Hugo Powell’s ‘wake up’ call to the Canadian Advertising Congress is still being debated two months later … and my question is why?

I grant that his remarks were carefully crafted, but the fear-based message of adding value ‘or else’ is one that has been beaten to death in countless business books, articles and seminars since Tom Peters and Bob Waterman wrote In Search of Excellence in 1992.

So why all the fuss?

I have to believe that in the last five years, the impact of the recession, the migration of Canadian head offices to the United States, the growing skepticism of consumers to advertising, the growth of media buying houses, and the increasing power of the trade, private-label brands and below-the-line marketers must have rung several wake up calls to the Canadian advertising industry, and a lot sooner than January 13, 1993.

Or has it?

Could it be that there are still some agencies that hold the view that they have a proprietary right to their clients’ marketing budgets?

If so, they should know that the rest of the marketing services industry holds the view that clients’ budgets are fair game and the most entrepreneurial service providers will win out in the end.

There are some agencies that have historically received retainers simply for showing up. This has led to the growth of lavish infrastructures and encouraged a culture in which creative directors are coddled,while their performance is measured solely by the many awards that are bestowed upon them by their peers.

Non-traditional communications firms realize that only through great ideas, on-time and on-budget execution and demonstration of an ability to help sell product can they earn the right to be considered for the next project.

I happen to be a fan of great advertising, but I recognize that the process for creating and producing ads is going to be radically different in the future.

In the same way we are seeing polarization in industry sectors generally – a few major players and a cluster of creative boutiques with the middle being squeezed out – the advertising world is restructuring.

The critical success factor will be the advertising agencies’ competitive portfolio and whether it is strong enough to secure a viable position in the marketplace.

In the past, when exclusive and long-term relationships were common and agencies commanded the lion’s share of budgets, an agency’s competitive portfolio was anchored by the quality of its reel, its new business acumen, and the fact that it could match a client’s hierarchy of vice presidents, marketing managers, product managers and assistant product managers with its own stable of talented and bright individuals.

In the future, none of the above will produce a competitive advantage that can be defended. I see a new age of marketing in which relationships will be less secure, results will be measured continuously, and clients like Labatt, that have eliminated their functional silos and are proponents of interdependent relationships with their executives, will be forced to make pragmatic choices as to where to invest their dollars.

Will a new advertising campaign for Blue be as dramatic for Labatt’s long-term bottom line as investing in process redesign, which could draw out more productivity from suppliers and employees, generate a stronger performance from the sales force or create a mutually-beneficial partnership with its customers and competitors?

If I was the president of a major agency, I would look very hard at my competitive portfolio and ask myself whether I had the courage to make the changes required to ensure that I maintained control of my destiny.

I would take a hard look at the strategies I had in place to attract and keep my customers. I would take an even harder look at my culture and whether it was committed and prepared to be rewarded for building our clients’ business as opposed to just producing great advertising – as defined by our peers.

I would examine the agency’s account management process to determine whether we had the ability to identify our clients’ needs (as opposed to simply assuming we had the ability) and to deliver solutions that matched what our clients were willing to pay.

I would also look to our level of understanding our clients’ method of doing business. This would not simply be an exercise in learning brand positioning, but an effort to understand the corporate structure, long-term strategies and cultural initiatives that clients are putting in place, locally and globally, to ensure their success in the marketplace of tomorrow.

Finally, I would take the aggregate of my findings to determine what areas of my business do add value to my clients’ business and what areas should either be out-sourced or eliminated to ensure that I can provide the breakthrough ideas and be the low cost producer of the service level we had negotiated.

In doing so, I will have created an agency that is highly energized and focussed, and one that is competitive by virtue of its collective ability to sell business solutions, not advertising stuff.

Tony Chapman is president of CAPiTAL C Communications, a Toronto-based corporate communications agency that specializes in creating compelling competitive advantages for its clients.