The shape of things
It’s easy to see that the marketing business has changed dramatically in recent decades. Just watch a few episodes of the award-laden TV show, Mad Men.
With its sleek style and seductive storylines (and chisel-jawed, bed-hopping, whisky-swilling hero, Don Draper), you may find yourself pining for a bit of ‘Brylcreem bounce’ and vintage frock flounce. Yet, from the dawn of the industrial era to the early 1990s, advertising wasn’t really a creative business. It was a commission business.
This fictional but historically accurate example may clarify. Sterling Cooper, the ad agency in Mad Men, works on commission. They get paid 15% of the cost of any media advertising they place. (So, if they book a $1 million TV campaign for a client, they get paid $150,000 – not by the client, but by the TV company.)
So, remember the little fat guy with glasses who runs the media department? Well, he delivers the income that pays for all the agency’s creative services, not Don the creative genius. Until the early 1990s, almost all agencies were commission agencies.
It was a weird system, which had a number of odd side-effects. Firstly, there wasn’t a direct connection between the hours worked and what the agency earned: the idea you came up with in the bath or in the pub could be worth a lot of money.
Secondly, the agency didn’t get paid unless the campaign ran – or get repeat business unless the advertising worked. So, despite appearances to the contrary, agencies needed smart, effective processes to make good decisions happen fast.
And, finally, the commission system allowed clients to see agency services as free. Senior clients could consult the agency on strategic issues – and outsource tedious marketing admin to the agency – without apparent cost. So, agencies used to be both well-connected and well-staffed.