I was Overhead


When Smarts Became Overhead

If you watched Mad Men you probably were intrigued and drawn by the culture in business, how they interacted, how they got things done. Depending on your own work background, it was either completely foreign or very familiar. It’s exciting, dynamic, risque, for old world standards, and even risque by today’s outlook.

If you’re from a larger company, the entire concept of small company or agency environment is as far from your reality as the 1950s setting of the show. Smaller company cogs instantly see the progression to the current day state, complete with more liquor (despite a shift in cultural and legal mores), and sadly, more crying.

What you also saw was no time clocks or time sheets. That’s a new invention in the agency world.

In an effort to merge what worked from other industries to justify costs and budgets to clients, agencies have tried to allocate project time, estimating using tighter constraints, and developing blended rates based on overhead and costs. They’ve taken quite a bit from the legal industry to justify project hours.

Sounds good, right? But then consider how limiting that is, and how the reality of it is so counter-productive to the entire world of agencies and the role they could have been a part of in the larger economy and creative industry and you begin to understand the pain points.

Creating budgets based on hourly estimates for creative work, and then admonishing the people for not delivering in the estimated time, or delivering lackluster work in the time provided, is counter-productive.

Creativity, thinking, strategy, takes time. How can you put a time limit on it. You don’t flip a switch and say here, have at it. Of course those types of people are almost always on, but by micromanaging times and budgets to require switching from project to project, client to client, industry to industry, and audience to audience, you cannot expect high caliber work in a policed environment.

And yet it makes sense. Agencies have to pay bills, they have overhead, and they have expenses. And clients are continually pushing back on estimates and budgets. And scope creep … man, that’s a tough one. That is completely representative of a failure on the part of the agency. Improperly scoped and budgeted projects, lack of setting of expectations and managing the customer, and an entire lack of project management. Yet the customer takes the brunt, and in the end, the agency pays with a lack of return business, and a reputation for being not only arrogant, but not delivering. That is the kiss of death.

Underselling, however, is equally detrimental. Your pitch may be the same as someone else’s, at a higher cost, and not representative of your capabilities. Delivering more on a low expectation pitch hurts everyone. You will NEVER get that customer to pay more on a return project, and they, in the end will be underwhelmed. Asking creatives and stategists to perform below their own standards, however, is the biggest danger. It breeds contempt. Especially when you then berate them for delivering sub-par work, and for spending more time to deliver. And then you rate them on the amount of time they spend on billable projects, less overtime.

so they’ve started creative specialists, those individuals who are responsible for the thinking on a project or initiative. The Director of this, the head of that, the SVP of this latest trend. In the old days, it was the account exec. Yes, today’s world has more tasks, more responsibilities, more platforms, but the key aspect of the work is starting with the thinking. Agencies don’t budget for that. And client’s assume that’s what the agency does.

The culture of agencies is such that they are quickly petering out. There is no surprise that there are few remaining true agencies, and the concept of Agency of Record (AOR) is slipping into the Mists, with most younger generations hearing of it as the golden age of history. For the most part, it is not justified.

But it still exists, and with the right agency, the right combination, it works even better now than in the past. But it requires respect and trust. Something that we have yet to fully acknowledge was robbed of our industry over the course of a generation of recession.

Folks no longer know how to estimate projects, either by project hours or by value. In the end, that is why small companies are priced out of the agency world. Account managers and estimators don’t think, they don’t consider, and there are so many hands in the pie, that a small company ends up getting a bid for a website that is a multiple of six figures. Agencies always seem to forget the customer, and what is needed, how it relates to the customer. And if they do that with their own customers, how will they manage yours in a campaign or strategy?

Don’t pay for overhead. Pay for thinking.