Strategy Matters with Faris Yakob

As part of the new The Definitive Guide to Strategic Content Marketing book I've co-written with Xoogler Lazar Dzamic, we conducted over 60 interviews with leading academics and industry experts around the globe.

I recently caught-up with author, itinerant strategy and innovation consultant Faris Yakob who kindly contributed to the book to further discuss some of the themes we explored in our previous interview.

It's one of a series of conversations and you can check out previous and current ones at the following links:

• David Berkowitz
• Robert Rose
• Professor Andrew McStay
• Matt Allison

Q1. As part of the research for the new book, we discussed the ad industry's existential crisis and prediction by Forrester last year that half of all agencies will go out of business. That does not seem so far-fetched given all the news about big advertisers shedding their rosters. What's your Porter's 5 Forces-type analysis of the challenges currently facing agencies today?

Faris Yakob: I've been looking at competitive threats to agencies for years, it was part of my innovation role at the holding company:

1. Partners becoming frenemies or competitors - we see this everywhere from Google and Facebook, to the NYTimes, to influencers. 
2. Relationships being dis-intermediated - similar but not the same, where brands go directly to the vendors that agencies used to manage. e.g. CMO Fiat Chrysler "We created a roster of production companies as we have a roster of agencies, and then we will directly source productions centrally." This is staggering, especially considering the ongoing DoJ investigations into production price fixing. Which leads to point 3..
3. Trust. Agents need to be trusted. There have been so many trust violations, media rebates, production scandal, pushing programmatic to suit the bottom line. That's a tough one. 
4. Consultancies leveraging their key strengths in technology integration and upstream strategy to swallow agency roles with a promise of holistic experience design and an single P&L to aid collaboration and integration. Note Ogilvy just moved to that model. 
5. Continued margin pressure from clients looking to radically rationalize their rosters and pay less for "non-working media"

Justin Kirby: Trust looks like an interesting one because from client side there has been procurement-led race to the bottom... particularly with media agencies. That's not necessarily conducive for bringing the best out of people as it only helps speed-up the game of musical chairs in an industry that is already facing a talent draught. A problem that is particularly acute when it comes to attracting people into the industry given other opportunities available to them with tech sector, start-ups, etc.

Faris Yakob: Absolutely. It's all related, of course. By squeezing fees and margin procurement put incredible pressure on agency principals, who have obligations to hit certain targets from the holding companies. Rock meet hard place. Thus new sources of revenue were found, in media rebates, or opacity, or programmatic trading desks, or production fixing - all conflicts of interest that can be leveraged to try to appease both masters...for a time.

Justin Kirby: There does seem to be a vicious circle because the forces you outline together with interrelated issues of the very real talent draught and squeezing of margins and fees have create a basic formula of today’s agency life that Tim Lindsay at the D&AD describes as one that now means working three times as quickly, for one-third of the money. 

That's not only bad for attracting the next generation, but also adversely affects the quality of work which is has been declining and therefore has less impact. Things have seemingly come to a head hence Professor Scott Galloway saying we have now entered an era that he "affectionately" calls "the death of the advertising industrial complex" where ‘Don Draper has been drawn and quartered’. That maybe overstating things but even big brands accept that although advertising isn’t dying, it does have to evolve.

Any thoughts on what that may entail and are you seeing examples of where things might be heading for the better?

Faris Yakob: Indeed - I agree with Tim - wrote about that spiral here. Ultimately, for agencies and agency, it's, as always, working out what business you want to be in, and then how to differentiate your offering enough that you can charge a premium for what you do. Ultimately, for agencies and agency, it's, as always, working out what business you want to be in, and then how to differentiate your offering enough that you can charge a premium for what you do

Faris Yakob: Yes we see this a lot and everyone is wrestling with it. In some ways, ROI as measured is the problem since it tends to be measuring direct sales response, which is obviously more immediate and more tangible than long term brand effects on price elasticity. There are well documented drivers and issues with short-termism for business: structural incentives, quarterly reporting and diminished tenure vs diminished profitability and growth and share price driven decision making. 

Ultimately, the issue is one of measurement, usually. A broad basket of KPIs capturing long and short term effect is best. I think the issue is that they are different. Different kinds of ideas in different media are more or less effective at either, usually not both. It's that conflation that has ruined much digital advertising, trying to make direct response work as brand.

Ultimately, the issue is one of measurement, usually. A broad basket of KPIs capturing long and short term effect is best. I think the issue is that they are different. Different kinds of ideas in different media are more or less effective at either, usually not both. It's that conflation that has ruined much digital advertising, trying to make direct response work as brand. Brands doing it well are the ones doing holistic comms planning, stimulating and capturing demand, and not confusing the two. Additionally, there is a large middle ground between immediate sales response and long term brand building that needs considering. 

Justin Kirby: One of the reasons for asking this is because of P&G’s chief brand officer Marc Pritchard talked about the need for agencies to consolidate their services and return to more of a one-stop shop 4A’s Transformation conference last year. 

But is it actually possible to have those who understand the short of it when it comes to performance marketing and those who think more long terms about brand advertising under the same roof, let alone pull in the same direction or have everyone that's needed to service a brand across the customer journey and via different channels, platforms, media, etc. Those different approaches seem to have different business models, cultures, operating speeds, etc. 

I think the term "full service" is very unhelpful. Firstly because agencies haven't been full service since they started outsourcing production in the 1950s. I think strategy needs to be re-integrated because it's perforce holistic, otherwise it's not strategy, it's planning.

Faris Yakob: I think the term "full service" is very unhelpful. Firstly because agencies haven't been full service since they started outsourcing production in the 1950s. I think strategy needs to be re-integrated because it's perforce holistic, otherwise it's not strategy, it's planning. Strategy informs the need for advertising, the allocation across all possible channels from advertising through experience to packaging, planning informs the advertising, or the media buy and so on. Strategy should definitely be conversant across long & short and brand & comms. Implementation across the broadest set of channels would be ungainly - indeed that's the essence of the agency model, finding best of breed production partners. I think clients want a single point of interaction because for the last decade they have spent all their time managing internecine battles among roster agencies under the banner of collaboration. 

Faris Yakob: There is something very newspeak about the term "customer-first" when used by a company. It is either tautological - without customers, there is no company - or a lie - because public company managers mostly believe they have a fiduciary responsibility to shareholders first and foremost. If you use profits to buyback shares instead of improving the product, service, customer experience or passing on savings to the customer - you are shareholder-first, not customer first. Interestingly, and appositely since it's newspeak, share buybacks have risen to an all time high since the emergence of "customer-first" rhetoric.

There is something very newspeak about the term "customer-first" when used by a company. It is either tautological - without customers, there is no company - or a lie - because public company managers mostly believe they have a fiduciary responsibility to shareholders first and foremost... Interestingly, and appositely since it's newspeak, share buybacks have risen to an all time high since the emergence of "customer-first" rhetoric.

Ultimately, there is a tension here, between maximizing humanity and maximizing profits, but that's writ large across late stage hyper-capitalism. Maximization is an extreme position, by definition. 

Ad agencies, and specifically planners, were of course "the voice of the consumer - the fabled "man on the Clapham Omnibus' as it's enshrined in UK law. That role has changed. In our research on research, we found large clients now mostly have separate insight centers, outside of marketing. 

Justin Kirby: If large clients have insight centres outside of marketing, what are those insights for, i.e., NPD, service improvements, etc? And didn't that all use to fall under the remit of the 4 Ps of marketing, and if it doesn't now are CMOs really part of the C-Suite in anything other than name?

Faris Yakob: The insights/research/knowledge departments services other departments as needed so yes on NPD etc as well as marketing. Interestingly, Diageo calls their group "Consumer Planning" which suggests it has an account planning bent as well as managing research. Yes, indeed that used to be part of the remit of the 4Ps of marketing but in many large organizations marketing mostly handles the promotion nowadays. That's not the case everywhere, but it's quite common. 

Faris Yakob: What are the ethics of persuasion? It's a very interesting question. Is attempting to influence behavior ethical at all? If it is, then doing it well must be - and yet we fear brainwashing and Hidden Persuaders. If it's not, advertising shouldn't exist. 

Let's establish a couple of essential elements. Firstly, all communication is persuasion. Any utterance by a person is an attempt to change their minds to be a bit like yours. It doesn't matter if you are giving directions to the shops or the afterlife, you are attempting to convince someone. Secondly, there are lots of biases in the way we think, that make us more or less responsive to changing behavior, but how to use them is diffuse and not turnkey. As practitioners, we have a responsibility to know what we are doing - in fact, it seems like authoritarian communicators across the world have embraced neurolinguistics and understanding of biases, to great effect. It behooves us to catch up, commercially and politically. 

As practitioners, we have a responsibility to know what we are doing - in fact, it seems like authoritarian communicators across the world have embraced neurolinguistics and understanding of biases, to great effect. It behooves us to catch up, commercially and politically. 

Justin Kirby: There seems to be a link between the business ethics of persuasion and the debate surrounding profit versus purpose. But there's another ethical consideration du jour linked to the industrial-scale collection of data. With GDPR are we going to see a need for advertisers to move away from trying to bombard us with messages to something that's much more opt-in?

Faris Yakob: There are a number of aspects to this:

1. The myth of fiduciary responsibility as shareholder value MAXIMIZATION. This sets companies up against its customers, in essence, since it cannot serve two masters, as per our previous discussion around share buybacks. It is simply not sufficient to work all day at something that hurts the world and justify it to oneself as fiduciary responsibility. Your obligations as a citizen and human precede your professional ones. 
2. People do not want personalized advertising - all the research is clear on that - they want personalized products and service experiences. Collecting data without specific permissions opted-in [not opt out] for every single use in advance and every single partner that may touch the data ever is immoral and definitely part of the mess we are in. 

The value exchange of advertising is free or subsidized content in exchange for attention. You get access to my attention - an OTS - you do not get to access or own my data. Privacy is a foundational right for free speech.

The business case for mass one to one direct marketing via digital platforms is shaky at best. 

Finally, the business case for mass one to one direct marketing via digital platforms is shaky at best .

 

Faris Yakob: Attention is a finite quantity. The idea of an attention span that is getting shorter is absolute nonsense [the goldfish myth is fake news. attention is plastic, and goldfish have such good memories they are used in memory experiments] but there is a finite total amount of attention as a resource - people have to sleep. So making things worth people's time is the job of everything. We have reached peak attention - 12+ hours a day is spent on media in the USA- there's no way to grow that until we have dream insertion ads. Digital agencies are pivoting to CX because the market for building websites and banners has been commoditized. Advertising is the tip of the brand experience whereas customer experiences exist where transactions and service occur. I think Pine's distinction is incredibly helpful - services are made better by reducing friction, but experiences are something you want to spend time on. 

Digital agencies are pivoting to CX because the market for building websites and banners has been commoditized.

Ultimately, however, marketing simply cannot be CX - one is bring people into the brand, one is serving them once they arrive. To conflate the two is a confusion of strategy. That's why I make the distinction between brand experience and customer experience. The word experience has come to mean everything - thus it means nothing. 

 

Justin Kirby: So you don't see the lines blurring between the two now that brands can connect to customers at more points along their journeys. For example, Unilever's All Things Hair content hub works for both those existing customers who need hair 'help' and tips, and those who are not yet customers but might be converted to their relevant products. And platform is e-commerce-enabled so it can generate awareness and good will, sell products and added value customer service in one place. 

Faris Yakob: The lines are blurring everywhere as digital media can provide "full funnel touchpoints" that could in theory stimulate awareness, consideration and conversion inside a single unit / location. Brand experiences are marketing, brand utilities we thought were going to function like marketing - the NIKE+ model - but it turned out a better use for most brands was to solve existing problems in how they served their customers instead of bolting on new services that also need to be maintained and developed. But the role of the different elements are still different - and in their totality they make up the assemblage that is brand.

---

This article originally appeared on strategy-matters