Why ad agencies don't advertise: their eyes on prizes, they know the ROI isn't always there

Have you ever wondered why advertising agencies don't advertise themselves?

The answer is clear: They really don't believe advertising works. If they did, they would be doing what they advise you to do: spend like crazy on the assumption that the best way to drum up new business is to advertise, advertise, advertise.

But, in fact, advertising doesn't always do what it is supposed to do, and, equally important, there is rarely a measurable correlation between the money spent and the results it generates. Return on investment rarely even enters the discussion.

Millions or billions of dollars go down the drain with a mind-set that allows for the willing suspension of disbelief--that somehow those commercials will promote sales of your products and services. But hope doesn't justify your approval of any other corporate expenditure, so why should it with advertising?

It may be that you think advertising is creative and you're not the ideal person to nix the creative process. After all, advertising is a permanent fixture on the P & L statement. It's there because it always has been there, not subject to reevaluation of whether it's the best way to spend your dollars.

The ad guys will tell you they are your business partners. They say they are in this game to drive your company's revenues. But, in most cases, that's nonsense. The great agency pioneers like David Ogilvy did function as business partners, but those days are long gone. Today, most agencies are creative shops that focus not on business results but rather on the creative awards that are the Oscars of their industry.

Is there anything wrong with an advertising agency that seeks to be honored by its peers for its creative work? Absolutely.

You're not hiring agencies to be creative. You are hiring them to be catalysts for sales. Whether that takes creativity doesn't--or shouldn't--mean a whit to you, but it's everything to them.

Your company and its advertising agency are like ships passing in the night. The agency is after awards that feather its cap and command headlines in Advertising Age and the other propaganda machines of the agency business. You are in the pursuit of the only goal that truly matters in a corporate entity: profits.

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When you walk down the halls of a major agency, some beaming account executive is bound to point to a near-teenager in jeans proclaiming breathlessly that this is "our new star." The exec will gush about the star's role in a buzzy new commercial that wound up on some dumb list of Top 10 Super Bowl ads. The agency suits will never identify a new talent because he or she achieved what ads are supposed to do: sell more Checrios or Goodyear tires or Crest toothpaste. What's cool about that?

Look, I am the CEO of a marketing firm. I am not against advertising. We recommend advertising to some of our clients. We advertise ourselves. Sometimes it works; sometimes it doesn't. But in all cases we are less interested in creativity than in measuring a link between money spent and results. We don't always hit our target. But we keep testing and measuring and seeking to find the code breaker that will drive sales. Creativity? The heck with it.

The most successful company in the world, Wal-Mart, produces some of the least creative advertising on the planet. In many cases, Wal-Mart's ads--a cartoon character slashing price tags--look like a school project. Agencies turn up their noses and call that amateurish. Amateurish? Wal-Mart identified a single theme--low-price leader--and has stayed true to that year after year. Its advertising and business strategy are aligned.

So what am I suggesting? A little reverse engineering. Bring in your chief marketing officer and your ad agency. Ask them point blank if they really understand your business strategy. See if what they say is more than superficial gobbledygook. Ask if what they're doing really works, and force them to show you the numbers that demonstrate it. In other words, when your creative team starts to talk about awards and buzz and photo shoots and celebrity endorsements, come back to them with a single demand: Show me the money.

Mark Stevens is CEO of MSCO in Purchase, N.Y., and author of Your Marketing Sucks.