With years of observation in the marketing and advertising industry, I’ve noticed an alarming trend recently. Continuous price wars and smaller client budgets have led to the devaluation of marketing and advertising efforts. This has caused a stagnant effect on creativity and it will only get worse.
I was reading an article in MediaPost’s Media magazine January-February 2010 issue in which Jay Suhr, Senior Vice President at T3, made a very relevant comment:
“Creative feels undernourished, as well, regardless of medium. It seems that in the recession, 2009 was a year of boring customers into buying our products.”
I cannot agree more with Mr. Suhr’s comment. In the very same article, Bryan Noguchi, Executive Media Director at T3, commented about how commoditized media has become and how clients are becoming infatuated with CPM’s and analytical reports. I must admit, I’m guilty of this as well but will be rectifying that very soon. Media buying has become so much about numbers and not enough about the integrated effect on consumers.
In the turbulent sea of price wars, smaller budgets, thinner margins, and countless of analytical reports we’ve lost sight of a very important element and that’s creativity. Let me regress for a moment and touch on my direction on this topic as an extension of the comments’ by T3’s staff.
Mr. Suhr and Mr. Noguchi made comments on media becoming commoditized as in strategic placement of the creative. I would like to expand on this thought and touch on the fact that the creative itself has been commoditized as well. The question has always been, “As graphic designers, web developers, and creative directors: What is our time and creativity worth?”
Clients keep demanding lower costs on creative. Others cannot understand why a custom developed website that integrates into their overall marketing mix costs so much more than a $399 offer they received in the mail. A lot of knowledge, education, genuine creativity, and experience flow into our projects. The value of that input must be held high. We’re not just pencil pushers; we’re artists in more ways than one.
I received a bachelor’s degree from a private liberal arts university with a double major concentration in business administration and communication along with a minor concentration in communication management. That education came at no small price and to this day I’m still paying my tuition loans. With my years of experience in the professional market and my intentions to shortly pursue my MBA, I must now closely evaluate how much my experience and creativeness is worth; something that all those thinking of becoming low cost providers in the creative industry should think about.
A Real Life Example: My Company
As a small agency, my company has had to deal with extremely low price competitors. For example, those that will charge a meager $40 for a flyer that will be part of an integrated marketing campaign. It’s impossible for us to compete because of the resources we pour into developing the deliverable for a client. We conduct basic research; write up detailed briefs; develop uniformity with other deliverables to increase effectiveness and recognition across the campaign; design several drafts and go through a couple of internal revisions plus those requested by the client; upload proofs in our project management software for collaboration; and throughout the whole process be in close communication with the client. A rate of $40 wouldn’t even cover our time spent on client services.
The level of service and quality being provided by the $40 competitor did not match ours but unfortunately clients are becoming more focused on cost reductions versus uniqueness and creativity. In our market, marketing is no longer being viewed so much as an investment but more as an expense. In 2009 we were faced with a decision; either we reduce our rates by reducing the resources going towards our projects or maintain our rates and face the possibility of losing a good portion of our clients.
At that point, I along with our few employees decided to reduce our rates to remain competitive against the low cost providers. We knew we couldn’t meet the rates of the lowest cost competitors since we’re incorporated, have payroll costs, report revenue and sales tax, and play it by the book. Fast forward to today and now I must question that decision. Yes, we were able to keep those clients but at what cost.
Our margins have been squeezed to the point that our creative has become a commodity. No longer can we dedicate enough time to a campaign that we believe we should be. Additionally, clients are now expecting even further cuts in rates. I walked blindly into a price war and couldn’t escape it quickly enough to avoid the consequences. Our internal growth has stagnated and put downward pressure on our resources. When I started this venture, it was not with the intention of being at where we are today. My mission statement has always been simple, “Less is more: less clients but more involvement and attention per client.” Currently we can’t support our mission statement because of the low margins we’ve been pushed towards. For 2010, they’ll be another important decision we’ll have to make…
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