me that we can successfully create intellectual properties which we license to clients, retaining or sharing the intellectual ownership of the idea.

And according to Charnock, the advertising industry is better equipped to handle this business than the traditional VCs.

We have access to funds through our clients and our media partners. But more than this we have interest in the strategic value and integrity of their entrepreneurial centure. One of the biggest complains about VC funding is that they are only interested in the financial multiples they make on a relatively short-term investment. VCs are also often criticized for their lack of “big thinking,” preferring to fund ideas that are similar in nature to toehr successful centures. Anything totally new, that has never been done before, forget it. The majority of VC’s are not that visionary.

This is where I think we have the competitive advantace. Advertising agencies that are exploring IP business models tend to be looking for genuinely new ideas that can help to differentiate clients who choose to license or sponsor them. These agencies have a vested interest in the strategic value, rather than just the financial value, of the idea. And unlike the VCs, it is important for us to create ideas with longevity and the potential for mass social and cultural impact. These are, after all, the kinds of initiatives that hold the greatest value, over time, to our biggest and most valuable clients

I like the idea of agencies vs. VCs. It’s a pretty bold step that makes a lot of sense. But it takes some restructuring on the agency side. In the mid-1990s, no one would have said Cliff Freeman & Partners and Draper Fisher Jurvetson should be coloring at the same table.

I can’t find much about JWT’s Section 64 online. But the mention of it confirms my belief that there are two chief forces working to evolve the industry:

1. Big, firmly established corporations that have the funds to dabble in innovation. (e.g., JWT’s Section 64, Crispin Porter + Bogusky’s purchase of Radar Communications, and Wieden + Kennedy’s new Platform)
2. Small companies that have no regard for what an advertising agency is supposed do and be. (e.g., Poke)

An agency crawls onto VC turf.