The Management of Advertising Agencies

QUANTITATIVE MANAGEMENT TECHNIQUES
FOR ADVERTISING AGENCIES



Background

Advertising Agency Organizations woefully neglect Quantitative Management Methods (QMM - - defined as using quantitative measures to make organizational and management decisions). Historically this has always been so. Agency Heads point to the creative and many times abstract nature of what they do – and the creative talent they manage; as well as and subjective outcomes as the reason that the management function is relegated to program planning, budgeting and cost-accounting instead of quantitative management methods as used in other business models. Quantitative Management Methods use finite measures to determine plans and to measure outcomes, and to make quantitative management decisions. Comparative analysis and assessment between programs and other competitive organizations is non-existent because of claims of varied organization purposes and historical precedence – unlike most business organizations which use comparative analysis as its means for strategic planning and strategic outcomes management. No one argues with Advertising Agencies about the creative disciplines, knowledge and creative products they impart, but instead with the efficient delivery of and the quantifiable outcomes they purportedly yield.

Advertising Agencies that have clearly defined goals, objectives, and mission that are communicated and known by all employees operate better than those that do not. Agencies that use Management By Objectives to manage and assess employees operate better than agencies that do not.

Business relies on Quantitative Management Methods for its decision-making processes. The best known is Management By Objectives (MBO). MBO was first outlined in Peter Drucker’s 1954 management book ‘The Practice of Management.’ MBO is the systematic and organized approach that allows management to focus on achievable goals and to obtain the best possible results from available resources. The aim is to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees identify their objectives, time lines for completion, and projected outcomes: the evaluation then focuses on the accomplishment of planned outcomes and a comparative analysis of this year’s outcomes versus last years.

MBO then is used by organizations as a management system to identify desired outcomes (Objectives) designed to meet organizational mission through planning; using management methods and techniques (Goals) to accomplish Objectives that realize Mission. The educational outcomes are then measured based upon their successful accomplishment and compared to other such organizations (strategic) and/or last year’s outcomes versus this years. Mission is the organization’s primary purpose of being.

Managers mindful of organizational mission identify operational Objectives. Objectives are long-term operational concepts cast to accomplish mission. Goals are then shorter- term operational concepts devised to accomplish objectives.

Setting Objectives

Using MBO systems managers write objectives for each level of the organization where individuals are given specific aims and targets. People need to know what the organization is trying to achieve and what their part is to meet those aims, and how, as individuals, they are expected to contribute.

In organizations such as ours where the programs and methods have been fully considered it is relatively easy to construct organizational objectives, and then team objectives. Goals are then devised to accomplish objectives. This process provides for organizational focus and direction – where each member of the organization understands the organization’s mission, their unit’s objectives, and their individual purpose in accomplishing objectives and organizational mission.


Written objectives, and mission should be concise and precise. And their numbers should be kept small. For MBO to be effective each individual manager must understand specific objectives of their individual job and how those objectives fit in with the overall functional objectives set by the Agency President. Each subordinate administrator should be directed and controlled by the objectives of performance rather than by his boss. The managers of the various units or sub-units, or sections of an organization should not only know the objectives of their unit but should also actively participate in setting these objectives and take responsibility for accomplishing them.

The quantitative review mechanisms then enables leaders to measure the performance of their managers, especially in key results areas: creative outcomes; innovation; human organization; financial resources; physical resources; productivity; social responsibility; and profit/service requirements. Quantitative review is done simply by having each manager/administrator identifying and stating their organizational objectives, goals, resources, and time-lines. These then are evaluated based upon there accomplishment.

Based upon these quantitative measures of mission, objectives, and goals – and how well they have been accomplished, quantitative management methods can be employed in decision-making. Administrators/managers performance is based upon their ability to accomplish their objectives/goals to achieve mission.

MBO is perfect for creative organizations. MBO builds management and leadership skills by encouraging creativity, tacit knowledge and initiative.

In the present case then (Advertising Agencies) the mission statement in concise terms is:
To maintain excellence and leadership in Marketing Communication: Advertising, Promotion, Public Relations – as directed by client’s mission and stated objectives.

Or the mission statement can be more client driven. Generally it is better to have concise broader mission statements, and set more narrowly focused outcomes in the organizational objectives. For example:

Our Mission is to become the number one billing agency in our market area.

This is an example of a client driven mission statement. However, it could more easily be stated as an objective of the organization, and not its mission statement.

Describing the mission in terms of the expertise or services you provide is a better mission statement. For example:

To maintain excellence and leadership in Marketing Communication: Advertising, Promotion, Public Relations – as directed by client’s mission and stated objectives.

This mission statement clearly states what the agency does, and concludes with the inclusion of the Client(s) it serves. The mission statement without – ‘as directed by client’s mission and stated objective‘ is effective and the client concern could easily become an objective.

To achieve mission objectives are determined. There are three types of objectives: Routine Objectives; Innovation Objectives; Improvement Objectives. Objectives must be: focused on a result, not an activity. Goals, focus on activities designed to accomplish objectives. Objectives must be consistent, specific, measurable, related to time, and attainable.

Routine Objectives:
These objectives are devised to maintain operations: they are functional, what the agency does routinely such as details about client work, or how the ongoing agency functions are defined.

Innovation Objectives;
These objectives are devised to maintain or improve operations, departments, and the overall agency. Designed to keep the agency state-of-the-art, these are objectives that define continual innovation methods and techniques with methods that identify and then adopt innovative initiatives that keep the agency current and informed.

Improvement Objectives
These objectives are solicited through CRM methods: Customer Relationship Management, where continued feedback from clients and potential clients are used to improve agency operations. CRM also includes employee comments and criticisms.

All the individuals within the organization are assigned a specific set of goals and objectives that they are asked to reach during a normal operating period. These objectives are mutually set and agreed upon by individuals and their managers to attain the organization’s mission.
All objectives, goals, and the organizational mission itself,
are based upon measurable outcomes.

Once objectives are determined and set, then goals are created to achieve these objectives. Goals are more immediate or timed with finite dates for when they are to be accomplished. Goals are devised to achieve objectives.



Six MBO Stages

1. Definition of organizational objectives at the agency board of directors/senior management level. (Devised to achieve agency mission).
2. Analyze management tasks and devise formal job specifications, desired outcomes, which allocate responsibilities and decisions to individual managers.
3. Set performance standards.
4. Agree and set specific objectives. Devise goals to accomplish objectives.
5. Align individual targets with agency objectives.
6. Establish a management information system to monitor achievements against objectives.


Eight Key Areas where Managers Must Pursue Clear Objectives

Marketing
Managers must be mindful of the Agency they operate and that its functions are current and are in demand by clients that they are aligned with – and with the industry (s) which they purport to represent. Agencies should have an identifiable strategic difference and brand promise that they can easily communicate with clients and potential clients.

Each manager must ensure that their department is current to industry standards and has suitable industry endorsements and that it is achieving its stated objectives. This capabilities information is presented to clients as a capabilities statement.

Marketing budgets must be in place for business development marketing.

Innovation
Strategic Marketing Programs, creative methods and techniques, must all be cutting edge and state of the art. All personnel should be encouraged to explore innovative methods and techniques to enhance delivery and outcomes.

Human Resources/Organization
Human Resources and Organization should be based on a realistic employee-projects ratio.

Organizational systems should be focused on facilitating the strategic marketing, creative concepting, production and planning functions of the organization’s mission statement.

Financial Resources
Financial Resources must be in place to execute creative programs and functions based upon stated business and client outcomes.

Physical Resources
Physical facilities should compliment the agency and facilitate the creative processes as defined in the mission statement.

Productivity
Managers set productivity standards, evaluations, and methods/techniques to accomplish objectives that satisfy mission. In creative organizations, creativity is a difficult concept to assess and is very subjective. As such, it is best that skilled creative practitioners who have done creative work themselves make subjective assessments. Ultimately it is the agency’s ability to develop creative marketing solutions that are strategic and develop quantifiable changes in the client’s business is closely tied to the agency’s ability to maintain client business and grow new business.

Social Responsibility
Is two-fold. First to its business constituents, clients and to the industry; and, second to the broader community and country. The agency’s management and its employees determine how this social responsibility is defined and executed.

Profit Requirements
Profit requirements imply a desired surplus generated from the administrative operation of the agency. In profit organizations end-of-year surplus is used for bonuses or moved forward to next year’s budget or into an investment fund intended to ultimately make the organization self-sufficient.

Profit is a business concept. Outcome is a business concept where customers are satisfied and that their objectives were met, and the desirable outcome for the agency is continued representation and a profit from the work they have executed. Both represent a positive progression of the organization’s objectives and goals in meeting its stated organizational mission.

In business, budget cuts result in a corresponding cut across personnel; outcomes; innovation; human organization; financial resources; physical resources; productivity; social responsibility; research; profit/service requirements – and loss in the resulting end product or service which the organization’s mission dictates: it produces less. Logically, if an agency receives a 10% budget reduction – it should in turn reduce its organization to correspond with the budgetary shortfall. To do otherwise is to demonstrate managerial incompetence.

Management of creative people is sometimes equated with herding cats, each having a mind of its own. Creative people are no different than anyone else who works for an employer. They have agreed upon hours, job responsibilities, and defined rules and regulations that they are expected to follow to allow the agency to function effectively.

Ideally, each position title is defined as to functions and responsibilities. With clearly defined expectations and identifiable goals and objectives, creative employees can be managed with quarterly, semi-annual, or annual reviews. The review serves as a managerial tool to adjust behavior or to increase productivity. Its success as a management tool is closely tied to the ability of the manager to write and communicate clear goals and objectives, and then to use them in reviews to adjust behavior or increase productivity.

The same criteria are then used to assess departments, and ultimately the entire Agency Organization.

©2009 Daryl Orris - http://orris-speaks.blogspot.com/ All Rights Reserved.

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