I have spent the last week in Ad Agencies in Kenya, and I’m doing the same thing in Uganda this week. There’s a lot to talk about. Analogue versus digital; strategy plays creative. Account service skill levels. Channel planning. Agency profitability.
But an unexpected question has emerged and run through many of these discussions. Particularly from those who have jumped through hoops to ‘qualify’ to join international advertising networks and that question is: "Has it all been worth it?"
Let me back up a bit and give you the context. Since the first Ad Agencies appeared on this continent in the 1950’s, the international network has always been the Holy Grail of our homegrown entrepreneurs. No matter that they have risen to prominence in their home markets. Pioneered new skills. Taken foundation clients with them along the way. Taken hard knocks and received kudos. Nothing has gilded their lily more than being affiliated to, or invested in, by an overseas Ad Agency group.
In Nigeria, the most successful local agency is more often known by its international network name – Grey. Ironic, because it has always been as colourful a collection of individuals as you’d hope to meet. Their signature item of dress is the bow tie (for the men at any rate) and they are proud to wear it, long after they have left the agency’s ranks. But the irony doesn’t end there. Because the success of that agency has had little to do with it being grey. Rather, Grey has benefited from local savvy and chutzpah. But guess who pays whom for the privilege? Yes, you guessed right.
It stands to reason that international Ad Agency networks need to be in many countries to be ‘international.’ But they don’t do it out of altruism. They have big international clients who tell them "we’re going into Congo, and we need you to find us an agency there." Actually I’m not sure how many times an executive from Battle Creek, Michigan has obligated an Adman to service him in Kigoma but, you get the idea.
So Bert, or Ed, or Johannes or Jean Paul has to clamber into a jet and fly out to scout local talent and understand this: with Africa in the ascendant today, they need you more than you need them.
But of course, discussions are never shaped like that. They don’t have to be, because local Admen and women regard a visit from Havas or Dentsu or Mother as The Second Coming and all too often they forget to examine the value equation.
Two years ago I had a call from a very senior French Ad executive. He wanted to find a strong local ad agency in East Africa to represent his brand.
I wasn’t interested myself, but used the opportunity to probe him about the value a local Ad Agency might obtain from such a relationship. First I asked him what such a relationship would cost, and his opening gambit was an annual fee equivalent to five percent of the local agency’s revenue. You may think that doesn’t sound much. But a moderately well-run agency’s revenue is 25 per cent of its billing. And on whose revenue would be it be levied? The local Ad Agency’s revenue. All of it.
Which brought me to my second question. "What business will you be bringing to the partnership?" This produced a very familiar style of response in which a list of a) exotic b) large and c) brand-leading clients is reeled off with a certain degree of smugness. In this case there were three – a telecoms company, a credit card and a petroleum business. Quite enough to get the uninitiated local Adman very excited indeed.
Fortunately, I knew that the next question to ask has to be: "What will they bill, and on what terms would one do business with them?" This is a sucker punch because, as predicted, the man from Paris had no idea of the East African billing potential of these clients. Moreover he would be reluctant to tell you the terms until it was too late. Typically international referred business commands a margin of between four per cent and 12 per cent of billing – barely enough to print the stationery you will expend running it.
The hidden nightmare about working on referred international clients is that the local agency will have to report to a network bureaucrat in Brussels or Detroit, every time it places a 2cm by 3cm classified ad.
By this stage in the call the man from Paris could sense my negativity, so he threw in a flourish of last gambits. The network had amazing training (mmmm, interesting but nowhere near as relevant as it was 50 years ago). The network might want to invest cash (unlikely) and perhaps the least motivating of all "of course, we have a fantastic name."
Which brings me back to where we started. If you are a thrusting African Ad Agency well-respected in your local market, which name really matters? Would you rather continue to build your own brand, or does it make sense to change your name to Flim, Flam & Fingelstein?
You be the judge.
Chris Harrison has 30 years experience of marketing and advertising most of them spent in Africa. He leads the African operations of The Brand Inside, an international company that helps organisations to deliver their brands and strategies through their people. www.thebrandinside.com
Join Chris this and other discussions about business, brands and behaviour by liking The Brand Inside Africa on Facebook - today!