CARLOS PEZZANI https://usuaria.org.
ar/ CDO FORUM PAPERS – 12/2017
Not just doing digital: being digital
A disruptive manifesto for creative agencies in Latam
“Either you’re disrupting or you’re at risk of getting disrupted.” Brian Solis
Introduction
Creative agencies in Latam keep working like
50 years ago. It’s a baby-boomer organization
that remained untouched in its basics.
The latest reengineering occurred around 1999
with the spin-off of the media buying companies.
Other than that, we keep doing things the same
way. Mad Men without media and with
computers instead of typing machines.
Every industry had to go through a full
process of change in their business model,
production model, provisioning model, logistics
model, etc. Full reengineering in insurance,
banking, leisure and travel, software, automotive,
music and many other industries happened
sometimes more than once in 50 years. Clearly
not us.
Some people think that the advent of Digital
changed advertising, and although it has certainly
shaken our industry and had the power to reshape
some agencies, it can’t be considered as
reengineering. It has just been an incremental
improvement in our status-quo.
We see agencies dividing teams into clusters
around the work, trying to enhance collaboration
and workflow. It’s also change not to change.
Meanwhile, in the last 20 years our income
model shifted and we no longer compete amongst
creative agencies. Digital agencies, boutique
agencies, consultant firms, technological
companies, Google, Facebook and garage start-
ups all of them are taking their bite from our
business. Traditional partners and suppliers too,
in a model called “bypassing” jump over agencies
to claim their piece of the cake. And last but not
least, in a curious deja-vu, media buying
companies started developing creative
departments in house.
On the business side, creative agencies suffer
what I call a “Fatal Trifecta”: we work against a
fixed budget (usually fees, or projects), that is our
clients pay a fixed amount for our services. We
have fixed costs (people, expenses and
1
infrastructure). And scope is always variable.
Either because it’s not clearly stated in the
contract, either because there are significant
number of revisions, or services the agency
provides without control that affect the estimated
cost of the overall fee or the projects and
therefore the margin.
“Ad agencies have long functioned according
to the traditional retainer model. Under this
approach, firms charge clients a monthly fee that
encompasses a set number of service hours. At a
surface level, the retainer model makes sense,
setting a fixed price for delivery of services. The
problem with this model is that it’s not
functionally suited to handle the changing nature
of agency work. While the retainer approach may
be simple, it’s not adaptable – and that presents a
challenge for firms hoping to provide competitive
services to prospective clients.
In recent years, client needs – and,
consequently, the nature of service delivery –
have dramatically evolved. Whereas clients once
signed creative agencies to deliver “big bang”
campaigns, today they’re looking to these same
firms to deliver a more collaborative and
continuous relationship. If creative firms used to
be seen as outsourced project developers, today
they’re increasingly viewed as strategic partners.
This shift is largely a function of evolving needs:
Instead of requesting high impact ad campaigns,
clients are recruiting creative firms to help them
better foster ongoing relationships with their
customers. As a creative agency, your ability to
deliver attention-grabbing TV ads is becoming
less important than your proven results building
consistent customer engagement on social
platforms, through apps and at industry events”.1
Starting to do Digital for their clients has been
a painful process for creative agencies in Latam.
Agencies strived and a few succeeded, but as
today, Digital is still a nuisance, mostly confined
to adaptation of ATL to digital channels and
social media. We’re not providing consistent
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quality of service, a broad Digital offering or
truly professional Digital services. Or built a
Digital department around these new functions
we don’t know what they do.
And that’s mainly because we brought a new
discipline into an outdated industry without
developing true Digital DNA. We are just doing
digital, not being digital.
Digital demand a different approach starting
with strategic planning, creativity, client services,
production, processes and even organizational
structure and management.
Creative agencies –therefore- need to start the
process for digital transformation of our business.
IDC states that organizations either will adopt
digital transformation and will prosper or won’t
be able to embrace the digital disciplines and will
battle for survive.
“Digital transformation is no longer an option
for companies but an obligation to survive in a
world where technology has made its presence
everywhere and spread its influence in every
activity”.2
We’re late and to make things worse, in 5
years, Digital won’t be a differentiator anymore:
“The digitization of everything is a step change
even greater than the invention and adoption of
the internet, primarily because of its scale and
pace of change. What we describe today as
‘digital’ in a few years’ time will have no need
for the descriptive word. A ‘digital camera’ is
already a mere ‘camera’ to those who know no
different. In the same way, a ‘digital’ strategy
will become business as usual strategy. This is
why it is so important to get a head start and
learn while there is still time”.3
From my point of view, we should consider as
a business whether there’s something we’re not
seeing. As a start: how do we think we’re going
to be able to thrive in the digital economy if we
insist in keeping our traditional organization
model, outdated technology and legacy processes
that barely let us survive.
Our income model changed, our competitors
changed, media changed, advertisers changed,
consumers changed, everything in our ecosystem
already changed but us.
Amazingly, we’re still able to keep doing
business as usual, on an outdated fashion,
although results show how revenue and
operational profit are going down for almost
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every advertising group. Meaning: we’re doing
worst. Several articles written in 2017 show how
advertising groups are struggling to cut costs,
streamline structures, find synergy opportunities
and consolidate. 4 5 6 7 8
Investment in advertising it’s being funneled
from traditional media towards Digital but don’t
grow significantly because effectiveness of
digital advertising due to fraud and other topics
has damped advertisers. Hence, the cake remains
the same but there are more invitees into the
party.
Alberto Brea in a LinkedIn post made a simple
but precise definition of the industry and the
consumers: “If someone can pay for Hulu,
Netflix, YouTube, HBO, Spotify, Twitch or a
newspaper or magazine digital subscription, will
get rid of advertisement, meaning we’re in
trouble. Consumers don’t hate advertising, they
hate bad experiencies”.9
It’s time to accept our traditional business
although empowered by Digital is not sustainable
in the future as it is.
Creative agencies in Latam need urgently to
start the path of true digital transformation to
keep the pace of the changes required to
outperform in advertising.
Digital transformation is not about analytics
with steroids, it’s not just a transformation for the
sake of our marketing strategy, it’s a deep
revolution in the business and a permanent
condition and there’s no end for it because it’s a
continuous process of change. It’s not about
seeking for new digital answers for old business
enquiries but for making new questions and find
unexplored needs. We can no longer survive
doing the same and just adopting a digital
environment. Not anymore.
Digital transformation
There are several definitions for Digital
transformation:
- “Digital transformation is a strategic
opportunity to incorporate new technologies,
but above all, new business logic in order to
make the business more efficient to create new
opportunities”.10
- “The investment in and development of new
technologies, mindsets, and business and
operational models to improve work and
competitiveness and deliver new and relevant
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value for customers and employees in an ever-
evolving digital economy”.11
- “… means changing the ways they interact with
customers, partners, and suppliers, and
dramatically rethinking their internal practices,
behaviors, and processes to accomplish this”.12
- “Digital transformation will fundamentally
change your company's mission-critical
processes and operations. Done right, it
changes the way your company, works, thinks
and addresses challenges”.13
Digital transformation it’s not just another
bubble, a trend or a new theory. Acceleration of
technology has extended their influence on all the
society and the economy. All the changes in
digital behaviour and business models that rule
the digital economy are well established in the
market, consumers, organizations and
government.
There’s plenty of information about digital
transformation and many articles and books were
written tackling the subject, each with its own
perspective and recipe for success.
I designed a proprietary framework tailored
for our advertising industry that include 5 pillars:
business, people, process, technology and culture
and for the purpose of this manifesto, each pillar
includes different digital paradigms along with
some traditional principles. Both digital
paradigms and traditional principles need to be
implemented urgently by creative agencies in
Latam in order to become truly digital
organizations and recover competitiveness and
profitability.
Each pillar tackle current missed opportunities
for our creative agencies in the digital economy.
This framework is a comprehensive approach,
nevertheless may not every digital paradigm be
applicable to every agency, nor be applied all of
them at once.
Scalability and feasibility are the concepts that
rule this vision, therefore objective and
measurable results are achievable if agencies
venture to change immediately their baby-boomer
mindset, culture, process and management
principles and start developing true digital DNA.
Pillar one: the business
Such outdated business and operations model
for creative agencies in Latam in the current
scenario of revenue and profitability shrinking
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will no longer support the creative quality
demanded by our clients. In order to be able to
keep the landmark of creativity, the need for a
healthy and profitable business is paramount.
In a permanent cost cutting landscape there’s
no chance to maintain and foster a culture of
experimentation that rises the bar and leads to
exceptional creativity, outstanding performance
in festivals and superb engaging pieces of
communication for our clients.
The threats for our Latin-American creative
quality are (pick the ones that apply the most): an
industrial age business model, reduction of
advertising budgets, more demanding clients,
proliferation of competitors, reduction of
margins, higher operational costs, excess staffing,
services’ commoditization, lack of investment,
obsolete technology, lack of tools, silo mentality,
demotivation, discouragement, lack of controls,
excessive manual labor, lack of processes, low
standardization, missing opportunities for
synergies in international networks, gut decisions
instead of data driven, slow response to changes,
reporting-based corporate culture, excess of
policies, inefficient human resources’
management and last but not least: not being
digital.
Any of these are blockers for a digital
transformation process.
About our product
“… if your traditional value-proposition was
kept artificially high, there is a high probability
that a new entrant will challenge you on this. Of
course, they will never offer exactly the same
solution, but often it will be good enough to
disrupt the way you and your market think about
price”.14
What these authors describe sound like how
boutique agencies are biting from our revenue. Or
digital agencies expanding into ATL with lower
prices. Creative agencies seem not to notice that
are not competing amongst pairs anymore and
that new entrants are challenging the business.
We simply cannot change the market, nor the
rules. But we can certainly change our value
proposal.
First digital paradigm: innovation
Creativity is what differentiate us but in order
to keep its essence and a continuous generation of
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additional revenue in research, media and
production fees agencies should stop thinking
about “campaigns” and start developing a more
digital concept: innovation.
Some people might confuse creativity with
innovation.
“The main difference between creativity and
innovation is the focus. Creativity is
about unleashing the potential of the mind to
conceive new ideas. …Creativity is subjective,
making it hard to measure, as our creative
friends assert.
Innovation, on the other hand, is completely
measurable. Innovation is about introducing
change into relatively stable systems. It’s also
concerned with the work required to make an
idea viable. By identifying an unrecognized and
unmet need, an organization can use innovation
to apply its creative resources to design an
appropriate solution and reap a return on its
investment.
Organizations often chase creativity, but what
they really need to pursue is innovation”.15
For advertising, innovation mean involving in
our client business, to partner and bring ideas
which aren’t just advertising campaigns. And
measure ROI not in terms of advertising
parameters but business ones.
Perhaps it’s time to redefine our business and
think about creativity as a commodity whereas
innovation is value added. Without innovation
strategies, we will keep losing in an increasingly
commoditized industry.
Any of our competitors can provide our clients
with a solution that is good enough and at a
considerable lower cost. A just OK campaign can
be done by any new boutique agency or digital
agency, a just OK TV commercial can be done by
a production house and a just OK digital
campaign or social media can be made by a
garage start up.
We definitely master creativity, thus entering
into innovation shouldn’t be difficult. We must
change our mindset and create our own blue
ocean and our own products. Innovation is
strongly rooted in Digital and might help to
redefine many other aspects of our business.
“In order to compete in today’s fast-moving
world, organizations need to create a working
environment that fosters and nurtures innovation
from all departments, and inspires all employees
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to have a vision for the future. Not everything will
be a success and organizations need to be
prepared to fail in order to reap the rewards of
process innovation. An organization that takes
risks, whilst has a clear understanding of how
work gets done and challenges its team
members”.16
It is through differentiation and innovation
that advertising can create the shift in mindset
necessary to win in the digital game.
Second digital paradigm: B2B
The traditional way in which agencies achieve
new business already started to wear out.
Opportunities for big client pitches scarce, not
to mention the difficulty to get invited, followed
by two opposite trends on the client side:
consolidation and fragmentation.
While some clients look to have one stop shop
for their full marketing strategy, there’s another
large portion of them that already started to
divide assignments amongst different agencies
and/or vendors seeking for higher specialization
and lower costs.
For Latam creative agencies, their leaders use
to reach to friends, former clients, former
colleagues and networking referrals in order to
contact prospects in the local markets. Great work
and awards don’t suffice either.
This old-style approach has proven to be
ineffective in the new digital economy.
If an agency feels comfortable keeping it, fine.
But shouldn’t be the only source of opportunities.
A digital approach to winning new clients or
new assignments based on a B2B framework to
complement leaders’ personal networking must
include a full business development program to
bring in new prospects.
We must remember we’re not competing
towards creative agencies only. There’s a new
competitive landscape with new entrants like
consultancy firms and digital agencies who are
specialists in sophisticated tools, techniques and
data management.
A modern development of a content strategy
with development of meaningful content along
with the publication of newsletters, insights and
research, deployment of content marketing
campaigns and physical interactions like small
events related to the business of our prospects is
the way.
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It’s an omni-channel approach being relevant
in all the places where a prospect expects to find
the agency to generate engagement and nurture
leads that can contribute to sales conversion.
A successful B2B program won’t work with
part-time employees whose primary job is
elsewhere. This activity need focus, expertise and
involving true professionals.
Third digital paradigm: fragmentation
“… whatever your future looks like, it will be
a more fragmented future. You will have to
master more skills in order to win. The efforts you
invest to obtain a certain result will be more
scattered in a complex mix of smaller
initiatives”.17
“For decades, digital globalization— powered
by free-flowing data—gathered pace. But today’s
business leaders are waking up to a far more
complex and fragmented reality. Trends toward
fragmentation—caused by increasing barriers to
globalization— have been building for some
time”.18
As seen in the second digital paradigm,
difficulty to win large assignments along with
proliferation of rivals fighting for a bite in the
cake put creative agencies in a difficult position
when trying to achieve bigger fees based on a
full-service approach.
Therefore, future (or at least a portion of it)
might be in the fragmentation of services.
Instead of striving for all or nothing, agencies
should reshape their offering and go for smaller
campaigns, projects or initiatives that drive
revenue and require less effort to win.
Well implemented, a successful B2B approach
to new business can drive this type of work.
There are better chances to engage future
clients in specific projects than getting the full
account. If we can get a client to agree to
something small, they’ll be more likely to agree
to something bigger next time. Like old times
salesmen, we get a foot in the door.
The major issue is that many creative agencies
in Latam aren’t fully prepared to deal with this
type of assignments due to their organizational
structure, process, mindset and controls. They all
need revision and alignment to drive a successful
experience both for client and agency.
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Fourth digital paradigm: finding, creating,
generating new revenue
“Digital transformation is really that
intersection of technology innovation and
business innovation. It's how you're taking digital
technologies and as a company really,
fundamentally changing the way you're
delivering products and services. It's about
applying technology innovation to come up with
new business models which really drive new
revenue above the line and new ways to deliver
products and services”.19
Based on what we’ve seen in the second and
third digital paradigm, driving new revenue is key
to our success.
a) Success fees. In the digital world, the
commercial model is more transparent and
everything is trackable and measureable. If the
agency has accurate supporting data that
ensures an idea will work, it’s worth sharing
the risks and benefits of a digital campaign
with a client. If we can reassure a client that
he won’t pay for our services unless certain
key performance indicators are met, might
lead to new business, unlock budget and lead
to a new revenue stream.
b) Revenue management or yield
management. The model was developed by
American Airlines in the 70’s and is
applicable to businesses with:
a. Low variance of operational costs.
b. Fixed costs high.
c. Fixed (or close to fix) capability.
d. Resources perishability.
e. Variable demand.
All of the above are characteristics of our
industry. If we are able to predict the resources
utilization in the short and medium term, we
would be able to sell those idle hours for out of
scope projects or campaigns at a lower rate. If
managed properly and with clear communication,
clients should be able to understand that these
proposals are “low season” and therefore for
future assignments price might change.
This practice need careful planning, process
and management and shouldn’t be confused with
overselling resources, a wide spread practice in
advertising that sometimes convert our agencies
in sweatshops.
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Fifth digital paradigm: transparency
“The degree to which a company shares its
leaders, employees, values, culture, strategy,
business processes and the results of those
processes with its publics. It’s the opposite of
opacity, in which companies operate behind
closed doors and shuttered windows”. 20
In the digital era, transparency is key. The way
in which organizations handled and share
information is a key component of their corporate
reputation.
Transparency is about disclosing relevant
information to the right people, the right way at
the right time.
Based on the definition above, I say
advertising is an opaque business and this
attribute creates serious problems to our
management model not only facing the client but
also internal.
a) Hours. “The firms who are stuck in the
outmoded paradigm of selling hours cave in at
the first objection of well-trained professional
buyers, because they only know how to discuss
and defend their costs. They lack the self-
assurance that comes with understanding
what professional firms really sell: expertise
and effectiveness, not efforts and efficiency”.21
Modern pricing methodologies talk about
value creation and not incurred costs.
Acknowledging that hours are the mean to
organize, control, manage and report our
employee’s dedication to our clients, agencies
should proceed to:
a. Change the pricing model based in hours
(Labor theory of value22) and separate the
value from its cost (value creation).
b. Be more transparent in their registration
process and management. Delivered value
might be intangible, but hours aren’t.
Accuracy in time sheet is objective data
that can help to clarify any discussion
involving hours with clients. As of today,
it’s also very likely agencies are delivering
more hours than the ones committed in the
fees, so why not making it transparent?
High quality in hours log might help with
resource planning, deployment of yield
management, renegotiation of contracts,
demand planning and many other benefits.
Even when after showing a client that we’re
over-delivering he refuses to pay more for our
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work, we can still turn this into value. Lack of
time sheet, non-accuracy, opacity,
miscommunication, it’s not money and no
value either.
For management purposes, better cost
calculations and better decisions are made if a
proper hour management process is in place.
b) Tasks. If we were able to know the cost of the
effort placed in the relationship with our
clients to report and inform about the status of
campaigns and projects, who’s working with
each job order, stage, delivery dates and
whether they will or won’t be met, we would
be able to find a precise measurement of the
inefficiency and how much it costs. Not only
our resources cost, but cost in terms of the
relationship with our clients. This lack of
transparency is present amongst internal
departments. Silo mentality rules.
Instead of relying on an army of middlemen
with no added value but trafficking with
information in and out, we should deploy
online management systems that show our
clients all this information. It’s not about
showing our clients how we’re doing things
but to give him the tools to retrieve the
information he need just in time.
c) Income. Rebates is a tricky subject. Typing
“rebates in advertising” show many articles
from Business Insider, The Economist,
AdAge, Forbes and other media tackling the
subject.
For the purpose of this manifesto, rebates are
payments or compensations unbeknown for
clients in the form of Production Volume
Discounts (PVD) or Media Volume Discounts
(MVD) that are a widespread practice in Latin
America in many creative agencies.
The problem is in defining exactly what is a
rebate and what as a matter of fairness should
be passed through to clients.
In fact, success and sometimes large portions
of the agencies’ profitability is tied up to these
types of rebates not refunded to clients.
Clients are increasingly suspicious and large
corporations deny the existence of rebates.
Media are putting some pressure to eliminate
any type of compensation to advertising
agencies too.
On the production side, the pressure from
clients’ procurement departments to reduce
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budgets and the shift from traditional media to
digital where traditional production costs are
higher than the investment in digital media,
contributed to shrank the production
investments and lowered the amount of the
rebates for the agencies.
As a result, the combination of these factors
decreased dramatically creative agencies’
profitability in Latam.
Agencies should create different digital and
traditional capabilities to cope with the trend
of vanishing rebates.
a. Content production. “Content marketing is
all about giving consumers details about a
business such as how they make food, what
it is like to work there, and so on. By
sharing this data, the company makes the
customers feel like they are part of a group
which knows common information. And in
turn the customer ends up giving up his
data to the company which lets it construct
new advertising strategies”.23
Mastering content creation for our clients is a
new source of transparent revenue. Doing
it cheaper and faster, taking advantage of
micro-moments and subjects raised from
consumers and developing fast and agile
responses will position creative agencies as
true digital partners for our clients.
b. Executive production. Traditional agency
producers use to hire production houses to
take care of the full production of the TV
commercials or spots. Agencies have the
clients, the volume and know exactly the
quality of the final product they want.
Therefore, instead of just outsourcing the
full production and leaving the profitability
to production houses, let’s do it ourselves
integrating the all the professionals
(technical and art) and keeping the margin
in house. It’s a huge shift from traditional
producers to executive producers but it’s
worth a try. For our clients, we should
make it transparent and show them we’re
competing in fairness against production
houses.
d) Management. For many years, creative
agencies developed sort of opaque procedures
in order to keep some data and costs hidden
from their clients (time sheet, rebates, rework,
internal jobs and production costs amongst
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others). The main problem with this practice is
that agencies are hiding this data to
themselves as well, turning normal costs of
doing business into some kind of “toxic” costs
whose registration should be avoided.
Errors, rework, proofs and trials, internal jobs,
festivals, self-advertising, pitches. All of them
affect our bottom line, therefore we developed
procedures to avoid registration.
The main issue is that they exist and they
don’t disappear, no matter what we do to hide
them. Either increasing production costs (paid
by clients), making up management reports or
using alternate accounting, they affect
overhead calculations and don’t provide
accurate information to the agency to launch a
continuous improvement program aimed to
control and reduce them.
For Lean methodology, what I called “toxic”
costs, are considered as “waste”. Lean has
been around a long time since pioneered by
Ford and perfected by Toyota and is
outwardly focused on being flexible to meet
customer demand, inwardly focused on
reducing/eliminating the waste and cost in all
processes.
Exactly the opposite to what agencies do,
sweeping the “waste” under the mattress.
“The ability to eliminate waste is developed
by giving up the belief that there is ‘no other
way’ to perform a given task. It is useless to
say, ‘It has to be done that way,’ or ‘This
can’t be helped!’. At Toyota, we have found
that there is always another way”. (Study of
the Toyota Production System).
Agencies need to accept there are problems,
put some light on every source of “toxic” cost,
separate waste from the cost of doing business
and launch a continuous improvement process
to reduce or eliminate waste.
A formal process for registration, approval and
control will ensure a healthy and transparent
business.
Pillar two: the people
“If the management waves disruption away in
ignorance, then employees (who often do
consider it a threat) will lose faith in their
company. If they are helpless or afraid you will
get bad results, like a self-fulfilling prophecy.
Does the management see disruptors as an
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enemy? Then so will the employees. Instead of
being paralyzed by fear, they will start fighting
back.
Ask yourself, would you rather work for a
company that is trying to learn and improve in
difficult times, while focusing on positivity? Or
for a company that is constantly trying to defend
itself against inevitable evolution, instead of
investing in a new future? Employees might think
the same way, and perhaps consider moving to
the competition if you do not take the evolution
seriously”.24
Our business is changing, there is no doubt.
Increasing and sustained pressure on our costs
from clients challenging dedication, seniority and
salary of our employees and our agency overhead
in an industry where 60-70% of internal cost are
wages, determine a clear target for optimization.
This mean estimate, plan, utilize, control and
manage our people far more efficiently than
we’re doing.
Being digital require eliminating opacity and
arbitrary decisions, change our mindset and lead
and manage our people.
Traditional principle: control
There’s a principle that rule every business
activity which is doing the basics extraordinarily
well. We can discuss for hours what’s the basics
in advertising, but from my point of view –and it
applies to any business- the basics is being
profitable.
Again: agencies are struggling (and losing the
battle) to keep their margins.
Either we can keep playing the blame game:
clients, competitors, market, economy, politics or
realize we’re our worst enemy.
As seen, a business with 60-70% of internal
costs concentrated in people can’t keep managing
without tighter control.
How precise do you think your client
profitability is? Honestly, please.
Proper time sheet management in conjunction
with planning tools are paramount to our success.
The following are the most common time
management practices that creative agencies are
using in Latam:
- Tolerate delays of days, weeks and sometimes
months in the registration of hours.
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- Assign the registration of hours for full
departments to a single person, or delegate on
PAs.
- Receive estimations from each head of
department instead of actual registration of
hours for analysis.
- Encourage to input hours topped and
discourage real hours registration.
- Create huge bags for general or non-
productive hours.
- Register time at client level instead of
campaigns/projects.
- Avoid creating jobs and login hours for
festivals, pitches or self-advertising.
- Ignore re-work, errors, internal jobs.
If you think any of these apply to you, there’s
certainly a lot to do in your time management.
Time sheet process optimization and control
provides the utmost benefits to our agencies and
is the only way to go for better resource planning,
to improve productivity and to make better
decisions based on actual and accurate data
instead of sensations. And it’s the basis for
continuous improvement providing continuous
feedback.
Mad Men sometimes tend to confuse
productivity with over-selling, low wages and
working long hours, a practice that agencies and
people should avoid.
My feeling is that control and process are two
cursed words in the advertising industry in Latin-
America because they’re seen as creativity
limiting factors. Which are not.
Better time management is directly linked
with margin, and doing nothing is not a plan to
recover our lost profitability.
Seventh digital paradigm: liquid talent
Creative agencies have been advertising
schools for people for years. Traditional
apprentice relationships were established with
young people coming to work in the industry
attracted by its glamour and wages.
In the past years, this cycle has been
interrupted as new employees receive very basic
training and they’re sent out to deal with
everyday issues and strive for survival.
Pressure over costs forced creative agencies to
include more trainees in their workforce and hire
younger, inexperienced and –therefore- cheaper
people, making things worse.
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We’re seeing how Generation Y employees
(also called millennials) started to populate our
offices and shock against an old company, with
culture from the industrial age, linear processes
and managed by Generation X or baby-boomer
executives running an outdated business with silo
mentality, basic tooling and zero-orientation to
collaboration that refuses to change.
We’re taking this people back to 20th century
and wasting their best qualities: tech-savvy,
achievement-oriented, team-oriented, task-
oriented, best-educated, thoughtfully-raised,
motivated by meaning, open to change, challenge
hierarchical structures, hunger for learning,
entrepreneurship and need for feedback.
“… millennials will soon become the
predominant source of human capital…
businesses stand to benefit greatly from the
technology acumen and talent this generation
(also known as ‘digital natives’) possesses. But
the flipside is that 53 percent of business leaders
are finding it hard to attract and retain millennial
talent”.25
The concept of “liquid talent” is completely
associated to millennials because it’s a model of
organization of the delivery that takes full
advantage of Gen-Y contributions and consists of
a nimbler workforce, typically consisting of
freelancers, that values flexibility in their work
environment and is continually looking for a new
challenge/skillset.
Trends towards mobility and platform
agnosticism help people to work from anywhere
with any device. Therefore, tasks and workspace
are decoupled. If creative agencies allow them to
think differently and shift to a different
organization of work, they can take full
advantage of this trend and millennial style and
create a different working environment, more
flexible whose return will be immediate savings
in people, training, infrastructure and space.
Joy's law is the principle that “no matter who
you are, most of the smartest people work for
someone else”. For international or network
agencies, “someone else” might be themselves
and exploit the benefits of hundreds of employees
around the world. First, registering and
measuring, then acknowledging and finally using
the idle time of Creative, Production, Digital
people amongst other positions. Companies
would be able to hire time from their own
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workforce, but sat anywhere in the world.
Literally.
Globally, the impact in margins would be
huge by recovering costs from our own staff.
Smaller creative agencies could hire hours from
certain positions that wouldn’t afford as full-time
employees. Or hire seniority. Or have immediate
access to talent not available in local offices. Or
anything.
Benefits are endless: efficiency (idle capacity),
less infrastructure, time-zone differences,
motivation, diversity, fresh ideas, creativity,
competitiveness. Kind of gig-economy although
done internally.
A liquid workforce can be an asset to
organizations, adding agility in a competitive
marketplace but will only flourish in an
organization that, in the face of change, is
prepared and equipped to bend and flex.
“The liquid workforce is rapidly becoming the
new normal for how businesses organize
themselves. Traditional methods cannot keep up
with the pace of change in the digital age and
forward-thinking businesses are already
beginning to learn that their workforce strategy
has the potential to be a major competitive
advantage”.26
Eighth digital paradigm: crowdsourcing
“For centuries, traditional businesses have
relied upon closed approaches for their success:
they recruit and retain specialists, and then
deepen their skills and experience over the
ensuing years; they develop proprietary tools,
tactics, techniques and procedures to help them
do business, drawing upon decades of project
work and intellectual property; they sell products
and services that evolve only gradually and
compete in markets where the competition is
doing the same; and they build up a
protective armour of sorts, shielding themselves
against risk and change. Being closed, and
keeping things ‘in-house’, was simply the way
that businesses worked. Failures could be kept
locked up; credit for successes could be clearly
assigned”.27
Crowdsourcing is a sourcing model in which
individuals or organizations obtain ideas,
knowledge, experience, labor and finances from a
large, relatively open and often rapidly-evolving
group of internet users.
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For business, crowdsourcing improve
productivity, provide flexibility and scalability
and reduce time-to-market amongst other
benefits.
It fundamentally changes the way in which
organizations create value.
In our industry, with such a silo mentality,
ideas, knowledge and contributions do not flow
easily. For international agencies, crowdsourcing
(similar to liquid talent management) can bring
outstanding benefits from the talent and
knowledge distributed inside the global network.
Well managed, crowdsourcing can collect
data, insights and ideas to help the business using
knowledge and talent distributed globally.
Primary application is pitches. Or solving a
specific problem for a client. A global tool might
be able to make an open request to the “crowd”
and get instant response. A reward program
would encourage people to engage and
participate.
Ninth digital paradigm: customer centricity
“Today’s customers will remain loyal only if a
brand offers them transparency and superior
quality products while actively engaging with
them to build a relationship they value. Meeting
those needs has everything to do with running the
business in a way that is customer-first and
customer-centric”.28
Nobody argues that customer centricity is a
key paradigm in the new digital economy.
Technology gave consumers the control of the
relationship with brands and they replied putting
people in the center of their strategies.
Although we don’t sell to final customers
directly, our employees represent our internal
clients and consumers, and we should start paying
attention to them.
“In a broader sense, digital transformation
replaces limited one- way vertical communication
with broad communication channels that are both
vertical and horizontal. CxOs can engage in 2-
way communication quickly at scale. Employees
can collaborate in ways that were previously not
possible”.29
This represent a huge shift in the process of
strategic decision making.
In the current organizational structure, there’s
no place for our internal clients. They don’t
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participate in any decision process and there is no
space to place any comments or opinions.
People has a lot to say about the company, the
organizational structure, the tools, the processes,
the workflow, the technology, the learning and
career plans and especially about their everyday
tasks. Our employees can provide powerful and
valuable insights at a granular level that
management will never be able to reach.
Creating channels of interaction and
communication with the agency is the best way of
connecting and integrating people in order to
build a valuable relationship. Engaging them,
improving their customer experience, their
loyalty, receive feedback and act upon.
More or less what we tell our clients to do
with their customers.
In the digital economy, the concept of
Employee Experience (EX) growing steadily and
is the equivalent to Customer Experience (CX).
Technology is key and shouldn’t be an issue
because there are plenty of tools available to
manage this relationship. The real challenge is
whether management has the desire and ability to
listen and above all, to learn.
Good listening will allow to anticipate
conflicts, opportunities, proactivity, identify
leaders and create a great environment for
workers. A great Employee Experience.
This channel will also replace the annual
satisfaction surveys which are just a picture of a
particular moment and change the model to a
continuous feedback one.
Tenth digital paradigm: social media
From a strict functional and practical point of
view, the concept of social media relates to media
or communication platforms created with the aim
to be used with a social function facilitating and
empowering the connectivity and interaction
between people, groups and/or communities.
Social media is absolutely intertwined with the
advent of Web 2.0 as a facilitator of means in
which developers and users utilize the web.
Corporate social media platforms and
channels may provide the capabilities to develop
superb Employee Experience (EX).
“While companies tend to be aware of the
need to achieve collaborative and cross-channel
engagement with their customers, they are less
conscious that this need applies equally to
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suppliers and to employees. The rise of social
media is breaking down barriers between these
groups. Instead of talking one-on-one to
customers, suppliers and employees,
organizations are now talking to a crowd of
people who are often talking to each other. As
well as generating a great deal of noise, this
interaction means that information can flow in
directions that the company did not anticipate.
Generation Y, in particular, have had
experiences as customers which influence their
expectations in other business dealings, such as
their interactions with their employers. That
means that, as well as cost savings and
productivity benefits, digital communication
capabilities are becoming a key weapon in
recruiting and retaining talent”.30
The need for creation of new ways of
interaction with our people and amongst them
can’t be dismissed for long. These channels
should be also mobile, flexible, collaborative and
in order to drive engagement, they must match
their experience as consumers in their personal
life.
Traditional principle: human resources
Professional human resources management is
not a landmark for advertising agencies in Latin
America, although we’re a business that is based
in talent and people and that should be more
interested and focused in such a “supply” that
concentrates 65-70% of our operational costs.
Current role of HR in an average advertising
agency in Latam (when present) is limited to
search and interview candidates, basic induction,
payroll, basic communication, birthday
reminders, celebrations and not much more.
Far less from the modern HR organization
scope: develop and conduct professional
induction programs, provide tools, design and
manage training, identify coaching needs,
mentoring actions, manage talent and motivation
actions, communicate and maintain the
organizational culture, foster team working,
helping in developing career plans, engage people
and organize participation in community and
social activities, provide legal and tax support and
include close relatives in agency events, amongst
others.
This modern approach requires to leave the
current transactional and administrative role
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behind (which by the way are easily outsourced)
and shift into strategic management of talent to
reassure that any initiative involving people is
measurable, has a positive influence and adds
value.
“In an age of disruption, business and HR
leaders are being pressed to rewrite the rules for
how they organize, recruit, develop, manage, and
engage the 21st-century workforce.
This workforce is changing. It’s more digital,
more global, diverse, automation-savvy, and
social media- proficient. At the same time,
business expectations, needs, and demands are
evolving faster than ever before. While some view
this as a challenge, we see it as an opportunity.
An opportunity to reimagine HR, talent, and
organizational practices. An opportunity to
create platforms, processes, and tools that will
continue to evolve and sustain their value over
time. An opportunity to take the lead in what will
likely be among the most significant changes to
the workforce that we have seen.
Hence, our call for new rules for HR in the
digital age…
… Today, a new set of digital business and
working skills is needed. As we discuss in this
report, companies should focus more heavily on
career strategies, talent mobility, and
organizational ecosystems and networks to
facilitate both individual and organizational
reinvention. The problem is not simply one of
“reskilling” or planning new and better careers.
Instead, organizations must look at leadership,
structures, diversity, technology, and the overall
employee experience in new and exciting
ways”.31
Of course, the current role of HR is a
consequence of our vertical industrial age
organizations where moaning seems to be the
norm in many places. Just a quick look at people
from our industry comments in social media
platforms show how far agencies have gone from
the cool and glamorous workplaces they used to
be.
In Billions, Episode 1, season 1, an employee
appointed a visit to the HR director, Maggie Siff
(Dr. Mojo) and tells her he need Prozac because
his performance is below his colleagues’. Maggie
tells him: ‘You don’t need meds. You’re just
listening to the wrong voice’. And keep going
with a speech partly motivational partly
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psychological. As a result, the employee leaves
her office energized and turned into a shark to
conduct business.
Although a bit extreme, if HR would be able
to just try to approximate to this approach, would
be able to produce a huge difference and a
positive change by inspiring and motivating
people, improving the work atmosphere and
getting everyone to work refilled with energy and
passion. We definitely need that change in our
agencies.
Pillar three: the processes
We’ve heard many times that advertising
agencies are not a factory, that processes don’t
apply to our business, that our activity is too
dynamic to be organized, that agility prevent
planning, and more of the kind.
In order to grow as a business every company
needs to remain competitive. As a result, the goal
for all organizations should be how to find and
retain their competitive edge. This requires true
understanding of how work gets done and
continuous improvement.
Glamour, informality and creativity are not
mutually exclusive with the processes that enable
an organization and its people to be productive,
efficient, effective, organized, predictable and
profitable.
The main excuse for not deploying processes
in creative agencies in Latam is that would limit
creativity. What percentage of the activities in a
typical agency is truly creative? I’d guess less
than 25%. Administrative tasks, Finance, IT,
Human Resources, the most part of Client
Services tasks, all the Production jobs and a
portion of Strategic Planning are simply non-
creative.
In the chapter “Operations management: the
relentless quest for efficiency” from the book
“This is Service Design Thinking”, an interesting
approach to Design Thinking written in a
collaborative fashion, Kate BlackMon states:
“Operations management (OM) is concerned
with the design, management, and improvement
of the processes through which an organization’s
products and services are delivered”.
Design, management and improvement, three
words that have never been associated to
processes in a creative agency. And follows:
“One of the early OM insights was that the
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design of production processes and the outputs of
those processes needed to be closely linked, so
that in services – as well as manufacturing – low
volumes and high variety were linked
(professional services, for example) as well as
high volumes and low variety (mass services such
as air transportation)”. In this paragraph, she
brings the concept of Operations Management
and processes closer to professional services.
In the creative agencies in Latin America there
are plenty of things we can do to improve our
processes without impacting creative quality. It’s
about redefining them aiming to operational
excellence. Interesting to note that we don’t need
to reinvent the wheel, all we need to do is to
apply methodologies, techniques and knowledge
that already exists.
Eleventh digital paradigm: project
management
Creative agencies have been using for years
the waterfall model to manage all their
deliverables. The Waterfall model is a very
structured approach to project management. All
(or most of) the details of the projects need to be
known and documented before the project can
start. Every step is dependent on the previous step
being completed and approved.
Creative agencies have adopted Waterfall
model despite the tight schedules, shifting
objectives, high level of uncertainty, frequent
rework and fixed scope and budget so typical in
our business.
Although these drawbacks should discourage
using waterfall model, its sequential approach,
intuitive learning and easy management made it
the preferred choice.
In our creative agencies, the control of all the
production process is managed by client services
team using waterfall model. As seen, new
employees with little or no experience can
understand and follow the model with almost no
training.
Client services team –therefore- is the ultimate
responsible for all the production process and
manage scope, schedule and costs with the client.
The problem with this approach is that client
services people aren’t fully skilled in project
management techniques and thus become just
middlemen that bring forth and back materials
and proofs between the client and the agency.
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This organization model has several problems:
client services is not fully objective because they
face and service the client, consequently they
don’t care about productivity, internal production
costs or rework. They should be dedicated and
professional people but they don’t manage any
project management methodology or technique.
Besides, overseeing the delivery distract them
from the two fundamental activities they should
carry on: manage relationship with the client and
the business. In the latter, must control client
profitability and at the same time create new
revenue opportunities (organic growth).
Client services teams are running behind the
delivery, pushing creative and production teams
all the time. If we remove this distorted activity
from client services teams we will allow them to
have time to think, to be creative themselves, find
new business opportunities and add value to their
function.
That’s how the role of Project Manager (PM)
comes into consideration. Creative agencies
should embrace this practice and assign PMs to
deal with the production and the delivery.
Just mirroring the way in which pure digital
agencies hire PMs to manage time, cost and
pooling (resources) for projects in order to
comply with the deadlines, mitigate risks,
produce at the less possible cost and focus
heavily in control and reporting.
If needed, the PM will involve client services
team or creative to solve complex client
requirements or comments.
This way we shall free client services teams
from non-value-added activities, professionalize
the whole agency, improve quality of our
services, and most important, we will be able to
evaluate client services people and PMs for their
real contributions within their scope of their jobs.
Twelfth digital paradigm: Agility and agility
“Without an empowered culture focused on
agility and growth, digital transformation and
innovation are greatly hampered.
At the same time, digital transformation is
progressing slowly and not yet penetrating deep
within organizations to change corporate DNA
from a legacy-based to a more agile approach”.32
“To effectively compete, and eventually thrive,
businesses must become agile rather than
reactive and customer-centric rather than
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presumptive... We live in an era of ‘Digital
Darwinism,’ where society and technology evolve
faster than the ability to adapt. Disruptive
technologies are affecting market dynamics and
how businesses operate within them… Operating
within the confines of traditional paradigms
without purpose or vision eventually challenges
the direction, capacity, and agility for thriving in
a digital economy”.33
Developing agility is key to compete in the
new digital economy and the subject is
highlighted as top priority in every paper and
article related to digital transformation.
Need to say that there’s not a single Agility
(yes, with capital “A”) but two. The first Agility
is Operational Agility which is prerequisite to
develop the second one: Strategic Agility.
Operational Agility is about “… enabling a
team, a unit or an entire enterprise to nimbly
adapt and upgrade its existing products and
services to meet rapidly changing technology and
customer needs with efficiency gains or quality
improvements… Operational Agility generates a
capability to achieve greater efficiency gains and
faster quality improvements.
By focusing work on what adds value to
customers and systematically eliminating what
doesn’t, it can lead to cost savings (efficiency
gains). And by giving everyone in the
organization a clear line of sight to the customer
and working in small teams and short cycles, it
can enable continuous enhancements of existing
products and services (quality improvements)…
The gains from operational Agility at the
enterprise level can ensure the firm’s short-term
survival in an increasingly competitive and
rapidly shifting marketplace. But efficiency gains
and quality improvements will rarely lead to huge
financial gains. To achieve that, firms need to
look beyond their existing products and services
and open up markets that don’t currently exist.
That entails mastering strategic Agility.
Operational Agility is just part of the Agile
journey”.34
As seen, efficiency gains and quality
improvements operate within a limited frame.
That’s when Strategic Agility enters. Strategic
Agility is related to innovation in every level of
the whole organization and aimed to the creation
of new markets or new income (Blue Ocean
Strategy) by expanding the current business
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model and leading to economic growth and the
creation of new jobs.
“Strategic Agility is needed not only because
of the limited financial gains from operational
Agility. It is also required to deal with the 21st
century reality that sectoral boundaries
themselves are collapsing… A firm can no longer
rely on mastering the sector in which it developed
its core competency. The expectation that
companies will remain in one industry forever is
becoming an artifact of the past”.35
Strategic Agility is completely related to the
concept of “Innovation” (First Digital Paradigm).
On the realm of Operational Agility, which
“involve new values, principles, practices, and
benefits and are a radical alternative to
command-and-control-style management” 36 their
outcomes are: change in processes,
automatization, flexibility, workforce
optimization and relentless use of technology in
order to achieve higher efficiency and qualitative
improvements faster.
Creative and Production teams are natural
targets for deployment of an Agile methodology
and therefore further development of Operational
Agility.
The Agile methodology
(http://agilemanifesto.org/principles.html) was
originally conceived to address the challenges
brought by high levels of uncertainty in the
software development sector by a group of
software developers.
Agile methodology include scrum, which
emphasizes creative and adaptive teamwork in
solving complex problems; lean
development, which focuses on the continual
elimination of waste; and kanban, which
concentrates on reducing lead times and the
amount of work in process.
“In scrum, strong organizational matrices
disappear and are replaced by a workgroup with
a flat structure aiming to be more open, with
higher visibility of requirements, tasks, timeframe
and deliverables. Nothing is a mystery and
everyone is welcomed to pitch in, help tackle
bottlenecks, and finish tasks on time. This group
is a self-guided team that collectively, is stronger
than the sum of its parts. Don’t be confused
though; self-guidance has no conflict with on-
time deliverables. Changes requested do not
clash with processes and new creative ideas do
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not clash with predetermined client expectations
because the client is part of this team”.37
As seen in Eleventh digital paradigm: project
management, waterfall method is still the most
prevailing method for managing the delivery
workflow even in the context of high level of
uncertainty and constant changes that rules our
work.
Agile methodology provides high adaptability,
full control over the workflow, increase
efficiency, keep costs under control, improve
communication, keep the team members focused
and full accountability on deliverables.
Other benefits are: flexibility and faster
response to changes, better risk management,
constant feedback, results-oriented, client
satisfaction, faster problem-resolution but
fundamentally, it’s more transparent, more
collaborative and brings excitement and fun to
the team members.
If the agency that has spent many years
developing a business model around the waterfall
process, will have to break through many layers
of entrenched thinking in order to establish new
practices and effect organizational change.
Creative agencies must understand that in
order to get the most of these methodologies will
have to adapt to the following:
- Gather interdisciplinary and autonomous
teams.
- Clients are part of the teams (not arguable).
- New and unfamiliar roles, rules and rituals for
all team members.
- Have a 15 minutes meeting with 3 topics,
daily.
It’s possible to apply the methodology
gradually, but in the long term, creative agencies
won’t remain competitive nor survive using old
methodology. We are living in the age of agile
development and being in permanent beta.
Thirteenth digital paradigm: Design Thinking
Design Thinking (DT) is a discipline
developed by Stanford University in the 70’s and
that’s being pushed by IDEO, a consultant firm
focused in the promotion, education and
commercial practices of Design Thinking.
“Design thinking can be described as a
discipline that uses the designer’s sensibility and
methods to match people’s needs with what is
technologically feasible and what a viable
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business strategy can convert into customer value
and market opportunity”.38
There are different approached to DT and
books written about the subject.
IDEO’s framework as follows:
Phase 1: Observation: observing the end-user,
learning, and being open to creative
possibilities.
Phase 2: Ideation: start brainstorming ideas
with the team based on what has been learned
from Phase 1.
Phase 3: Rapid Prototyping: quickly build a
simple prototype of the idea to make it
tangible.
Phase 4: User Feedback: get the prototype into
the hands of the people you’re designing for.
Phase 5: Iteration: after getting feedback from
the users, use that information to fuel the
changes to your design. Keep iterating,
testing, and integrating user feedback.
Phase 6: Implementation: after validating the
usefulness of the solution, it’s time to get the
idea out into the world.
“If we try to understand the meaning of
Marketing and its correlation with Advertising,
we would get to the concept that it is all about
solving problems; addressing a need
that doesn’t exist by tackling a problem most
people won’t notice and letting them know that
we “as a brand” have the answer… it sometimes
is not about promoting an existing product or
service, but as well coming up with new ones to
solve a problem and then promote the solution to
the customers… By definition, there is a
commonality between the concept of design
thinking and the essence of marketing. There is a
need for every marketer not to take things or look
at things the way most people do – there is this
element of trying or having to find solutions and
add value to life, shifting it from merely as people
see it to how it can be better”.39
Design Thinking is not a process but a mindset
and it’s not meant to replace the creative process.
It’s a different approach to innovation and
pursues the generation of new sources of revenue
for the agency by “designing” in conjunction with
clients.
The challenge for creative agencies in Latin
America is how to adapt this mindset to better
serve our purposes, change our reactive attitude
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and move into a more proactive way of doing
advertising.
As digitization moves forward, media
accompanies this progress. Creative agencies
aren’t just designing static advertising for TV,
newspapers, magazines or web. We design
personalized through data interactive and live
services. We design –or create ideas if you
prefer- for a customer experience in a broader
sense. This requires interdisciplinary teams of
creative people and designers + data science
experts, developers, anthropologists and
sociologists.
In the digital economy, customer-centric
approach means also involve them in the design
process since the very beginning. It’s about
keeping a relentless focus in the customer
experience and Design Thinking provides the
necessary methodology.
Fourteenth digital paradigm: everything is
Digital
Production departments in creative agencies,
alike the whole agency’s organizational structure,
are industrial age units whose main focus reside
solely on delivery.
Concepts like productivity, efficiency,
finance, collaboration, proactivity, innovation or
agility are completely out of their scope.
They developed an order-taking and quickly-
get-rid-of-jobs mentality.
Usually the heads of these departments have
been around for more than 10-15 years and
although have valuable experience, are used to
deliver under high pressure and are highly skilled
in their subject, have been confined to the
execution of the delivery and to obtain rebates
from vendors.
Production departments are also outdated from
a technology and training perspective.
Lack of tools to manage tasks, workflow and
projects make things worse and don’t stimulate
management, efficiency and productivity and
contribute to blur accountability.
Digital production although new in the
agencies has been trapped in the same logic.
This paradigm introduces the concept that
everything is Digital in the production
departments.
From a technical perspective, every piece of
work for digital (web or social), graphics, photos,
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3D, animation and videos is digitally produced or
finished. Producers from each discipline share
common skills, knowledge and tools (basically
Macs and Adobe), and although there are some
deliverables and some field work that’s not
digital, the most of what’s produced in
Production departments is made digitally.
a) Burning down the silos. Production
departments as we know them should
disappear. The division between Studio,
Digital, Photo retouching or Broadcast should
be blurred. Producers should be skilled in as
much as disciplines as possible and manage
different type of orders with flexibility
allowing the agency to cope with variable
demand. Current level of such specialization
in areas where everybody’s doing a similar
type of work affect not only the financials of
each department, but people’s productivity
and motivation as well.
By no means quality should be affected and
specialists or heads fired. Let’s train people,
give them additional skills and put them to
work all together in a unified environment,
and appoint a manager to organize the team
focused in the quality and speed of the
delivery but on productivity, efficiency and
profitability as well.
b) Digital talent. Every new worker in THE
unified Production department should be a
professional of design (web, graphic, AV). No
more apprentices or moto boys upgraded as
producers. Training people is a must, but they
need to bring their own skills. It’s completely
necessary to bring pure digital talent on board,
and specially people from the design field.
This people is the best suited for a unified
production environment because it’s easier for
them to shift from one discipline to another.
Traditional principle: control (ii)
In the People pillar, we’ve seen the
importance of the time sheet control and its
positive influence in management by turning a
(usually) subjective parameter into objective and
useful information.
There are other controls that creative agencies
in Latam aren’t taking too seriously and that
might bring better information to adjust how the
agency works to be proactive, to improve revenue
and margin or the cash-flow. And utterly
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important: to manage with trustable, complete,
objective and updated information.
a) Fee-hours. Few agencies control hours
delivered into fees thoroughly. Usually,
people dedicated 100% to a single client don’t
register hours or makes a bulk input.
But despite partial or full-time dedication, job
orders should be created for every job, no
matter whether the job is part of a fee. And an
organizational structure that include
campaigns or projects that permit to input real
hours by project/campaign. Using this
approach agencies will be able to control
hours delivered to each client.
The definition of a fee (functions, seniority,
people, dedication, costs) determine the
amount of work to be delivered by the agency.
It is –in essence- the capability. Accurate time
sheet registration should “discount” hours
from that capability and allow the agency to
identify over delivery of hours (or under).
A capability proactive management identify
trends, season peaks, productivity and
efficiency and bring valuable information that
should be shared with the client to make a
better people planning.
b) Fee-cost. Same as Fee-hours, but with
valorized hours agencies will be able to
manage the financials as well. Perhaps the
creative agency’s delivering the right number
of hours, but with different function and/or
seniority. The Fee-hours + Fee-cost control is
an effective way of monitoring the capability
and manage on the fly adjustments.
Tight control of hours and cost it’s the model
that consultancy firms, software developers
and digital agencies follow. The time and cost
of their employees is paramount for success or
failure. Creative agencies still need to learn a
lot from them.
c) Scope. Usually, scope definitions in the client
contracts suck. Either because are inexistent,
or too broad, or unspecified, or undetermined.
Mechanisms for control and reporting aren’t
clearly stated either.
Creative agencies by means of lack of controls
over Fee-hours, Fee-cost and Scope become
an “all you can eat” shop. Not to mention the
contributions made by the “Fatal Trifecta” to
this scenario.
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By means of lack of control, we’re wasting
one of the organic source of growth: out of
scope (OOS) jobs.
As a general rule, everybody in the creative
agency should be made aware of client’s
scope and proceed to work only on what’s
explicitly specified.
Everything else, should be considered OOS
and be under scrutiny to determine how to
proceed.
d) Pendings. This is a fundamental control in the
administrative process in creative agencies.
Basically, because contributes to downsize
and tend to eliminate losses.
It’s a common practice in Latam to make a
swipe in November and find there are jobs
pending since March that were never invoiced
and at this time of the year the client doesn’t
have the budget anymore.
There are two things that enable a successful
pending’s management: a financial or ERP
system that allows to register every job order,
including items and tasks, billable or non-
billable and a process that enforces to do it.
And every means every.
Once job orders, items and tasks are recorded,
a process for managing pending should be
devised. My recommendation is to have an
autonomous Process department who will be
in charge of supervising time sheet
compliance, scope and administrative pending
(budget, quotations, approvals, invoicing,
etc.).
e) Fraud. Although fraud control might seem to
be part of the regular audit process, creative
agencies’ traditional workflow and silo
departments favors discretion outsourcing
management. No matter whether it’s pass-
through or vendors invoicing clients directly,
full responsibility about transparency relies on
the agency.
There are several controls that help mitigating
frauds that include analyzing data and trends
like vendor rankings, volume by provider,
establish a thorough process for vendor’s
registration, cross-controls between data from
vendors and HR, check if different vendors
share same phone number or address amongst
others.
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CDO FORUM PAPERS – 12/2017
Monitoring regularly will help reduce the
chances of fraud and keep a healthy
relationship with our clients.
Traditional principle: every piece of work has
its price
This traditional principle establishes that no
matter whether a job is billable or non-billable, it
has a price.
It’s easier to understand that producing any
piece of work has a cost associated to it than
everything has its price. But it does.
The problem with the work included in agency
fees is that they’re generally not registered,
estimated or controlled, therefore remain
invisible.
Creative agencies should change that
approach, quote and issue estimates of costs for
every job, regardless it’s billable or not. It’s the
way of making them visible.
The information and associated controls that
this practice brings to the agency are priceless.
Assessment of performance; cost analysis per
type of project, task, campaign or employee; total
investment per client; benchmarks are amongst
the valuable information that the agency can pull
out after implementing this principle.
It can be used when renegotiating fees or
projects showing the clients the actual value of
the work delivered and move the discussion to
value instead of FTEs.
Traditional principle: real synergy
As seen before, the silo mentality and
organizational structure from the industrial age
that rule creative agencies in Latin America,
already started to impact the business,
productivity, margin and de-motivate employees
as well.
Partly developed in the Fourteenth digital
principle: Burning down the silos, blurring the
lines between Production departments is the first
step to real synergy within the agency.
a) To adapt and to prosper. There are several
types of work that no one wants to do.
Everything that’s not so “cool” tend to be
procrastinated. Creatives don’t like to do key
visual’s adaptations or sale TV commercials;
Client Services don’t like complicated stuff
(Catalogs, Shopper) and so on. Most of
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Production daily work are simple requests and Pillar four: the technology
format adaptations. “Digital transformation (DT) – the use of
Procrastinating consequences are low quality technology to radically improve performance or
jobs delivered at the very last minute, reach of enterprises – is becoming
a hot topic for
undermining the relationship with clients and companies across the globe. Executives in all
opening the window to competitors. industries are using digital advances such as
Unified Production and its professionalization analytics, mobility, social media and smart
will allow to increase revenue and reduce embedded devices – and improving their use of
operational costs. traditional technologies such as ERP
– to change
Production might develop its own business by
customer relationships, internal processes, and
managing clients themselves providing basic
value propositions. Other executives, seeing how
design and adaptations along with all the type
fast digital technology disrupted media industries
of work that no one wants to do. This mean
in the past decade, know they need to pay
not having Client Services as middlemen and
attention to changes in their industries now”.40
just involving Creatives for supervision
Technology is the ultimate enabler for the
simplifying the process.
process of change and transformation. But Digital
Adding the layer of Project Management
Transformation is not just an upgrade or shift of
(Eleventh digital paradigm) will increase
the current technologies in use by the
Production capabilities and control.
organization, it’s a process-changer. Every
b) Economy of scale. The topic of Production
process that touches communications,
hubs in international networks is revisited over
relationships or transactions is potentially
and over. Some global or regional clients
changing due to digital technology.
encouraged them and there are a few success
Martec’s Law says: “Technology changes
stories.
exponentially while organizations change
It’s a great idea and it mimics the production
logarithmically” and this statement might lead to
model of manufacturing, like automotive. The
frustration, confusion and –worst of all-, denial.
main constrain is that revenue derived from
And it’s understandable: no matter what we do,
Production for local agencies matters. And
we’re losing the pace.
sometimes matters a lot.
Although “technology” is a broad concept that
This is a true digital paradigm, decoupling the
includes many new developments and
place where the work is produced by taking
technologies in itself, we’re going to focus on the
full advantage of current state of technology
technologies that make sense for our activity.
and communications.
There are other definitions –that although
Although it totally makes sense for creative
might seem a bit fundamentalistic- states: “… all
agencies and as seen, Production hubs benefits
companies increasingly become ‘technology
from better professionalization, higher
companies’” (Brian Solis) and “…every company
volume, lower costs and, in order to be
is a software company” (IDC) and no one is so
successful a hub should be able to keep the
away from those definitions than creative
margin for local offices that feed the hub.
agencies in Latin America. We’re not technology
Otherwise, there’s no interest for them.
companies nor we’re on the way to be.
The business for the hub is to gain extra
Just a quick analysis of the most used
margin by being more productive, more
technologies in advertising agencies:
efficient and producing at substantial lower
- E.mail: first e.mail was sent in 1971. No major
costs.
changes since.
This extra margin –or lower costs- mean a
- File server: Novell launched Novell Netware
more profitable organization, or facing the
in 1983. Same technology since: personal
client to reduce price to be kept inside the
folders or shared folders.
game or to obtain more production volume.
- Finance systems: developed in house or third-
party solutions born with the Mad Men agency
model 20+ years ago.

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We can add Excel to the list, our swiss army
knife for almost everything.
Creative agencies keep using outdated
technology and legacy systems not suited for the
challenges they must face today. By adapting and
adding patches to them, we’re preventing new
and better shaped technologies to take place and
replace the old ones.
New technologies are essential in the process
of digitization and required for joining the digital
paradigms already seen: innovation, new revenue,
transparency, control, liquid talent management,
crowdsourcing, customer centricity, agility and
synergy and the ones to come. None of them are
possible without an injection of applications and
tools that help drive positive change.
Digital Transformation to be successful must
be considered as a permanent investment, not a
single-time expense.
“The ‘digital’ in digital transformation
implies technology-centric metamorphosis. Many
of the challenges are no stranger to business
evolution. They’re often human and require
management and shepherding to guide change
from the perspective of the organization and
individuals”.41
Fifteenth digital paradigm: automation
Not a secret for anybody. There’s a lot of
manual labor in creative agencies. And I’m not
referring to crafting creativity. Multiplicity of
administrative processes, reporting, workflows
and controls are carried on in a manual fashion
causing people to feel sub-utilized and frustrated.
This expands the gap between administrative
tasks and tasks with added value, creates more
chances to make mistakes, interferes with the
process to obtain relevant information, delays
decision making amongst other.
Worst: some controls and processes simply
aren’t followed because doing them manually is
simply too complex.
Automation of processes and tasks is not an
easy endeavor. Nevertheless, creative agencies
should start by digging and assessing how current
processes are being carried on, where data come
from, how much manual labor take to consolidate
information, the bottlenecks, the dead-end roads,
the systems that don’t talk to each other and why
and the workflow. And figure out where to start
to streamline and optimize.
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No need to go for everything at once, but
keeping the big picture in mind, start by one
department, or process and find a suitable
solution that automates the process.
Traditional approach to picking up –or
developing- new software used to be a long and
painful process. Needed thorough evaluation of
the infrastructure, database, operating system,
consultancy and training. And that took months
or even years till being ready for the operation.
Today and honoring the agility paradigm,
there are many applications that run in the
Software As A Service (SAAS) fashion, hosted in
the cloud and with web interfaces that can be
deployed easily, quickly and with minimum
consultancy and training.
Payments are based on actual usage and
provide a fast response to our obsolete manual
processes. Perhaps they won’t solve all our issues
but the essential is to start with something.
There’s no case to wait for the optimum solution,
it might never arrive.
Sixteenth digital paradigm: big data
Big data appeared for the first time in a paper
from NASA in 1997. Although today there’s not
a commonly agreed definition, I like this one:
“The ability of society to harness information
in novel ways to produce useful insights or goods
and services of significant value” and “…things
one can do at a large scale that cannot be done at
a smaller one, to extract new insights or create
new forms of value”.42
Interesting to note that this definition not only
describes size but everything that can be done
with data.
For advertising, it’s not certainly the size what
matters most but its variety, sources, type
(structured, non-structured) and most important:
how to use them.
Great benefits are derived from big data
utilization in advertising because of the direct
link with technology, new revenue streams and
better and agile decision making.
a) Big data for clients: Data represent a huge
competitive advantage in the new digital
economy and became a fundamental asset for
every enterprise.
Today, big data turned advertising into a
fusion of marketing with data that represent
equally opportunities and challenges.
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And data is everywhere. Consumers leave
their digital footprint in every digital and in
most physical interactions with brands.
Advertising industry should feel like in
paradise. Big data can be used to help create
targeted and personalized campaigns that
ultimately save money and increase efficiency.
The possibility of targeting the right people
with the right product with the right message
in the right device by gathering information
and learning user behavior instead of
traditional segmentation made by age,
socioeconomics, gender, social role or
geographic is awesome.
This result in improved offerings and raise the
possibility of conversions.
For these things to happen, investment in
technology, data and analytics should be
completely aligned and a big data strategy in
place. Not only gathering data, but building
big data.
Creative agencies have a huge business
opportunity. Instead of keeping our passive
role, receiving data from clients and starting to
work from there, or just producing PowerPoint
reports from data pulled from Google
analytics crafted manually in Excel, we should
start hiring specific profiles, people highly
specialized and trained in data mining, data
science and analytics that help to develop real
data consulting for clients. It’s not only a new
revenue stream but also a chance to redefine
our role as partners and produce better insights
derived from data that ultimately will lead to
better advertising.
As seen on Fourth digital paradigm, better
data management gives us better information
and reduce risk to join projects rewarded on a
success fee fashion.
“Technology innovation will make it possible
to trim a great deal of waste out of advertising
by making it more precise. As advertising
becomes more precise, it will become more
efficient, which will drive up its ROI. This
higher ROI will then lead to more investment
in advertising”.43
b) Big data for the agency: This concept is not
exactly big data, but close. As described, big
data is about using all the data scattered in
different systems, databases, repositories and
formats and start using in our own benefit.
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This mean producing relevant insights about
our own company that allow management to
take better and faster decisions.
If it were only structured data, we would be
talking about Business Intelligence (BI). But
as great insights can be found in social media,
messaging systems, internal chats, document
repositories and even pictures or video, big
data is the preferred choice.
It’s a fact that creative agencies in Latin
America are managed based on perceptions
more than actual data. When data is available,
is usually collected and analyzed post-mortem
which lead to decisions made late.
There isn’t data for predictive modelling,
analysis of different economic scenarios, to
assess the real impact of changes in staff or
client contracts or for benchmarking.
P&L made in Excel is not enough. Not in the
digital economy nor in the current competitive
scenario or the new media and advertising
ecosystem.
Client profitability is just an estimation –and
sometimes a guess- that shows something that
does not occur in the real world and out to
date.
Peter Drucker’s famous quote “If you can't
measure it, you can't improve it” inspired by
Lord Kelvin’s (too) similar quote highlight the
importance of data and measurement in
business.
“Companies are usually more focused on the
deployment of processes and new technologies
than in the definition of the performance
indicators that evaluate them”.44
Even if we decide not to go for big data in the
agency, it’s fair to say that Business
Intelligence (BI) entered the market 20 years
ago as a technology that enabled the business
to create a “top-down single source of truth
from which organizations
would centrally
track KPIs and performance metrics with
static reports and dashboards. This stemmed
from the proliferation of data in spreadsheets
and reporting silos throughout organizations,
often yielding different and conflicting
results”.45 Sounds familiar?
Businesses that want to maintain a competitive
position need updated, reliable and always
available information. It’s mandatory for
efficient management and creative agencies
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need to adopt with urgency an approach of
management with data, not only with the guts
as facilitator for all the initiatives already seen.
Instead of being mere spectator of things that
“happen” to us, advertising should move to a
more proactive approach where data driven
decisions along with top executive’s
experience would make a difference and lead
to agile management.
I myself developed a full methodology of
management with data, dashboards, KPIs,
dynamic reports and benchmarking for creative
agencies gathering, consolidating and comparing
data from multiple sources. It’s a comprehensive
framework aimed to make better and faster
decisions and fundamentally decentralization of
management that is still being used in Y&R
Chile.
Seventeenth digital paradigm: collaboration
and social media in and out
In teamwork, teams are created when
managers need to work closely together to
achieve a joint outcome. Their actions are
interdependent, but are fully committed to a
single result.
In collaboration, people usually have some
shared goals that are only a smaller part of their
overall responsibilities. Unlike teams,
collaborators cannot rely on a leader to resolve
differences, and cannot walk away from each
other when they do disagree. So, collaboration is
this relationship of give and take between its
participants.
In the predominant silo organizational
structure of creative agencies, collaboration is
simply not encouraged and therefore there’s no
interest in deployment of tools to support it.
Social media has become an integral part of
modern society. Since its inception about 20
years ago, social media platforms have been the
most important technologic landmarks and have
changed the way we communicate, gather and
share information, giving rise to a connected
global society.
Majority of creative agencies started doing
Digital by doing social media for their clients,
fundamentally because it was the easiest way of
entering this new world and less skills were
required. Therefore, this early engagement should
have mastered agencies in the fundamentals,
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usage, value and how to manage social media
efficiently.
Although the fact that social media has a huge
influence in any digital transformation endeavor,
we suck at doing social media for our own
business. Agencies should review all their digital
communication initiatives. Today, it doesn’t go
further publishing some news on some press for
the advertising industry or posting new
commercials’ launches on Twitter, Facebook or
Instagram.
Creative agencies should think who’s their
audience and work harder and better to achieve a
more active participation in the corporate world
and the society by creating more content, more
self-advertising channels, broader our audience
and do –more or less- what we do professionally
for our clients.
Looking inside, the most utilized tool is still
e.mail, augmented by instant messaging via
Whatsapp. Internal communication consist of
newsletters, birthday or party announcements sent
by e.mail. Few advertising agencies developed a
real intranet and rare cases implemented social
media platforms for internal usage. The
communication sucks here too.
Advertising agencies are losing the essence of
social media platforms which is to strengthen ties
between people and opportunity to increase
collaboration and productivity in two-way
channels where employees are part of the
communication.
It’s about taking full advantage of the added
value and talent from our people giving them the
chance to contribute to initiatives and projects as
seen in Crowdsourcing and Innovation. A client’s
problem doesn’t have to be solved by the
dedicated Creative, Planning or Production team
only. If agencies truly believe that everybody’s
creative, then let’s put this into practice.
Huge benefits can be obtained from
collaboration and social media programs inside
the agency: foster real collaboration culture,
improve and de-centralize communication and
connectivity amongst people, manage scattered
knowledge, help to identify leaders and experts
and definitely blur the silos boundaries.
“Do not look at collaboration as just a
marketing tool though, like most companies are
doing. Involving people in your business, giving
them the opportunity to come up with ideas or
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suggestions will make your company or brand
more open, more human and ultimately more
appreciated. That is very valuable, but make sure
it is not your only objective. Online collaboration
can transform your business bottom-up, and
bring down the internal silos. If implemented
properly, structural collaboration is one of the
most powerful assets of the digital age”.46
In my experience, people tend to do whatever
is possible to keep the pace of the technology
evolution even when the company don’t. This is
called “shadow IT” and it’s caused by frustration
produced in the people by lack of tools and
technological updates. With more and more
generation Y employees that often have more
access to technology than the available in the
organization this is not only embarrassing, but
alarming. Free technology adopted without
knowledge and control is a dangerous threat that
advertising agencies should notice immediately
not to restrict it, but to manage.
“One of the major changes in the past ten
years has been a shift in understanding of how
value is created. Value is created more and more
in networks of collaboration rather than in
traditional silos of expertise, so it is important to
look at who needs to collaborate with whom to
create the compelling experiences that will satisfy
customers”.47
Eighteenth digital paradigm: anytime,
anywhere
Omnichannel is about true continuity of the
experience of the consumer. Let’s replace
“customer” by “employee” which is indeed our
internal customer and we have defined a different
approach to work, centered in people and their
experience (Employee Experience).
In the “Careers” section of many companies
aside from offering continuous learning,
mentoring programs, technology, innovation,
inclusion, purpose and diversity, making a
difference in the world and many other promises,
we start to see more and more “… we offer a
range of flexible work arrangements to help our
people achieve work/life balance, while meeting
the demands of our business”.
Flexible work arrangements mean part-time
jobs, home office, remote work amongst others.
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In every creative agency in Latam most of the
work is still done in the office. And it’s not
needed.
Absence of vision, obsolete organizational
culture, silo mentality again, inefficient controls,
no tools, centralization, low transparency, non-
collaborative environment, outdated
methodologies, no processes and more discourage
adoption of flexible ways of doing things and
working anytime-anywhere.
And fear. To lose control because we don’t
know and we don’t have the means to do it.
Almost every employee has broadband at
home. Technology is not an issue because tools
for collaboration, communication, organization of
work, project management, control and sharing
documents are mature and secure. And millenials
love it. Why not doing it?
Flexible work arrangements are based in 3
fundamental principles: communication,
collaboration and culture. Communication aimed
to transparency; collaboration to keep the people
aligned towards a common objective; and culture
to develop trust and commitment.
Clear processes and a culture of remote
working are key to success.
Agencies should challenge themselves and
start with baby steps. Don’t need to happen for
everybody at once, but deploying gradual
programs that foster flexible work arrangements
will lead to improve productivity, reduce
frustration, save infrastructure and operational
costs, reduce turnover. It’s a win-win situation
where people can achieve a better life/work
balance.
Having such a flexible program, it becomes
easier to deploy a “follow the sun” approach
(Crowdsourcing) where the agency can take
advantage of trading idle hours from people
everywhere by leveraging the technology that
allow remote work.
Nineteenth digital paradigm: AI
Along with big data and analytics, Artificial
Intelligence (AI) is one of the hottest
technologies and also a solid opportunity to
introduce innovation in our industry.
Although AI and Machine Learning are
sometimes used as interchangeable concepts,
there are substantial differencies:
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“Artificial Intelligence is the broader concept
of machines being able to carry out tasks in a
way that we would consider “smart”. And,
Machine Learning is a current application of AI
based around the idea that we should really just
be able to give machines access to data and let
them learn for themselves”.48
Hence, most of the applications of AI for
advertising are indeed Machine Learning and
advance algorithm.
Nevertheless, ML has multiple applications in
marketing and advertising and although not
everyone is suited for creative agency business,
the following list show the extent of the
development of this technology:
- AI enhanced and pay-per-click advertising
- Highly personalized website experience
- AI-powered content creation
- Content-creation chatbots
- Intelligent email content curation
- Churn prediction and smart customer
engagement
- Smarter search
- Recommendation engines
- Programmatic advertising
- Speech/Text recognition (Conversational
commerce)
- Automatic image recognition
- Advertising fraud detection
- Customer insights on-the-fly
- Real-time analytics
- Generation of insights from data
- Intelligent A/B testing
- Dynamic creative optimization
“AI’s full potential will never be realized until
agencies and advertisers take more risks and
begin to experiment with AI technologies more
aggressively. It is one thing to rely on AI to
automate previously manual tasks involved in
media buying and ad targeting… how AI can turn
real-time feedback into actionable campaign
adjustments, and how it can target more relevant
prospects for more efficient media spend”.49
Opportunities for creative agencies abound.
To better service our clients for sure.
But also, to get closely involved into client’s
business and help driving innovation together, to
create new revenue streams from automated
services based on Machine Learning, to have
better tools to collect better data and produce
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more relevant insights, to create more
personalized and better advertising.
There are challenges as well: privacy must be
respected and must adhere to local and
international regulations; data inputs must be
accurate and ethics should rule advertising
behaviour.
For agencies, the threat that automation
will eliminate a broad swath of jobs across the
world economy is now well established. As
Artificial Intelligence (AI) systems become ever
more sophisticated, another wave of job
displacement will almost certainly occur.
Certain positions in the advertising industry
should be concerned. Production, for example
with “Automated narratives” that includes using
bots for music and editing the closing credits of
commercials. Or if your job is really to move
numbers around a spreadsheet and optimizing it
based on what’s performing, the computer is
going to be way better than you and faster.
Creative that typically gets slightly tweaked by
location is ripe for algorithmic creative. Or
“flexible storytelling,” pieces within ads that can
be changed based on data. It’s not sci-fi, it’s
already happening.
For traditional creative field, it’s safe to say
that when it comes to telling a story, human touch
will never go away. But for workers of the future,
then, the ability to adapt their skills to the
changing needs of the workplace will be critical
“I think the end goal of this is: we want to get
the industry in a way where people will be able to
find things online that they may have not known
about before but they’ll be able to see this and
say, ‘Wow, this is really great.’ We all know
there’s a lot of amazing content, there are a lot of
amazing products out there that have yet to be
discovered by people”.50
Pillar five: the culture
“Culture is a multi-layered core at the heart
of every successful digital transformation. In our
increasingly digital world, a digital culture
cannot thrive if your company operates in silos
with disconnected or under-connected business
functions. With technology as an enabler, a
modern workplace needs to find that harmony
between the hierarchy of a traditional org
structure and the fluidity of a network; just as a
modern smart building needs to find the harmony
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between maximizing employee productivity and
environmental sustainability.
To spark a change in digital culture, you must
begin thinking in a “boundary-less” way across
your internal organizations. Your work needs to
be measured with real data, and that data needs
to be used to equip employees in ways that let
them truly understand and serve their customers.
Learning from this data, your teams need to
operationalize their shared accountabilities with
processes that help other teams become more
successful”.51
Changing corporate culture is amongst the top
3 challenges in a process of Digital
Transformation. In such a baby-boomer
organization like creative agencies in Latam with
old rigid rules and largely wedded to traditional
working practices, this might represent the most
difficult barrier to digitization.
“We believe that organizations of the future
need a culture that is more open to change and
innovation. It will become crucial to better follow
new trends and start experimenting sooner than
you ever did before”.52
Changes need to be driven top-down with a
strong commitment from top management and
can’t be made department by department. It’s not
about fixing or improving particular processes in
a certain area. Agencies must be open to
experimentation and allow themselves to fail. As
defined by W+K statement: “Fail Harder”.
“It’s relatively easy to copy a good business
idea today, and technology solutions are cheaper
and more flexible than ever. Differentiation
through a clever business model or a novel
technology is challenging. Culture, however, is
hard to emulate. A vibrant design culture can be
the best and most sustainable differentiator for an
organization”.53
In order to succeed, deep cultural changes
might happen, transparent education and
communication are indispensable. And people, of
course. Thus, HR plays a major role in this
process.
Change is uncomfortable and requires new ways
of thinking and doing. People have trouble
developing a vision of what life will look like on
the other side of a change. So, they tend to cling
to the known rather than embrace the unknown.
You could never expect one hundred percent
support from any individual who was not
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personally involved in devising a change which
had an impact on his work.
Hence, the agency must create a work
environment that seduce and engage people so
they can feel that they have the power to initiate
change. This is also positive and a tribute to a
different work culture.
“Just as digital transformation can’t flourish
in a silo, new procedures and technologies that
aren’t employee friendly will also fall flat. Busy
employees will only be frustrated by technologies
they don’t know how to use or those that need
constant troubleshooting. When this occurs, they
simply return to the old way of doing things.
Instead, IT leaders have to think like user-
experience professionals and HR teams. They
need to assess new technologies based on user-
friendliness, as well as educate, train, and
support employees when new technologies are
implemented.
Digital disruption brings change, which can
be uncomfortable for employees—especially team
members who are used to the old system. It’s
important to be understanding and patient.
Setting the right tone is crucial. For instance, let
employees know that a dip in productivity is
expected while everyone adjusts to the new
system. There are also many ways to make
learning new technology more enjoyable for
everyone. Holding new tech trainings with
snacks, games, and prizes, and allowing for some
time to let everyone socialize can help the team
relax and have fun”.54
Collaboration, social media platforms, two-
way communications, everything that make the
employees feel that the company’s listening and
reacts accordingly does the work. Creative
agencies need to change themselves in order to
allure the best people and digital talent.
Agencies need to shift the focus. For years,
we’ve been hearing that advertising agencies are
striving for survival. I propose to ban that word
from our vocabulary and use success instead and
aim for success. Not just for the sake of
motivation, but to be great places to work.
When the industry’s biggest differentiator is
its people, the fact that it is failing to change fast
enough or significantly enough to attract the best
talent is a major issue.
The historic "work hard, play hard" culture of the
advertising industry is no longer much of a lure
CARLOS PEZZANI https://usuaria.org.ar/
when it comes to attracting the best talent and
need to change this as well.
“This ‘Generation Y’ already plays a major
role in accelerating the emergence of a new,
digital world, and their impact is impossible to
ignore. Generation Y’s expectations are being
formed by the technologies they surround
themselves with. They adapt their lifestyles to
each new technological invention and they won’t
accept that the brands they interact with or
employers they work for don’t do the same.
Generation Y already constitutes a new category
of consumers, citizens and employees who are
digitally, globally and constantly connected…
Gone are the days when an employee
enthusiastically received their new work laptop
and mobile phone. Today’s employees more often
than not have more information communications
technology at their personal disposal than they
are given at work, and IT departments are
increasingly seen as a limitation to their needs
rather than an enabler”.55
Let’s be sexy, glamorous, objects of desire
again, but overall: let’s be Digital.
For our people, for our clients and for our
business.
Management
“The Digital Transformation megatrend is
fundamentally disrupting and changing every
industry, business and most jobs at a rapid pace.
Many executives and managers are struggling
with understanding this megatrend and what it
means to them and their organization. Digital
Transformation affects everything from updating
the company vision and strategy, to educating
CEOs, CIOs and management teams on the
significant changes that are taking place
today”.56
Management for the purpose of this abstract
relates to all the management disciplines and
practices and not just the top executives of the
agency.
“Leadership is essential. Whether using new
or traditional technologies, the key to digital
transformation is re-envisioning and driving
change in how the company operates. That’s a
management and people challenge, not just a
technology one”.57
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CDO FORUM PAPERS – 12/2017
The new management
There are several changes in the agency
management practices that are essential not just
to drive Digital Transformation, but to enable a
different approach on how to rule the business in
the new digital economy. And to recover the pace
in regard to traditional management practices that
creative agencies in Latin America never
followed as well.
Advertising agencies –as already seen- need to
move away fast from the model of an industrial
age organization and at the same time need to
adopt some basic principles of this archetype in
order to walk the way of relentless control,
productivity, optimization and effectiveness.
But it’s not just our industry: “Only those who
are adaptable survive. That’s just one of those
inconvenient evolutionary truths! Generally
speaking, companies and governmental
organizations are not designed for adaptability.
They are organized in static, pyramid-shaped,
top-down broadcasting models and not organized
to receive feedback from the outside or the
bottom of the pyramid or to use this information
for change and continuous improvement”. (This
is Service Design Thinking).
Traditional management in advertising in
Latin America relied on savvy, strong
personalities, deep knowledge of the market and
natural talent that ruled the business based more
on gut decisions than actual data. This need to
change because it’s not possible to compete in the
current landscape with this type of governance.
Managing with data is not an innovative or hot
concept. It has been there for decades and is key
to any successful business. But creative agencies
still run the business with just elementary
information.
But it’s not one or the other. A mix of both
talent + data is needed to prosper in the digital
economy.
Personalized management lead to excessive
centralization of the information and the
decisions, a vertical organization and a silo
organizational structure that don’t contribute to
agility. De-centralization of management is not
only feasible but recommended. Every head of
department should manage all the data needed to
carry on his functions, including detailed costs
and sources of revenue. Departments should be
considered as operating units that manage their
CARLOS PEZZANI https://usuaria.org.ar/
own P&L. Business Intelligence with
segmentation of the information and personalized
dashboards can make a huge difference in all the
management process. Accountability, leadership
and business mentality should be developed in
each department and its heads to aim for better
and agile decisions based on accurate and up to
date data. The heads of departments should be
trained in management techniques, motivation
and collaboration. Professionalization of middle
managers and giving them tools to work more
efficiently should be a top priority of creative
agencies.
The new creative agency require that everyone
need to be collectively responsible to optimize
revenue and margin. By making people
accountable, everyone’s contributing to success
or failure. Sharing responsibility on profit and
loss is another shift in the mindset that give
people a different sense of value just by reporting
hours accurately.
The new people
As every organization faces a radically
shifting context for the workforce, the workplace
and the world of work, turnover might represent
an opportunity to bring to the agency people with
more digital capabilities, tech-savvy and social
media proficient.
And this is true and should be mandatory for
every position, including top and middle
managers.
Today, a new set of digital business and
working skills is needed. Thus, creative agencies
should focus more heavily on career strategies,
talent mobility, and organizational ecosystems
and networks to facilitate both individual and
organizational reinvention.
“There is a need for a new recruitment
process for the times we live in… (required to)
develop a process that moves from the
recruitment systems of the industrial era to a
recruitment system of the information era, where
the identification of talent and attitudes are
essential for companies that are looking for
people-centred innovation and competitive
differentiation. Classic recruitment processes
often disregarded certain qualities, such as
empathy, creativity, charisma and attitude, since
these cannot be detected simply by reading a CV.
An innovative recruitment process needs to take
into account the fact that happiness at work
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CDO FORUM PAPERS – 12/2017
makes employees more productive and a good fit
is essential for building a mutually sustainable
relationship. To achieve such aims, companies
need new systems to spot people talent quickly by
looking beyond their CVs and computer
transcript. This enables employers to efficiently
get people on board who will add value to the
organization’s activities, wherever they are”.58
The new (?) position: COO
Process and control are two traditional best
practices that should be leveraged for Digital
Transformation. As key enablers for digitization
they should be taken more seriously.
From my perspective, and in a huge shift from
current model of operations based on taking
orders and delivering without control, creative
advertising agencies can’t keep operating
anymore without appointing a Chief Operating
Officer, a C-level executive who should report to
the CEO and manage all the internal operations
including unified Production, Information
Technology, Human Resources and processes.
Shall establish all the controls needed to keep the
agency running and will be responsible for the
deployment of systems, applications and tools, to
automatize processes and the overall business.
With strong focus on management with data
should participate in every business proposal
considering delivery and operational costs are
under his/her responsibility.
“But what’s required for strategic plans to
come to fruition? Two things: one, the operations
excellence required to execute that enables a
company to perform better and faster than
competitors and two, the leadership and talent in
place to drive strategy execution”.59
Working closely and partnering with other top
executives the agency will run the business
smoothly and more efficiently and will be better
prepared for the future.
In the advertising industry, a COO with true
digital DNA would make a huge difference and
may integrate Chief Digital Officer functions to
lead the Digital Transformation program too.
A Digital Transformation process includes
reviews and updates to Goals, Objectives,
Strategy, Process, Metrics and Technology;
therefore a truly digital COO is in the right
position to lead the endeavor.
“A transformation is not a series of
incremental changes. Rather, it is a fundamental
CARLOS PEZZANI https://usuaria.org.ar/
reboot that enables a business to achieve a
dramatic, sustainable improvement in
performance and alter the trajectory of its future.
Because they are comprehensive by nature,
transformations are complex endeavors, and the
majority fall short of expectations for achieving
their target value, coming in on time, or doing
both… Transformations are no longer one-time
initiatives. Because the pace of change is so fast,
companies need to adopt an always-on
transformation mindset. Transformations require
changing the way that the company operates and,
consequently, assembling new talent and
capabilities”.59
The new outside
Advertising agencies in Latin America usually
don’t cultivate relationships outside the close
circle of clients, prospects, vendors, advertising
schools and… other agencies.
This narrow approach is undermining the
value and perception of creative agencies and
their contribution to the pop-culture.
Poor communication and PR and lousy
management of social media are instrumental in
exacerbating this problem.
Agencies need to change this by broadening
their audience, producing meaningful content and
engage more in social responsibility activities.
And advertise them accordingly.
The rise of social media has challenged the
very nature of how people and organizations
relate to each other, and we should take
advantage of this by doing for ourselves what we
already do for our clients.
Jumping over the boundaries of our close
circle is difficult and involve other initiatives.
Not only CEOs should participate in academic
lectures, events and presentations from other
industries and verticals. Many people in the
agency can talk about their valuable work and
inspire others, and the topic shouldn’t be
necessarily the business.
R/GA for example, created a chair for IoT in
ITBA University in Argentina. It’s not an
advertising, nor a marketing university: it’s an IT
school.
Introducing initiatives like “Best place to
work” or “Best agency to work” (and doing it
right) would definitely help and put agencies in
the news not just from advertising press. And lure
talent.
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CDO FORUM PAPERS – 12/2017
Creative networking site Working Not
Working's issued its fourth annual list of
Companies Creatives Would Kill to Work for
Full Time, and only the only international
network is BBDO. R/GA, 72andSunny, W+K and
Droga5 and no much more from the advertising
industry. Creatives prefer to work for Google,
Patagonia, Red Bull, Nike, Airbnb and Facebook
amongst others. They’re saying something.
The top 50 most innovative companies issued
by FastCompany, in Advertising and Marketing
show the same R/GA, W+K, Droga5 sharing
distinction with Facebook, Kenzo, FX Networks,
NetScout, Ingo Stockholm, 20th Century Fox.
Brand relevance index plublished by Prophet
don’t show any advertising network. Some have
the same size or are larger than many clients.
Why not?
Epilogue
I have been working in advertising for 25
years and I’ve seen a lot. As I worked in Studios,
Information Technology and Operations in both
local and regional positions, interacting with
vendors, clients and all kind of managers, I had
the chance to develop a holistic view of the
business in Latin America.
Digital disruption and its impact in a number
of industries show that the best response to
external disruption is embracing preemptive self-
disruption instead of playing defense.
The main purpose of this manifesto is to create
awareness about the urgent need to initiate a
process of Digital Transformation in creative
agencies in Latam as a proactive investment for
adapting to market disruption before it’s too late.
Doing Digital is not enough anymore, we must
become Digital.
We might call it “The 3D’s of advertising”:
Develop Digital DNA
I really hope you enjoyed the reading and
found some of the ideas and insights useful.
This manifesto –therefore- is a call to action
for a change.
No matter if you don’t share the vision, nor
agree with any of the digital paradigms or
traditional principles, it’s OK. Develop your own,
do it your way, but do it.
Advertising agencies don’t seem to realize the
extent of the effects –and associated cost- of
CARLOS PEZZANI https://usuaria.org.ar/ CDO FORUM PAPERS – 12/2017

decisions that are not being made. Please avoid About the author
conformity and stop doing business as usual. Carlos Pezzani
I totally understand that the magnitude of the - Graphic designer, Project Manager and Lean
endeavor can be scary. No need to do everything Six Sigma Green Belt.
at once, nor every concept might work for your - 25 years of experience in the advertising
agency. It doesn’t matter, transformation can be industry managing Studios, Information
achieved even in incremental steps while Technology and Operations for Y&R Group
maintaining the view of the big picture. Argentina, Y&R Latin America, Prolam Y&R
I think advertising today require leaders to be Chile and Grey Advertising.
brave and bold. No one likes to work in an - Currently working as Technology Business
industry that’s in a permanent state of survival, Partner at Grey Latin America.
strive, cost-cutting and moan. cpezzani@usuaria.org.ar
Let’s aim for change and success. Let’s go for Linkedin: carlospezzani
it.

28
CARLOS PEZZANI https://usuaria.org.ar/ CDO FORUM PAPERS – 12/2017

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