Reframing the role of agencies: From brand builders

to brand immunisers
Source: WPP Atticus Awards, Joint Winner, Branding and Identity, 2016
Downloaded from WARC

This essay argues that agencies are fundamentally optimistic, while boardrooms are rather more glass-
half-empty; agencies look to optimise while boardrooms prefer to limit damage, so agencies should use
this paradigm to prove their value as 'immunisers'.

The business world is becoming more complex, interdependent and globalised - corporate risk
increases - agencies must use stories about brand protection and immunisation from damage.
Four strategies exist: start from a pessimistic place, prescribe short-term pain for long-term gain,
subject clients to persistent 'doses of risk', and abandon one-size-fits-all mediation.
Brand immunisation should not be seen as weak or boring; indeed, one of the surest ways to beat
your competition is to remain robust while they falter.
Agencies should start talking about how they guarantee the mitigation of failure.

Executive Summary
The optimistic psychology of agencies is misaligned to the pessimistic psychology of boardrooms. Agencies sell
the promise of business growth, but boardrooms prefer to buy insurance against business failure.

Brand immunisation offers a new way for agencies to prove their value. Far from being conservative, it offers a
route to long-term success that accommodates risk and innovation.

Brand immunisation doesn't require wholesale changes to the structure of agencies. But it does require
agencies to reframe how they sell themselves to the boardroom.
Introduction: The psychological misalignment
Last year there were 37,427 entries to the Cannes Lion Festival of Ideas. No two entries were the same and yet
each entry told the same story. The story of how an agency had proved itself to be pivotal to the success of its
client.

Such entries are indicative of a wider phenomenon: the narrative of failure has disappeared from the agency
landscape. The prevailing story is one of success. The prevailing psychology is one of optimism.

And yet most boardrooms don't buy the story or the psychology.

There are many explanations for why this is the case. Some argue agencies have failed to use the language of
the boardroom. Others suggest agencies don't have the necessary professionalism. But there is a more
fundamental explanation.

Boardrooms tend to use defensive decision-making. Defensive decision-making is an instinctive human

behaviour made famous by the German scientist, Gerd Gigerenzer. It is based on a simple concept: the fear of
bad consequences is a stronger force within the human brain than the desire for good outcomes.

So even if the boardroom ranks an agency's solution as the best route to business growth, it will still choose an
inferior 'non-marketing' option to protect itself in case something goes wrong. The optimistic psychology of
agencies is misaligned to the pessimism of boardrooms. They see the business world in different ways.

But there is hope for agencies. The business world is becoming more complex, interdependent and globalised1.
As a result the incidence and severity of corporate risk is increasing and will continue to do so. This leaves
businesses vulnerable to short- and long-term damage. Clients will need to proactively immunise their brands.

Encouragingly, there is strong evidence that agencies can provide this preventative care. Binet and Field have
proved that marketing activity can immunise brands against losses to profit margin and sales volume".

But the boardroom will remain unmoved unless the evidence is framed appropriately. Instead of using stories
about brand building and business growth, agencies must use stories about brand protection and immunisation
from damage.

From brand building to brand immunisation

The origins of brand immunisation can be traced to 1975 and a paper entitled: Practical Progress from a Theory
of Advertisements, written by Stephen King.

King outlined a 'Scale of Immediacy' to distinguish the different roles for advertisements. At one end the scale
was 'direct response' advertising. The purpose of this type of advertising was to elicit immediate, measurable
action from its intended audience. At the other end was advertising that sought to 'reinforce existing attitudes'.
The primary role this type of advertising was to protect a brand's salience, fame and relevance. King argued that
this type of advertising was a form of brand immunisation.

Brand immunisation is likely to be a contentious objective. Without doubt as a Chief Marketing Officer (CMO],
your first responsibility is to prevent damage to margins and sales volume. You will also want to immunise your
brand against competitive entrants and challenger brands. These are commercially imperative objectives but
CMOs tend to ignore them because they don't sound aggressive and they are hard to measure. How, for
example, do you prove that marketing activity has repelled a new entrant to the market?

However, companies now face a range of new and unpredictable challenges1". In The Black Swan, Nasim Taleb
argued that it is impossible to predict when shocks will occur. Taleb asserted that the best strategy is to
strengthen the resilience of a business so it can absorb shocks wherever they land and whenever they occur.

Businesses that are resilient to attack will have a stronger basis on which to develop and flourish. Not least
because less resilient competitors will be relinquish market share.

So how can agencies provide this immunisation? There are four strategies.

1. Start from a more pessimistic place

2. Prescribe short-term pain for long-term gain
3. Subject clients to persistent doses of risk
4. Abandon one-size-fits-all medication

Start from a more pessimistic place

Clients face a range of new and unpredictable challenges. This means agencies must prepare clients for worst-
case scenarios, which means identifying the weaknesses and vulnerabilities of a client's business.

Some clients can see weakness for themselves. In 2006, the iPod accounted for $7.7 billion of Apple's $19
billion revenue. But despite this dominance Steve Jobs could foresee the total annihilation of the iPod. He had
witnessed the launch of a new Nokia phone that offered users six music downloads per device. Jobs knew there
was nothing stopping Nokia from developing a follow-up phone that could offer hundreds of downloads and kill
the iPod in the process.

At the time many thought Steve Jobs was paranoid. But he channelled his pessimism to create the iPhone, and
the iPhone changed the world.

But Steve Jobs is an exception. Most clients cannot see the risks their business faces. They are too close to
their jobs to see hidden frailties and vulnerabilities. In this case, agencies can offer the boardroom the outside
detachment to reveal where weaknesses are hiding. This will undoubtedly cause clients discomfort. But in
exposing frailty, agencies can break clients' businesses down to strengthen them up again.

Practical Steps to Start from a More Pessimistic Place

Use brand valuation, mystery shopping, social media monitoring and other relevant methods to conduct
'threat audits'. Use the outputs of these audits inform a series of 'threat simulation workshops' to plan
responses.
Remove goals and objectives from client briefing documents and replace them with a client's fears, threats
and concerns.
Use Brand Valuation techniques to detect the vulnerability of a brand using simple rules-of-thumb. For
example, if sales decrease by 10% will profits decrease by a proportionately higher amount than they would
rise if sales increase by 10%?
Prescribe short-term pain for long-term gain
Typically, between 70 and 90% of a company's value is related to cash flow that will be accrued in three years'
time or beyondiv. And yet despite the importance of long-term value, many clients remain stubbornly fixated on
short-term results.

Thirty years of IPA Effectiveness data has proved that the most profitable campaigns are those that drive both
incremental volume and the strengthening of marginsv. Since pricing effects are slower to achieve than volume
effects this takes time. As Binet and Field have shown, if a business focuses too much on short-term strategies
(such as price discounts or promotions] it will invariably lose its entitlement to the greater sales volumes, price
margins and profits it could have secured if it had pursued long-term strategies".

Agencies need to remind clients that impatience carries a significant opportunity cost in the form of unrealised
profit. Agencies can immunise their clients from these losses by demonstrating the value of long-term strategies.

Short-termism also biases clients to create new sources of value rather than remove existing problems that
deplete value. The problem with this bias is that it overlooks a path dependency: damage doesn't repair itself
and must be addressed first. Until value-depleting issues are eliminated, any new source of value is unlikely to
fulfil its potential.

For example, Ryanair's biggest 'value depleting' weakness is the perception of its brand. This weakness
prevents Ryanair from attracting new customers. However, instead of tackling its image problem, Ryanair has
tried to increase sales by making its website easier to use. This overlooks the path dependency. Until Ryanair
addresses its perception issue, the improvements to its website will be largely inconsequential.

Practical Steps to Prescribe Short Term Pain for Long Term Gain

Use econometric analysis to demonstrate how a short-term focus will cost a client unrealised profit in the
long-term.
Conduct customer journey analyses to isolate and size the value depleting areas of a client's business.
Once identified, help clients to tackle the biggest weakness first.
Change the philosophy of the agency's planning and creative process: prioritise the elimination of value
depleting weaknesses over the creation of new sources of value.

Subject clients to persistent doses of risk

Brand immunisation doesn't mean boring, risk-averse marketing. In complex systems you need experimentation,
inefficiency and innovation to mitigate your exposure to riskvii. It may seem inefficient today but it makes you
resilient to tomorrow's shocks

To build resilience, many companies have espoused the 70-20-10 model of innovation. In 2011, Coca Cola
announced they were moving to a 70-20-10 model of content creation: 70% of the content should be low risk
marketing, 20% should innovate off what works and 10% should be high risk ideas that will be tomorrow's 70%
or 20%.

The problem with applying the 70-20-10 model is that it is hard to distinguish the boundaries between the three
areas. A simpler and more effective risk-taking strategy is the bimodal strategy as espoused by Nasim Talebviii.
A bimodal strategy operates at the two ends of the risk spectrum: play it very safe in some areas (extreme risk
aversion] and take small risks in others (risk loving]. It avoids the middle of the spectrum, that is, medium-level
risk.

To use an example from finance: if you put 90% of your funds in cash and 10% in very risky shares, you cannot
lose more than 10%, while you will be exposed to the upside of the return from the shares. By contrast,
someone with 100% in so-called 'medium risk' shares will have a much higher exposure to potential loss and
they could potentially lose everything if they miscalculate the exposure to risk they face.

A bimodal strategy remedies the problem that risks of rare events are incomputable and vulnerable to estimation
error. The bimodal strategy has a maximum known loss and no risk of total ruin.

Practical Steps to Subject Clients to Persistent Doses of Risk

Apply a bimodal strategy to agency resourcing. Work with a client to identify the two or three important
briefs of the year. Put your best talent on these briefs to maximise the chance of great work. Meanwhile
resource all other briefs with a business-as-usual team to minimise the chance of bad work.
Apply a bimodal strategy to media planning. Invest 85% of a media budget into media channels that you
know are effective (preferably guided by econometric analysis]. Invest the remaining 15% of the budget into
new and unused channels.

Abandon one-size-fits-all medication

Doctors don't prescribe the same drug for all illnesses. Instead, they diagnose patients on their own terms, with
the acknowledgement that medication is specific and transient. That is, it won't work for everything and it won't
work forever.

Agencies have lost credibility by prescribing panacea treatments.

In the last five years, the marketing industry has espoused the benefits of "engagement marketing", "content
marketing" and "data-led marketing" as the breakthrough solutions that could solve any and all marketing
problems. And yet these have all felt like fads. If agencies are to immunise brands, they must be wary of these
one-size-fits all recommendation.

In a similar fashion, many agencies operate as if there is only one model for how communication works
(predominantly the rational persuasion model]. In The Anatomy of Humbug, Paul Feldwick argues there are as
many as six distinct models. Feldwick does not suggest one model is better than any other, but he does argue
that significant time and cost can be saved if agencies and clients explicitly agree which model they will be using
before work starts.

Finally, in recent years agencies have been making the 'one-size-fits-all' argument at the highest level. Many of
the senior leaders of the big agency groups (WPP, Publicis and Omnicom] have urged clients to make cost and
time savings by replacing a roster of smaller agencies with one full-service agency. This is often referred to as
the 'horizontality' argument and it is risky for clients.

The reason it is risky is because the risk profile of a centralised agency is different from the risk profile of a
roster of agencies. A roster will likely create small doses of volatility, however this volatility is contained at the
smaller agency level. In the centralised model, volatility affects the entire offer, so small delays and errors can
escalate into significant costs and inefficiencies. These costs are likely to be greater than the savings a client
thought it was making by moving to the 'all under one roof model.

The UK government's history of handing a single 'efficiency-saving' contracts to an IT provider for the Armed
Forces recruitment (Capita] and a security service for the London 2012 Olympics (G4S] sets a precedent for the
issues and delays a client can expect from the one-size-fits-all solution. The centralised agency model is likely to
pool risk and scale risk. Agencies should recommend it at their peril.

Practical Steps to Abandon One-Size-Fits-All Medication

Monitor signs that agency employees are selling clients 'faddish' solutions. Re-educate
or punish repeat offenders.
Train agency staff and clients on the different models of communication. Before new
briefs are accepted, agree which model will be used to create and evaluate work.
Abandon conversations with clients about the 'full-service' agency solution.

Conclusion
The boardroom prefers defensive options: options that deliver results whilst protecting the company from risk
and recrimination. Agencies need to align themselves to this pessimistic outlook.

Brand immunisation should not be seen as weak or boring. Indeed, one of the surest ways to beat your
competition is to remain robust while they falter.

Brand immunisation does not require wholesale changes to agency structures or processes: existing
approaches are fit for purpose. The thing that needs to change is how agencies frame their work.

Agencies should stop talking about how they guarantee business success and instead start talking about how
they guarantee the mitigation of failure.

i. Sargut and McGrath, 'Learning to Live with Complexity', Harvard Business Review, 2011
ii. Binet and Field, 'The Long and Short of It', IPA, 2013
iii. Sargut and McGrath, 'Learning to Live with Complexity', Harvard Business Review, 2011
iv. Barton, 'Capitalism for the long term', Harvard Business Review, 2011
v. ibid
vi. Binet and Field, 'The Long and Short of It', IPA, 2013
vii. James, "I Believe in Confronting Complexity", IPA, 2014
viii. Taleb, 'Antifragile', Penguin, 2012
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