When Marla Kaplowitz took the helm of the 101-year-old American Association of Advertising Agencies (the 4As) just over a year ago, a scathing report about agency rebates had just dropped from the Association of National Advertisers (ANA).
“There was an erosion of trust when that happened,” Kaplowitz said. “Everyone was guilty without any sort of regard.”
Upon taking the CEO role in May 2017, Kaplowitz made it her mission to repair the relationship with the ANA and gain back agency-client trust.
“All of the agencies I meet with say it’s getting better,” she said. “It definitely was hit, because of the way it was painted. We need more clients having positive experiences talking about it.”
In addition to gaining back trust, agencies are adapting to technological disruption as digital, programmatic and data become central to the media plan. The 4As provides forums and committees to help its 700 members collaboratively explore new models and position themselves for the future.
“We empower our members to deliver creativity that drives commerce and influences culture. all while moving the industry forward,” Kaplowitz said.
The 4As also focuses on diversity and inclusion. Kaplowitz oversaw the launch of the Enlightened Workplace Certification Program last year to address harassment, bullying and intimidation. The group also has run its Multicultural Advertising Intern program for 45 years, which has brought 3,000 minority alumni into the advertising community.
Kaplowitz spoke with AdExchanger about the agency landscape today.
AdExchanger: What’s this last year been like for you?
MARLA KAPLOWITZ: It’s been great getting to know independent agencies, because my background has been on the network side. I spent a lot of time going to council meetings and regional board meetings, listening to members and getting their feedback.
People talk about big ideas and creativity, but it’s important to connect that to business impact. How does that impact culture and pricing?
McKinsey recently released a study about agency rebates. Do agencies still have a transparency problem?
There were some very misleading things in that report. It’s a summary based on conversations. And it was global. There are agency volume bonification deals that happen in other markets, and they’re customary.
I disagree that not much has changed, and I know [ANA CEO] Bob Liodice disagrees. There’s a deeper understanding of what’s in a contract. There’s a deeper level of transparency. There’s a greater level of scrutiny as it relates to the contractual discussion. There are more honest conversations about compensation.
What’s your relationship like with the ANA these days?
I made it my mission to spend time with Bob Liodice. We partner on a lot of different areas: TAG, the IAB, as well as CBA and Ad-ID. We quite frankly agree on a lot. There are some areas where we agree to disagree, and that's OK. But we have an open dialogue about it and we’re supportive of one another.
There’s a lot of talk about agency transformation. What needs to change about the holding company model?
Every client wants something different. There is no one-size-fits-all.
We live in a world of agility. Structures that have layers implies that there’s no agility. But there’s pros and cons to both sides, depending on what you want. If you need an infrastructure and different experts, that might be the model for you. It’s not for us to say what is the right model because truly there is no one right model.
A lot of holding companies are creating bespoke teams for clients across their networks. What are the pros and cons of that from a talent standpoint?
You’re seeing the need for integration. You can’t have one person doing creative over here and not talking to media, PR or shopper. All of it needs to be connected. A lot of clients like the bespoke model because it’s taking the best talent across retail, for example, or auto, and gathering them to work in a collaborative fashion.
How do you meet the different needs of independent and network agencies?
There’s a lot both rely on us for. We do benchmarking and salary surveys. The independent agencies lean more heavily on our learning and development and training because they don't have that in-house. They rely on us for documentation and support, whether it’s job description or any sort of legal support.
How are agency salaries these days?
There are always pressures from procurement and making sure agencies are getting paid for the value they deliver. It comes down to the talent. They want the best talent and the best talent costs money.
Are agencies getting paid for the value they deliver?
Not consistently, no. There’s so much pressure from a business standpoint.
The first time one agency said yes to any demand, that was a problem. The fact that clients are out there asking for 120-day, 180-day payment terms, agencies are not banks. Agencies still have to pay their employees and rely on cash flow. And in the same way clients need to make money so they can reinvest in their talent, people and systems, agencies need to do that too, especially with technology.
Are zero-based budgeting and other cost-cutting initiatives still big issues this year?
If you are a public company, there is a tremendous focus on short term. My concern always is that there’s not as much of a long-term view.
That’s the same in the agency-client relationship. It used to have a greater duration. That continuity is critical in terms of an agency understanding the whole [client] enterprise.
Part of the problem is you have constant change. Reviews take an incredibly long time. They’re very taxing on both sides. Is it necessary to go to the level of depth they’re going? Agencies need to be clear about the value they bring and the price associated with that.
This interview has been edited.