Ad agencies have lost influence, says Rory Sutherland, vice chairman – Ogilvy UK

Published: June 14, 2019 12:16:00 AM

For every problem that can be solved with a media budget, there are thousands that can be solved psychologically, but nobody with a psychological toolkit has been allowed within a hundred yards of the problem, said Rory Sutherland, Vice Chairman, Ogilvy UK.

Rory Sutherland, Vice Chairman, Ogilvy UKRory Sutherland, Vice Chairman, Ogilvy UK

By Venkata Susmita Biswas 

Rory Sutherland, founder of the behavioural science discipline at Ogilvy UK, is an unabashed dissenter of rational thinking. On the sidelines of Zee Melt 2019, he spoke to Venkata Susmita Biswas about reviving the creative business, application of behavioural science in advertising, and the inefficiency of social media. Edited excerpts:

In what way is the newly restructured Ogilvy primed to compete with consultancies and tech giants?
The restructuring is very valuable, because clients now come to us with no preconception of the means by which their business problem may be solved. It is a very liberating thought to not define ourselves by what we do. One of the mistakes we made when we were looking at client integration was to assume that everybody uses everything, more or less simultaneously. I sit with Ogilvy Consulting in London, which is a psychologically led consulting division. I see behavioural science as practised by us in London soon being adopted by Ogilvy Mumbai, New York, Paris, and others.

We have clients coming to the consulting division first and, in fact, these are clients who can never be significant advertisers. We talk to them in the early stages of their business and offer solutions that are not necessarily advertising-led. We also have independent clients, many of whom would never need the entire agency. What we are doing is not new, but the reinvention of what good marketers used to do anyway.

In your book Alchemy, you bat for silly doubts and illogical ideas. Can someone who has to worry about the agency’s P&L indulge in such alchemy?
The problem is that the advertising business has acquired a dangerous tendency to believe that commercial activity can be only represented on a spreadsheet. I think it is a very dangerous assumption, but a very successful one because if you behave that way, you will tend to get promoted and won’t get fired. One of the observations I make in the book is that it is easier to get fired for being irrational than for being unimaginative. That creates a very strong bias in business and in government decision-making towards doing something boring and conventionally logical, rather than doing something oblique and perhaps counterintuitive.

To be honest, I am happy to offer these services; obviously my bosses aren’t. But I would be offering these services as a loss leader, because it allows us to talk to people at a decisive moment early in the gestation of a brand when we can be of most value.

Are consultancies doing a better job than advertising agencies today?
They are doing a much better job; whether they are doing a good job in the sense of creating value commensurate with the cost is a very different question. They have been patently more successful wiggling their way into the marketing and media buying departments, where they have business conversations. When agencies were working on a commission, it did not hurt the client to get the agency involved early, because it did not cost extra. But when we are paid on the hour, we learn too late of the problem or the ideas under consideration.

So, are ad agencies late in realising the threat these companies pose?
Agencies have lost influence. The creative agency business completely failed to notice that it was no longer paid on commission, and continued pursuing clients with media budgets, trying to solve only those problems where advertising was the dominant part of the solution.

My contention is that we ought to do a Columbus and discover new lands. Because for every problem that can be solved with a media budget, there are thousands that can be solved psychologically, but nobody with a psychological toolkit has been allowed within a hundred yards of the problem.

What role do tech giants Google and Facebook have in the advertising ecosystem?
Google and Facebook have made too much noise about their obsession with personalisation and data, and too little noise about having a great ad to display to someone in the first place. The relative emphasis placed on targeting versus creative and content optimisation is out of whack. It has served their purpose very well to attract the attention of clients to areas of activity where they enjoy a kind of bottleneck monopoly and a comparative advantage, and distract clients from the creative and content generation area where gains may be found but Google and Facebook aren’t needed as much. Weirdly, agencies have played along with this charade and made the situation worse.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.