- Xavier Hernandez
Why Advertising Sucks
Let's talk about why advertising sucks. Why are so many of our ads cookie cutter, safe projects just to get our clients logo in front of their consumers? We all know it doesn’t work. Effective advertising is bold, creative, and different. It pierces through the clutter and makes a real impact telling a real story.
The reason advertising sucks is money and insecurity. First let's talk about insecurity. Unfortunately most people make decisions based solely on job security. “Will this get me fired” and “will this get me promoted?” are the biggest drivers of decisions. So what does this mean for advertising?
It means most ads suck. Instead of listening to the consultants they just hired (lol), they do the safe boring ad they or their boss wants. Good agencies, with cache, will push back on this. However, most agencies just want the cash and will produce whatever the client wants.
This leads to the second problem, money. Businesses think short term and are risk averse so they put out crap that doesn’t work. However, they don’t think about the opportunity cost of bad advertising. Losing market share, sales, and brand loyalty are harder risks to understand than a risky advertisement. They would rather fall behind clutching the dollars they have, then chase the dollars they don’t have.
Agencies have a similar issue, pushing back on your clients can stress relationships and lead to lost clients. Agency budgets are tight so losing a few clients can be devastating. This leads to the same risk averse incentives of the client.
So what's the solution? We have to realign these incentives to make better advertising. My favorite example of this is Sandwich. Sandwich is a video production company in LA. What makes them unique is their equity based payment model. I believe agencies should adopt this payment system.
With an equity based contract the agency and client are tied together. The client's success is the agency's success. This realigns the clients and agencies incentives. Now clients will be more likely to listen to the consultants they hired and the agency is more likely to push back on unimaginative advertising.
This model has worked wonders for Sandwich, especially in Silicon Valley where tech startups are less likely to have liquid assets to pay a retainer. At the end of the day, advertising is dependent on the client/agency relationship. An equity based model can help align both companies incentives and lead to better advertising.