A panel debated what evolution is needed at December's iMedia Summit.

On December 6th in Scottsdale, Arizona, a panel of new-aged agency folks discussed what makes agencies more efficient for integrated marketing. Doug Weaver, president of the Upstream Group, moderated. Panelists were:

Gay Gaddis, CEO, The Think Tank (T3)
Richard Notarianni, Executive Creative Director, Media, EURO RSCG New York
Fred Rubin, Partner & Director, iDeutsch and directDeutsch

Here is the first third of the transcript, in which the panelists discuss structure and compensation:

Doug Weaver: What we are going to do over the next few minutes here is talk about the concept where advertising agencies go from here. Now to give you guys a little bit of historical context, in the past we have had people like David Verklin and Rob Norman and some of the folks from our own interactive agencies come in and you know talk to us about what interactive shops are going through (see Are Agencies Still Relevant?. So we decided to take a little bit of a different cut at that issue. And we are starting out with a couple of premises in mind. One of those is that there is a third way. There are some great creative ideas coming from agencies that aren’t part of the mainstream in this business. Secondly, that we think there’s a return to strategy. We think that there is a return to the notion of the full-service agency that’s really going to do it all for the customer. And my three guests this morning each have a slightly different take at that. So I am going to introduce them:

On my immediate left, Gay Gaddis. She is the President and Founder of T3, which stands for The Think Tank. Her clients include Dell, Marriott International, JC Penney, MSN. She does all of this from Austin, Texas, with a satellite office in New York City. I am happy to report that T3 is the largest privately held agency that’s wholly owned by a woman in this whole country. You can credit Gay for that. She started in the Richards Group in Dallas and has held a couple of other key positions in business, so we thank her for joining us. (Editor's Note: Gay was just named one of Inc.'s top 10 entrepreneurs of 2004.)

Next in line, Rich Notariani, who has the most interesting title I have heard recently. He is Executive Creative Director for Media at Euro RSCG Worldwide in New York and he is going to talk to us a little bit about what that means. Rich is really a pioneer in the discipline of communications strategy, planning, brand strategy and he positions planning and brand strategy, which really is a competitive advantage to the clients at Euro. A couple of accounts: Volvo, Polaroid, Evian, GSK and several others. I know him from his days at Geer Dubois and DDB and he has been a fixture in the New York advertising business for years. And in fact, he was once named the, one of Advertising Age's business marketing media strategists of the year in the late '90s I believe, right? Yeah he keeps going downhill since then, but …

And finally, Fred Rubin, Partner and Director for iDeutsch. Fred oversees the interactive and direct divisions at Deutsch for such clients as Revlon, Monster, Coors. He’s got 25 years of interactive direct marketing and general advertising business. And under his leadership iDeutsch was named Ad Week’s highly coveted 2002 Interactive Agency of the Year. So we are very happy to have him join us as well. So please give them a round of applause as we get started.

Okay, so what have we heard this morning so far? We have got, you know, we heard a call to arms about really abandoning the TV focus. You know, that (will affect) a lot of media plans. We have heard some great creative ideas about how video is going to be deployed. So clearly we are talking about a time when agencies really need to be nimble. They need to be very broad in their focus. They need to be creative. All of those things. So let’s assume that right now clients want their agencies and buyers to take a media-neutral approach to planning. Talk about how your agency is structured. Give us a little look at the zeitgeist and talk about how your structure really enables you to take that media-neutral orientation. Gay, why don’t you start? 

Gay Gaddis: Our firm has been integrated, if you want to call it that, for seven years. And when the whole idea of interactive marketing hit the screen, it was really something that we were already doing. I have had a great relationship for 14 years with Dell Computer Corporation and they decided they were going to move people online to buy. So we had to get very smart very quickly with that. So because of that, from day one, we were doing direct and as soon as we could, interactive. And we pushed everything under one group of account service people. There is no silo. There is no, you know, the interactive group or the direct group. We are all integrated. All of the planning and everything is done through the entire team coming together. And you know, to us, and because of our compensation, we really don’t care what the outcome is as far as what media that we recommend. It’s really about what gets results. 

Weaver: So it sounds like the account people are kind of a lynch pin in all that, that [it's] the account people sitting on top of all these disciplines, bringing solutions. It’s almost like the account person who has been sort of descended over the last few years is coming back to the fore. Correct?

Gaddis: Right. Well and with our creative team. But the account directors have to really understand all of the disciplines so that they can bring in the right people at the right time. But they are all around the table at once, so there’s no division in our company between any medium. 

Weaver: Okay. Rich, let’s talk about the structure of Euro and also your role there and why you were brought in to help them tie all of this stuff together.

Rich Notariani: Well at Euro the disciplines -- advertising, direct, digital -- reside under a single P&L. And by residing under a single P&L, it functionally changes how you work. In my previous life, I remember recommending a client do direct marketing instead of a tactical ad buy, and was later reprimanded with, "If you do that again, you won’t work here. You just gave away revenue" -- despite the fact that the direct marketing company was a sister shop. So what we have managed to do is create a single P&L. Within that role though, we find that -- and again, the account person ascends -- but also the creative and the strategic planner have to change how they work. They have to work in a new idiom. They have to become much more facile in channels -- not it’s a TV buy, let me work backwards from there. My role is one that I am a media guy who sits in the creative department, which means all of the creative guys keep calling me for baseball tickets! But in that role, what I find myself doing is working alongside creative people and not telling them why they can’t do an idea. As a media planner I think a creative guy would come in and say I am going to do this. And it would be absurd and you would look at him and say you can’t do that. My role, in many ways now is, in that space, take that idea and say this is how you can do that idea. This is how you can bring an idea to life. And it changes your whole working dynamic. And let me bring in the right people. Let me bring in the right resources. 

Weaver:  Outstanding. Fred, now you are sitting over both directDeutsch and iDeutsch -- talk about the integration of disciplines into the shop and sort of how you guys approach customer business holistically. 

Fred Rubin: Well I think right from the get go, just like the other panelists here -- one thing you have heard from the prior two and me as well is that there’s one profit center in Deutsch, iDeutsch and directDeutsch. While we have the skill sets of stand alone agencies, it’s very critical that we take the money out of the equation when we deal with our clients. And, you know, you can talk the talk all you want, but until you take the money off the table, it’s impossible to walk the walk. And I have been an interactive guy at a general agency, and direct guy, so I speak from experience. I think then you are left with people and process. And I think at the end of the day, a lot of the people thing is really literally proximity. I mean where people sit. And we are interspersed at the agency. You know, all of the departments are pushed together. That really facilitates, you know, the sharing of ideas. And you develop almost a ground swell of integrated thinking just through that physical location. And then a discipline process that, you know, everybody kind of comes with their own specific skill set, so whether it’s media people or analytic people or planning people, we all sit at the table together.

We all kind of access the business situation together and come up with, you know, a diagnosis of the problem. Here’s the solution. Consumer insight, consumer behavior is all agreed to by that team before we set off on a path. 

Weaver: So, if the big trend in advertising, over the last decade, has been arbitrage and spinning out a lot of vertical specialties, and really breaking apart the advertising business into separate disciplines, it sounds like all three of your shops are kind of going the other way. That you’re, both in terms of the finances, how you, you know, how you get paid, where the P&L is, right down to where people sit and how they interact with each other, yeah that seems like you are pushing against that trend? Fair enough? 

Rubin: Yeah absolutely. I mean, you know, in some of the businesses that we work on, where’s there’s automotive, pharmaceuticals, you try to take the Internet out of the equation and those consumer decision processes -- it’s like separating the wet from the water. I mean it just doesn’t work, so …

Weaver: That’s a great metaphor. I am going to use that. You know, actually, let’s go ahead and follow this line. I was going to do this a little bit later on in the panel, but let’s get specific and talk about compensation. You know, how do you take the money off the table? I mean, how do you, you know, this is the first big, sort of "how" question a lot of the folks in the agency community would be interested in. How do you get paid? What is the optimal compensation model for a client who really wants media-neutral, fully integrated thinking about their business problems? 

Rubin: I think probably we have 40 years, if not 50 years of compensation in advertising based on, "I give you all of the ideas for free, you pay me on execution." And we have lived through that. Basically in a consultancy, you are paying for the ideas -- a huge premium. And execution may or may not even be on the table. Our world started as we’ll buy this medium and by the way, we’ll throw an ad in, which was, I think, some of the origins as contemporary agencies. I think a lot of ways the agency model has changed anyway with the unbundling of media and even if you have media internally, the payment for that media being done differently -- no longer a straight commission. The structures we’ve developed up front with clients have been in the realm of compensation for time and staff. Compensation for service. Obviously with aspects of results and other things and incentives built around that. But in fact, almost no compensation for procurement buying of media. In that model, there's in the back of my mind, gee I'll get you to buy another couple of weeks advertising. 

Weaver: Yeah. Gay, how do they compensate you for ideas and business solutions? 

Gaddis: Well, we decided to change our name to T3, The Think Tank. It was really to say we want to be paid to do great things and to get results. And so years ago, we took all of the commissions and all of the mark-ups off the table. And it was a purely a fee-for-service business. But also, during this time, we have worked with several of our clients to be bonus rewarded. There’s an upside when we deliver specific results. And because we are so tied to the metrics, and the analytic side of what our clients are doing now, and we are involved in the strategy development of the goal and how we are going to get there, I am not afraid to take a lower, let’s say, hourly rate, knowing that there’s going to be an upside. And you know, certainly we want to cover our bases, but we are really willing to take that risk with the client because we are so confident that because we have our hands on all of the pieces, that we can prove and measure results. Of course interactive makes that just, you know, wonderful. 

Weaver: And much easier?

Gaddis: Oh yeah.

Tomorrow: Creativity, client relationships and taking risks.