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Decideware’s Agency Management Big 10 - July 2017

Below are the July articles of interest from key trade publications, with excerpts highlighting key take-aways. This month's selection includes articles on the failing share prices of WPP, the state of advertising labor rates, as well as where we stand today- one year after the ANA's report on media transparency.  We hope that you find this month's selections informative and valuable.

1. Are you Hired for your Head or your Hands?

Would you rather be hired for your ability to execute, or your ability to solve? Which is more valuable?

While both types of work are valuable and necessary (one would be quite useless without the other), they are just the same different skill sets that have different levels of perceived value. In a marketing context, one is a growth driver; the other a service provider.

2. Falling Share Price Hits WPP - Will Mooted Mega-Mergers Make a Reappearance?

WPP’s market capitalisation has dropped below £20bn following a downgrade to “underperform” from broker Exane BNP Paribas which reckons it and other agency-based holding companies will lose out to other “nimbler” providers better able to offer automation and ecommerce. Consultants, independent trading desks and big digital owners like Amazon, Facebook and Google in other words.

3. Analysts Downgrade Entire Ad Sector, Cite Media Fragmentation

Days after one influential financial institution issued a “double downgrade” of WPP, another has downgraded the valuations of the entire publicly traded ad sector it covers, including Interpublic, Omnicom, Publicis and WPP.

Wieser characterized current market conditions as a “difficult time for the agency holding companies.

4. Pritchard: Still No Wiggle Room in P&G's Digital Ultimatum

In January, Procter & Gamble Co. Chief Brand Officer Marc Pritchard laid down the gauntlet for digital media: Get your outside audience verification plans accredited by the Media Rating Council this year or lose your P&G budgets.

In a recent interview with Advertising Age, Pritchard said he sees progress, but he's not budging -- at least not yet. That could affect the company's business even with Amazon, which is both a major P&G customer and media vendor. And the real work, he said, starts when digital measurement transparency is in place and cross-media analysis starts in earnest.

5. ANA Report on Media Transparency: One Year Later

On the one-year anniversary of the Association of National Advertisers' landmark study and subsequent recommendations on media transparency, it's time to review the issues in this ongoing debate and see where we stand today.

The issues raised in the subsequent transparency debate are complex, and if the allegations against the agencies are true, the behavior is reminiscent of past high-profile financial scandals.

6. Unilever Cuts Agency Fees and Production Costs, but a Media Surge Looms

Unilever's 3% organic sales growth was slightly below analyst projections for the second quarter, but the company handily beat expectations on earnings and margin thanks to lower agency and production costs. Still, the world's second biggest ad spender plans to step up new-product launches and media in the second half.

7. Advertising Labor Rates Remain Stable Despite Ongoing Concerns Among Agencies

Billing rates by agencies to clients has been an ongoing concern in the ad industry, with agencies obliged to cutback on staff and resources when clients reduce agency compensation or scope of work.

Despite concerns within the industry, the ad agency trade association 4A's, released an updated hourly labor billing rate information report today citing that 2016 labor billing rates in the advertising industry are generally higher than those in 2014.

8. Compensation Divide: Agencies Prefer Fees, Clients Like Incentives

Agencies and their clients are far apart in terms of what they deem to be the most fair method of compensation, according to findings of a survey of advertiser and agency execs conducted recently by Advertiser Perceptions for MediaPost.

While labor-based fees are the No. 1 method preferred by agencies (45%), incentive methods were the top choice among marketers (40%).

9. P&G Slashes Digital Ads by $140M Over Brand Safety. Sales Rise Anyway

Procter & Gamble's concerns about where its ads were showing up online contributed to a $140 million cutback in the company's digital ad spending last quarter, the company said Thursday. That helped the world's biggest advertiser beat earnings expectations. Perhaps even more noteworthy, however, organic sales outperformed both analyst forecasts and key rivals at 2% growth despite the drop in ad support.

10. Failure to Build Brands is Hurting the Economy, GroupM's Irwin Gotlieb Says

A "massive deficit" of brand building is dragging down the economy, according to Irwin Gotlieb, global chairman of GroupM.

When the history books get written on the last 15 years, Irwin told me in a video interview for his induction into the Advertising Hall of Fame, "I think they will say that the lack of brand building, the lack of effort on long-term marketing, destroyed and damaged more brand value than anyone can add up."