Recently, a Goldman Sachs executive departing the company authored a letter that was republished by the New York Times. If you haven’t read it, it’s worth a serious read. (Link Here.)

What surprised me most about the letter is how it could have easily come from an advertising agency. The author’s fundamental arguement is:

We have stopped putting our client’s investment interests first. And we are making choices with their money solely to drive OUR financial success without consideration for theirs.

How easily an ad agency problem, searching to make money, can choose to deliver answers because they are best for agency profit and our own careers. This includes recommend approaches to client spending into areas where we make more money – not because it’s wise for the client. (A tremendous amount of new media spending develops for this reason.)

Even more sadly, a culture has developed where clients willingly accept (or are forced by agency politics to accept) work that is at best ineffective and at worst hurts their companies.

Advertising’s struggles start with creative departments which, in most agencies, are far separated from results. For decades the ad agency strategy has been to dismiss all measured results as “impossible to tell” in order to justify all range of dumb ideas. While there’s an element of truth buried in this approach, it’s rarely valid to confront proof of failure with “but it’s good for your brand”? (Just check out this recent quote: “The BK ads from CPB may not have moved the fast food middle child ahead in sales but the work was interesting and conversational.” WHAT? Consumer’s weren’t moved but it was still great advertising? Disgusting.)

There is also a more serious omission in agency management. Most agencies keep creative departments separate from a feedback loop where they can learn by doing. They never know (from consumer reality) which things work, which aren’t bad but aren’t important either, and which things get in the way of advertising success. Without a feedback loop, creative becomes untethered from reality producing an ethereal product that gets the team their next job (“Great portfolio piece!”) but hurts the client’s business.

In fact, the only feedback loop they have lacks any objectivity. Does my boss like the creative? Do his bosses? Do my colleagues at the agency? And does the Ad Director at the client like it? If so, then, consumer be damned, the ad must be fantastic!

Account teams are generally closer to the client goals and have a much better sense of success. And these teams should be a critical element in the feedback loop. Unfortunately, most of the time account teams lack the strategic ability to analyze what’s happened. Even worse, in many agencies the account teams are ignored when they offer feedback. (A friend of mine once observed that the quickest way to kill a good idea is for an AE to give it to the creative department.)

So read these letters and think deeply about them. What steps do we need to take in our service businesses to ensure that client interests come first?

I believe, along with the Goldman Sachs writer, that when we are clearly aligned and put client goals first, profit will follow. Perhaps not as easily. And it always takes longer to build that profit because it’s a matter of delivering on trust.

But when we put clients first, profit is delivered through loyalty and long term client relationships. And in this age of agency churn it seems that agencies everywhere would benefit from more client loyalty.

Copyright 2012 – Doug Garnett – All Rights Reserved