Started in digital media in the 90's. Was one of the first classes out of college that went into digital media as a job, it was just getting started. And it was a nice vantage point to see all manner of scams lead to valuations and exits and media sales guys getting rich. Watched them all get sold and vanish, or go public and crash, or go public get bought and vanish.
I've been in the private planes, played the private golf courses, and been to the mansions of the guys who sold these warehouses of vapor. And in the first few years of my career, I'm ashamed to say, I was handing out shovels at the gold mine. Some of the miners are done, some are still banging around, some have started companies that are making a killing trying to shine a light on a broken system that their first companies broke.
After starting my career in an agency eager to sell to highest bidder, I saw the agency side of that game. I moved around and landed at Wieden Kennedy. I remember when I got there and saw there was an ad serving fee I KNEW I could cut in half, and charge clients twice as much for. Our contracts didn't say anything preventing it, it was completely legal. And according to the world I'd come from just good business. I was quickly rebuked by my bosses. Wieden just doesn't do that stuff. And I probably lost the respect of most people that mattered for like a year. It was a forming experience. I spent 7 years there, was promoted few times, and those relationships basically helped put me in business.
Wieden behaved that way because they're independent, not trying to sell, focused on the work... and even so when it comes to money Dan, the leadership of that agency, the 19 people they just made partners or whatever, they are doing just FINE.
There is no zealot like a convert. It gives me a nice nose for circumstances that lead to the sale of smoke and mirrors hidden behind some tech and a good line of bullshit. And what I imagine is an intolerable superior preachy morality about a business that slings cheeseburgers, sugar water, and other crap to kids.
Over an 18 year a career I've gone from digital media buyer, to comms strategy director at Wieden to CEO of an independent media agency.
When we named the agency Noble People, my Aussie partner said, "It's a bit worthy, no?" But my argument was "you know what, there's enough bullshit in this business that's really bad, and we don't do it. And if we choose this name and put it on the door, tell the employees why, have them expect to act that way... The tide of this business will turn to us." The ANA report on kick backs and transparency came out within the next 18 months or so, and we've won Small Agency of the Year from AdAge and have enviable client list, award winning work, and two offices.
So how does it work? Well sometimes, I think this is rare, clients are simply lied to and stolen from. Agency says I'm only gonna charge for service or a commission but that isn't true and they work out kick backs from media sellers. Sometimes its straight kick backs (though that's ballsy and dumb at this point). Sometimes they set up a shadow company that receives a check from the media vendors. So an audit of the agency won't show the money coming back in. Sometimes the agency provides a trumped service for media vendors in exchange for way more cash than its worth. I met a guy who was hired by media agencies to present the same strategy deck to tons of media sellers year after year, said he didn't know what they charged but assumed it was a ton, and no at the media company gave a crap about what he was saying. He was like the guy from the Sopranos who just showed up on the job site and got tan so Tony clean some money.
More often than not.. An agency gives a client super low or free service rates which can millions of dollars of discounts in exchange to run 10's of millions through an agency trading desk which the agency ADMITS (to procurement at least) is marked up without transparency. They claim the rates for the media will be lower than the rest of the market so the client gets the fee discount, and it doesn't cost a thing. Seems like a good deal to procurement, agencies get good at exploiting a loop a hole. Everybody is happy... Except the people who want to sell products to people. And most agency employees.
This lack for transparency for clients means the people you are trusting to advise you will sometimes be giving you their best advice and sometimes they will not be, in favor of some other thing that will benefit the bottom line of their agency or their career inside of it. Also you won't really know what you're paying your agency, so it'll be a lot harder to determine if whatever they are doing is worth it. The bad for client's part is easy.
The thing though is lack of transparency is probably just as bad for the AGENCIES. There's a lack of mission clarity is weird for employees. Basically your selling yourself to clients by saying we exist to help you sell things or connect w customers but sometimes, without warning your telling your employees something else. So for example...
Before a ad tech company IPO's my clients other agency for other business units advocated an upfront buy that made no sense by any reasonable analysis. They made more effort to sell this than almost anything they'd done before. The client was checking these presentations off to me on the side, and they were easy to shoot holes through. He kept saying but they really believe in this, it's weird. And I said, it's not weird, somebody's getting paid.
When the IPO comes out, I read the prospectus the CEO of the media agency is on the board of advisors and made a bunch of money on the IPO. I'd since hired execs who were there at the time, and the pressure to sell this companies media pre IPO was intense.
Now imagine your 28 year old trying to do the work of your life on your first big client presentation. And your recommendation you slaved over is gutted not for a smart reason, for reason makes you admire your mentor and hate you underexperienced little brain but because and shut up and don't ask questions.
Do these young people look up to there bosses as mentors and if they do, what are they learning? How do they feel about their work. How much passion do they put into the next one.
Now multiply that times a thousand and do it over years. How valuable is the agency advice of passionless people. Are the people left over the best of the best or the people who couldn't get out.
You are turning the jobs of people who wanted to be problem solvers and turned them into salesmen. And if they were good salesmen they'd go make 3x as much money just being honest about being salesmen. I have a former employee, she left as a media sup, not that long at $80k... She came to me within 4 years asking my opinion if she should jump jobs from a likely $400k gig to a maybe $500k gig. That's what good the good salesmen do. With some mega ass kicking agency side, she'd be at $150k maybe.
So your left with either the shitty salesmen who couldn't get a commission gig who sometimes problem solve, young people uninspired by them (or worse, inspired by them) A technology system that's either built to sell things for clients or maybe just merely look like it's selling things to clients (who knows)
And you wonder why clients don't want to pay their media agency as much for the work. It's because the work is bad. And it's bad because a lack of transparency leads to a house made of bullshit.
Charge enough money for your time and people's time to run a good business. And lose the business that doesn't value you as much as you want to charge them for. Then fix that problem by focusing entirely on being more valuable so that client knows exactly what they are paying and they think its a good deal.
And if that means slower growth. Grow slower. Or shrink. If all that's holding you up as a business is that the clients don't know what they are paying, I would imagine, that's a shitty way to live. If you are working at company like this, leave. And if you think you've hired one, fire them.
I heard this analogy from one the Wieden partners when we were just starting out. There are two ways up money mountain. Straight up, fast and slippery. You grow fast, but a couple bad steps you fall off the mountain. Or the slow windy path. It takes longer, but you are staying true to your core, the footing is steady. As agency owner I like the steady one. I think my employees and clients do to.