Michael Farmer, Author and Chairman and CEO of Farmer & Company, on the Past, Present and Future of the Agency Model

Michael, thanks for joining me this afternoon. Well, thanks for having me here. It's a great pleasure. I know you in the context of your very first book, 2017, Madison Avenue Manslaughter. A friend of mine actually brought you to Toronto, so saw you speak, had the pleasure of having lunch with you and read that book as an advertising, uh advertising agency owner at the time and was transfixed. I highly recommend it. Followed up with your next book, Madison Avenue Makeover 2023. I know you've got another one in the works. I want to start way back with you for a second because I I tend to develop my opinions very, very quickly based on not a lot of data. You came to your first book by way of a long career before that book. So maybe start with where did you start before we get into this phase of you writing about the advertising world? Give us uh like where was a young Michael Farmer kicking off his career?

Well, I don't know how young I was there, uh, Neil, but I'll I'll tell you this. I had been, first of all, uh, before I got involved with advertising, I was at Boston Consulting Group and Bain and Company. And I did that, you know, for the better part of 20 years or so in Boston and Brazil in Europe. You know, I ran three offices for Bain in Europe. And I was used to dealing with, you know, walking into corporations uh where we were going to have a relationship with the CEO, knowing nothing about the industry, uh, trying to understand their view of what their problems were, and then starting to get data, you know, so that we could be informed. Because, you know, the truth is consultants know how to solve problems, but they don't know the industries that they're working in unless they've done it for a long time. So, you know, I did that for the better part of 20 years. Uh, I had left Bain in 1990 and started my own firm, Farmer Co., in London, which is where I was living at the time. And uh, two years after we started, I got a ring from Ogil v UK saying, you know, we need a strategy consultant. Uh, we just got bought by WPP. We're not making our numbers. Martin Sorrel isn't very happy. We don't want an agency expert. We good thing, because I knew nothing about that world. But I said, so it was Mike Walsh, terrific guy. And I said, Look, Mike, um, just so you understand, you know, I never know anything about a business when I go into it, but I know what kind of data I need. And uh I know in your case, I'm gonna need to know, you know, for each of your clients over the last five years, how much work are you doing? You know, and what kind of work is it? How many people does it take, at what cost, and how much do you get paid for it? I said if we put those things together for the past five years, we're gonna see that something has changed.

And and I'm gonna pause in this very moment and ask, did that seem like uh like a uh a big ask? That sounds to me like the kind of thing that you would ask of most organizations. And sure they might not have the cleanest data, but that would be stuff that they could find. Like you didn't think when you were asking this, hey, this is gonna be a huge lift, did you? Oh, no, no.

This is sort of warning, uh, we're gonna be bugging your people for data that are they're never in a they're never in a spreadsheet. You know, you probably have to go to six different people, you know, or or maybe go to each clienthead. I don't know what we're gonna have to do, but you know, how much work are you doing, how much you get paid, and you know, what kind of resources does it take? That's we always say that to clients. We always want a five-year position. On top of it, you might start to ask for customer satisfaction data and you know or stuff, turnover or something. All of that good stuff. But yeah, let's face it, if you're a consultant, you cannot just listen to your client telling you what their problem is. You need an independent point of view. But to clarify for him, I said, Mike, uh, just between you and me, I'm gonna treat you like you're a factory. You make ads. Yeah, I know how to do factory analyses. And he said, Oh, wow, that sounds really interesting. Just don't use the word factory around here. Okay, so well, listen, uh, Neil, to make a long story short and compress 30, 35 years of history now. Uh, they did not have any information on the work they did for each client. I mean, in any reasonable form.

Yeah.

Uh, that has not changed in 30 years for any agency I've worked with. And, you know, by this time, I think I've counted up that I've done about 1,700 scopes of work, you know, that I've looked at over the last 30 years with my people. And we've had to reconstruct them every single time because creative agencies just don't keep the data that way. They they might say, well, we're doing five campaigns. Yeah, but how many deliverables? How many actual ads? And the funny thing is, uh, Ogilvie then was doing about 360 ads, if memory serves me right. And they had 50 people. So, you know, the average creative, I'm talking about 50 creatives, the average creative was doing about seven ads a year. Now, we fast forward to uh close to today. I did another Ogilvy office that had about 50 creatives, so they were doing 15,000 deliverables. Yeah. Because of all the stuff that gets done for digital and social.

Yeah, all the derivative work. And it sounds almost romantic to think that back in the days, you know, you do seven ads.

Like that's and David Ogilvie complained in his book in uh 1983, Ogilvy on Advertising. He said the average creative only gets three ads a year on air or in print. And he thought that was really terribly uh low productivity, that they had way too much time. Well, today they're cranking out one a day. Yeah, and who's looking at it? Probably nobody really, except the client. Anyway, but I just wanted to say here that um since everybody when I got started was starting to be paid on man hours, that was true in the UK, just starting then. That what they didn't know was what is the relationship between man hours and the work that we're doing. And therefore, since man hours determine fees, actually, nobody could say anything about what is the relationship between the work we're doing and what we're being paid. Now, to me, that struck me as crazy. Like, you know, if you're running a business, you you need to have a rational way of charging instead of just kind of guessing at man hours and hoping that you hit it right.

Back in those days, how did that pricing get translated get translated to a client? Because like I have I have sort of grown up and owned my businesses in the kind of world of professional services where a client often feels at liberty to say, well, why is it gonna take X person uh Y number of hours? Because that's kind of how the scopes are presented. So in a world where you couldn't really tie effort back to scope, where the scope's just a bit of a there's gonna be some alchemy and this ad's gonna cost you$57,000. Like, how is that price justified to the client?

No, it no, it was never like that, Neil. I think what had happened is they were coming off of the 15% media commission, right? So let's say they were working for Ford, and I'm gonna Ford was has always been a big client of Ogilby. Um, I'm gonna I'm gonna make up these numbers, okay. Let's say Ford was paying them on a commission basis, let's just guess, two million pounds. I'm I'm making up that number. And two million pounds for their for their media buying. No, they were getting fees of two million pounds. That was 15% of the media buy. So when they all went to man hour billing, two million was sort of the benchmark. And so they would say, okay, well, we'd like to see a 10% reduction. So they, you know, they would take 200,000 off of that for the next year. And there never really was any real hard calculation about we're gonna do a TV ad or we're gonna do three TV ads, we're gonna do five print ads, we're gonna do all these radio scripts, and that adds up to now they would say it adds up to a million eight. Yeah, and that went on, that went on, Neil, for a long time. There was still uh kind of a hangover from the commission days until all the surpluses were gone in resources, and that was about 2004. And it was about in that time then procurement got into the picture because they were not part of the picture at all when I got started. Uh, you know, none of the clients that Ogilvie had or any that I saw in the next 10 years had procurement. Procurement came in around 2000 or so, and that's when the hard questions started being asked like, tell us how an ad is made and how many people it takes. And all the that since the agencies didn't know, but they were never going to admit that, they tended to say things more like, Who are you to be asking that question? I mean, you're just do you know who we are? Yeah, exactly. We work for the CEO and we're creating brands here, and you you want to know so you can put it in your spreadsheet, you know, how many man hours it takes to make an ad? We are insulted, you know. And the procurement people, the the ones that I met uh after, oh gee, I think it was about 2003. And in fact, there was one at Ford now in the States, because I had moved back. And I was doing some work with Ford on uh their relationship with YNR, which is out in California. And the procurement person said, you know, I'm just gonna whack their fees by 10% every year until they till they understand that I'm something to be dealt with.

Yeah, yeah.

They must be making a lot of money if they can push back like this.

Well, it's it's funny that that you mentioned that. I think I mentioned to you last time we were chatting. Like I started my first agency in 2005, and I don't know, by 2009 or something, one of the biggest banks in Canada was one of our largest clients. And we were doing you know millions of dollars of of revenue. And I get a call at some point with someone in procurement, and they're like, Who are you? And I'm like, what do you mean? And like we didn't have an MSA, like we had just, you know, we were, you know, we had we had uh discipline and our scopes are justified and all this other kind of stuff, but there was no, there was no like sort of corporate level contracting. And and I remember that conversation really sort of being, you know, fast forward eight months from then, and there was there was no relationship we had that didn't include procurement. And in some ways, like I appreciate that when you're spending that kind of money, uh, there needs to be some discipline and oversight. I also appreciate that sometimes it goes, you know, it swings a little bit too far the other side. But listen, same Neil, same thing in consulting.

Totally. Uh, I can't tell you how many of my Bain relationships were a handshake, uh, a letter proposal to the CEO. And then I'd always say, How do we bill you? You know, and the CEO would say, Oh, just send me the bill, I'll take care of it. Because in those days, and those days not that long ago, they had slash funds. Every CEO that I ever worked with had a private fund that they could use for whatever. And they often used it for consultants. There was no procurement, there were no MSAs or anything like that. That all came later after Enron. You know, I mean Enron really with uh Sarbanes Oxley and Boards and all that, and now now even little Mike Farmer, you know, going in to do a quick study for someone needs to sign a 50-page MSA and you know, and then wait a month while everybody processes the paperwork. It's just crazy.

Yeah. I I feel like we're into the early 2000s. We're leading up to your first book. So I don't know if you want to take us a little further and then get to this sort of the main premise of Madison Avenue manslaughter. Like you were there, must have been a point at which you thought, hey, you know, a bunch of light bulbs have gone off here. I'm gonna sit down and sort of put figures to keyboard. What was the moment where you said, there's enough pattern recognition here that I think I've I've got something for the book? And then also, what was the fundamental premise of the book for those who haven't read it?

Well, I the thing is, by the time now I had been, you know, I had been in the industry now for 20, pretty pretty close to 20 years. And uh I was extremely frustrated, Neil. I uh I mean, I thought, you know, it's a it ought to be a slam dunk case because here's what happened. I had developed all the technology for creative agencies to document, measure their scopes of work, and figure out how much he should be paid. I had used the techno, I had developed it for myself because in order to do smart stuff for agencies, I had to be able to figure out what they couldn't figure out. And, you know, when I moved back to the States in 2000, I worked with Ford, Hershey, Toyota, Mazda, Volvo, you know, a bunch of big advertisers that were all asking us questions. And I had the technology. I simply couldn't understand why agency office heads didn't say, hey, let's use the farmer's system. And because everything that I had observed and measured during this 20-year period up to the time I wrote the book, was that fees were coming down and workloads were going up. And they really went up after 2004 when digital came in, and then in 2007 when social came in. I mean, the workloads were crazy, and fees were still coming down because agencies had mismanaged their relationship with procurement. I didn't understand it. I was so frustrated, I thought, I'm not getting through to the industry. I've got to write a book about it. So that's what I did.

It's a great read. Uh, both of your books are, but that as a as an entry point into your thinking is a great read. It's a bit of history, it's a bit of business, it's really well written. But for those who haven't read it, give us kind of the greatest hits of of that book.

Well, the first of all, uh every once in a while I would go to a dinner party where I lived in in Connecticut. And people would ask me, if they didn't know me, you know, what do you do? And I'd say, Well, I work with ad agencies and I help them figure out how much work they're doing. And and they'd look at me like, what are you crazy? So uh I figured I had to write a history portion of the book to explain how did how did they get here? You know, when they were uh under commission, under media commission, they didn't know how they needed, didn't need to know how much work they were doing at all. And by but in fact, they were making so much money that it it didn't matter at all. But they were successful, they were creative, they were making a ton of money, they didn't have to document how much work they were doing, there were no procurement people.

Everybody who's listening right now who's in an agency is like, can you imagine it was unbelievable, unbelievable.

It was and and you kept clients forever. Everybody was uh in a 40-year relationship, and the only thing the agency really worried about was getting the client to spend more and more on TV every year. Because that was what client uh heads did. Client heads were constantly running up and down the client organization, you know, telling them to spend more on media because a 15% commission on television advertising was a lot of money. So, anyway, uh the greatest hits. Uh, the history section, I got more compliments on writing about the history than I did about writing the analytical part. People would write to me say, gee, I never knew. Wow, great, this has really been an incredible history lesson. I thought, wait, that's meant just to be the warm-up, those are the telescenics. That's the abuse boosh before we run the race. Because what I what I thought the the the thing that was most important that really grabbed my attention was that if you know how much work people are doing and you have a way of measuring it or quantifying it, and I invented a unit of work called the scope metric unit, which is just really it's an ad the size of a typical TV original piece of work. And then everything else is scaled to that. But so if you know the amount of work in scope metric units, which is like knowing how many kilos of work they're doing, you know, um, and you know the and you know the fees, you can divide one by the other and you can get a price per scope metric unit. It doesn't matter whether they're doing digital or social or all TV or a mixture, the scope metric unit corrects for all of those. And what I had was a graph from 1992 when I first started working, uh, to 2015 or so, uh, took inflation out and it showed that the price of agency services was in decline and was declining every year because workloads are going up and fees were coming down. Now, I thought that price curve would grab everybody's attention, say, oh my God, we're working in an industry where the prices are declining because we're doing such a terrible job pricing our services because we don't know how much work we're doing. And I thought that that would get everybody to jump on the bandwagon. The second big hit was I looked at for each of my clients, you know, how many creatives did they have and how much work were they doing. So uh we knew from the way I set up the scope metric system that a creative should do five scope metric units a year. That's normal productivity. But what I could show is that it that number was going up, it was going from four to five to six to seven. And if I analyzed 10 clients at an agency, I would surely find one client where the creatives are doing 12 or 15 scope metric units instead of five. Why? Because they're so underpaid. So I thought the combination of having a price curve and a sort of uh workload uh evaluation of the creatives uh for every client that I had worked with, and overall for the industry, I thought that would grab people's attention. And no, almost nobody's commented on that. You know, they they don't they don't think about their Running a business, and the business has certain metrics, and those metrics are moving in the wrong direction. And that's why they have to downsize every year for the holding company because they're not making enough money.

Back then and now, what advice would you give to someone who's on the agency side who is looking to, I guess, what would be considered by a client would be to be increasing their prices or to be charging more fairly for the effort in this environment where there's just intense downward pressure? I think there's a lot of agencies that are scared to go and have that conversation because they feel like the it will be weaponized and they'll lose the business. Like, how do you how do you navigate that declining price curve?

Nail, I'm really glad you asked that question because I started to touch on it with a book and I really majored on it in the book that's going to come out this June. But uh again, let's go back to my Bain experience. We were used to billing out a when we how would we price? Well, you know, we would write a proposal for let's say the the first piece of work would be a six-month evaluation of a total company's portfolio. And I would have a sense of who I wanted to work on that and and how many people, you know. Uh, and at a typically at Bain, uh, people worked on two studies at a time. So everybody was allocated 50%. So you knew if I was gonna call on six people working 50%, uh, I knew their billing rates, but our billing rates were five to six times their salary. And I knew when I got in the agency world they were two times the salary. And I thought, why is that? Why, why, uh, why was the management consulting firms, and Bain was no exception, by the way, are getting five to six times multiples on the cost of people, and agencies are getting two. And I thought, well, you know, it has to do with the mission because we always said, we at Bain and at BCG, we are in business to help you grow or perform better. And all of our studies were directed at that. I was looking at scopes of work and I couldn't find any in which the mission of the agency was to help the brands grow. It was do all of these deliverables at the lowest price possible. Procurement was thinking as they do, you know, they weren't not thinking about process efficiency, they were thinking about cost, and they were being egged on by a bunch of benchmarking consultants that didn't do the industry much good. I won't name them, but you probably have run across them once or twice. They were telling uh, they were telling procurement that agencies were doing illegal things, that they were billing fake people, that their billing rates were way too high, that their salary structures were way too high. And procurement, which didn't know much, was you know buying this stuff. And therefore, they were focusing very much on salary levels, overhead rates, and profit margins, and trying to work them down. So uh part of Madison Avenue Manslaughter, there's a whole section in which I say, look, you know, one of the things that you have to do, along with keeping track of your scope of work and and billing for it, is making sure that scope of work is designed to move client brands rather than just, you know, here's a bunch of stuff we're gonna do cheaply.

You know, you just you just mentioned the, I don't know, creatives doing 1,500 pieces of work or something. 15,000. 15,000. Yeah. Sorry, maybe I was just being hopeful I was rounding the wrong way. Uh, you know, there's a point where the ability to say these 19 derivative versions of a banner ad that are going to be dropped into a programmatic ad buying campaign, you know, it is very hard, I think, often to pinpoint value on a lot of the work that gets done. Oh, sure, right. Right. So that's a complicated thing.

But but here's the thing, Neil, the period we're talking about now, which is mainly, you know, when I started writing the book, digital and social hadn't completely taken over, nor had programmatic. So the the scopes were, you know, they were starting to be more digital and social, but they didn't get to be massive until today. Yeah. And uh here's another interesting fact. I wish I had researched it for the first book, but I wasn't smart enough. In 2023, I asked myself, I know that media has all shifted to programmatic. I mean, I know that most of the money is going there. I wonder what impact that has had on advertiser sales. So I went back and I looked at the top advertisers. First of all, I looked at 50 and recently I've upped it to 60. And I've looked at their sales in 1960, which was the height of the creative revolution. And then how did they grow up up to 2008, which is the financial meltdown? And then from 2009 to the present, which is definitely the era of programmatic and digital and social, when they, you know, those deliverables dominate scopes of work. Interesting thing, let's just take one company like PG. PG grew at 10% per year for 48 years from 1960 to uh 2008. Now, uh PG launched a huge number of brands. I put that in my new book. They bought a number of brands, they uh spent mostly on television advertising, and uh they had my generation of baby boomers on their side. Uh baby boomers had gone without in the beginning, you know, born in the 40s or the 50s, right? And then uh became quite affluent and were very influenced by television advertising, and baby boomers are brand loyal. Today, if we look at the 15 years from 2009 to the present, PNG's grown at a half a percent per year. 10% per year to a half a percent per year. They're not developing as many products, they are using programmatic advertising very extensively, and the generations have shifted to millennials and to Gen Zs who are not brand loyal. They tend to like brands that uh have causes and are less expensive. They tend to buy store brands, uh, and there's huge competition from store brands these days. So it even makes more sense for agencies that are suffering price pressures to get in the business of saying, look, we're gonna be in business to help the brands grow again. We are gonna rekindle brand growth for the CMO. And therefore, we need to have an understanding of the reasons for the brands to fall off the growth curve. We need to understand the relationship between the kind of scopes we're doing and their ability to move brand growth. And we need to be paid for the scopes that we do. You know, those that's got to be today's dialogue. Well, nobody's doing that either.

I'm gonna pick a point between 2017 and today, a little bit closer today, which is when your second book came out. I mean, Madison Avenue Makeover sounds hopeful. Where was your thinking in 2023 when that came out? And and maybe give us what the the greatest hits core thesis of that book was.

Yeah, I was well, I was a lucky guy. In uh 2021, out of the blue, uh in July or August, you know, during the middle of COVID, on a Friday afternoon late, I get a call, a cold call from Matt Baxter, who uh was uh you know 45-year-old head of CEO of Initiative, an IPG media agency where he had been for five years and had turned it around. I had done some work with Initiative and one of their clients. So I knew Matt, but I had never met with him because of the COVID. Anyway, he called me up and he said, Farmer, uh, you might be interested in what I'm doing. I'm moving to Huge, which is a digital creative agency within IPG, a lot smaller than uh Initiative, my first creative agency, and I'm gonna turn it around. How would you like to be a fly on the wall for the next two years, just sitting in all our meetings and write a book about what I'm gonna do? Hard to say no to. And I thought, how can how can I say no? Here I've been preaching agency transformation for creative agencies for God, 30 years. And and I get a call from a CEO saying, How'd you like to see it done? You know, yeah. So we uh we organized uh a contract and a set of conditions, it was going to be my book. I had 100% sole authority over it. He couldn't veto anything other than confidential material, yeah. And then from about uh I think September 2021 through the end of 2022, uh I was a fly on the wall. I went to their management retreats. There were three of them. I went to a lot of management meetings every week. I recorded everything. Uh I made transcripts, I interviewed people, and I put together uh the history of Huge and uh Matt, what Matt did. And and Matt had there were three basic things that he did. Number one, he said, our new mission is accelerated growth for clients. There you go. Now that was his idea, but I'm gonna say he did a masterful job bringing on his 20 key direct reports to being totally committed to this program. So he wasn't imposing a strategy. The second thing he did is to say, uh, we're gonna create a new suite of products that are appropriate for the kind of work we do, and we are going to charge a product price for them, a fixed price for the use of them. So he and his team went off and developed 45 new products that would move the brand of their clients. And then the third thing he did uh was to take the 12 offices of Huge, which were all over the world, and were treated like independent profit centers, and said, You're not you're now part of a single profit center, and you no longer have profit responsibility, you've got sales growth and resource management metrics that you will have to follow. But your job is to make your clients more successful. That's how we're going to measure you. So interesting. So, Matt, I won't say he finished the work. He was still working on it in 2023, but I was busy writing the book. And then we launched the book uh at Conn in 2023. And a short while later, Matt moved. He's Australian. He moved back to Australia, called me up and said, uh, IPG's being impossible. We haven't made our numbers for the last two years, you know, while we were transforming. Duh. You know, we're trying to go from 180 clients to 50 great clients. Yeah. There's a lot of disruption. Uh, should be, and we're not very big. It really shouldn't matter, but IPG is quite pissed off about it. And they've raised our targets and they won't let me invest in Salesforce. And I think I'm going to be out of here. And he, and shortly thereafter that he quit. And IPG appointed Lisa De Bonas, uh, who was his right-hand person and a very smart lady, uh, to be CEO. And then they sold it to a private equity firm in the UK, and that was the end of huge. Oh, she's uh actually, IPG had absolutely no interest in what Matt was doing in the, you know, in the transformation. They didn't want to learn from it. They just were mad that he didn't make his numbers. And that was an insight for me is to realize, you know, something? That's really where the holding companies pretty much are. They're they're financial holding companies, they're driving up their share price, they're paying their senior people a huge amount of money, they're firing people to make their margins. And they're not about improving advertising effectiveness, they're about improving their share price. And that's why uh the holding company agencies are all in a worse position today than they were when I got started 30 years ago.

Well, it makes me think about what it would take these days, like today, to kind of at a regional level deconstruct the you know, the regional office of a network agency and you know, inject AI capabilities, change your workflows, do all this kind of stuff to more future ready. I don't think there's anything so optimistic as future-proofing anymore in this industry, but to sort of future ready or make future appropriate your division, your region. But that requires it's gonna require investment. It's gonna likely require a change to your staffing model, either a reduction in headcount or like maybe a shifting in capabilities. All of that in year one will likely not yield returns. It will likely actually cost money.

Oh, absolutely, uh, Neil. It'd be a huge, you know. I mean, uh, huge, huge was not a big agency. It only had 12 offices. Uh, you think about taking an Ogilvie or a BBDO uh or a McCann, and I've and I've worked with all these folks, but doing, you know, starting to document the scopes of work, uh, use AI to replace junior people for doing all the little crap, all the little adaptations that get done, right? But since agencies have been downsizing for the last 15 to 20 years, they've gotten rid of a lot of senior talent and they need to bring them on board. Because let me tell you, my own personal view about AI is that it is a tool for experienced people, not a tool for kids. It's a tool for people that really have been there, done that. I think it's a fabulous tool for experienced mid to high-level agency people who can use it very wisely. But it is going to be as disruptive, uh uh, you know, multiplied by a thousand as the huge thing was. And I just wrote an article last week on my Substack that basically said if WPP is serious about transforming itself, and it says that it is, and it's got McKinsey in there and a new CEO, they're gonna have to take a three billion pound write-off because that because they cannot be exposed to Wall Street or the city. They can't be exposed every quarter to missing their numbers because they're going through all this transformation. They have to take a big hit all at once. And I did some research on how big a big hit is.

Yeah, how did you come up with three million?

It seems like both broad and specific. Well, okay, so if you look at uh if you look at really major big hits, and IBM did one in 91 to 93 when Lou Gershner came in and completely turned that company on its head. He basically turned it into a consulting firm uh as a that implemented digital changes as opposed to a seller of hardware and proprietary hardware and proprietary software that used IBM standards. They got out of the hardware business. And what did he do? He took 20, he took a 20 to 22 billion dollar charge. It turned out to be 20% of sales. Around 2008, JP Morgan Chase took a hit to account for all the bad loans that they had during the financial crisis. That was 35 to 40 percent of sales. And GM uh did did a uh a big one uh back uh in the 1990s that was about 20 of sales. So uh I did this research and I said, you know, what would it if if they had to do a big hit, what would 20% of of uh WPP sales be? And it would be about four million dollars or three million pounds. It wouldn't shock me at all if the need was that big.

But again, I'm and sorry, that's that's billion, not sorry, billion.

Yes, we're talking billion.

Just because I I feel like somebody at at uh at head office just went, four million, we can do that, no problem.

Now, uh somebody wrote to me uh after I published an article and said, wait a minute, wait a minute. WPP has taken a billion pounds of charges over the last six years. And I said, okay, let's let's compare those two. 1 billion over six years versus 3 billion in one year. There's an 18-fold difference. Yeah, that means that on average, over the last six years, it was taking somewhere between one and two percent of sales as a write-off. That's peanuts. Yeah, that is not a big write-off. That's just something that that is done cosmetically or for PR purposes with uh, you know, Wall Street. That is not serious. If you really are serious about transforming, then you're serious about uh things being very messy for two or three years. And you better protect yourself by taking a massive write-off. It turns out Wall Street does not punish people for taking the write-off. Yes, the share share prices will drop a bit, but uh they will also praise management for facing up to the problems and being serious about it.

So let me let me ask this as we sort of like, you know, round the turn on our on our home stretch in our conversation. I'm thinking about the Canadian market, right? Most of our listeners are here in Canada. That means a couple of things, right? There's on the agency side of the ledger, you're gonna have a fair number of independents. You're likely not gonna have any, you know, head office of a network here in Canada. You're gonna have regional offices, and we've got lots of those. And being a pharma brands podcast, pretty much everybody, except my mom uh who listens to the show is in, is in healthcare. And so you're gonna get not even just sort of regional offices of the network companies, you're gonna have often sort of like regional specialty offices, right? Like you're starting to cut it pretty finely. I think that I haven't had a conversation with somebody on the on the client side or somebody on the agency side who does not feel right now some degree of anxiety, right? Some degree of excitement for sure, but some degree of anxiety, uh, feeling like changes of foot. I think a lot of people feel like change is sort of about to happen to them versus that they know they are the architects of change. It's a it's a complicated time. Knowing what you know, having the perspective that you have, spending the time that you spend with folks. What kind of advice or roadmap do you think you have for someone who might be in that situation? Independent agency owner, head of a special. You know, part of a network in a region. So, you know, not necessarily at the big, big boardroom table. Yeah, what are your thoughts? What do you where where where do these businesses go?

You and I are in sync here, Neil, because I've kind of given up on the big boys. I think that um I don't think we'll see a 3 billion pound write-off at WPP. And Omnicon has already indicated what it's doing. It's firing people. It they said that they were going to reduce their cost by$750 million, along with another$250 million that IPG was going to do in addition to that. So there's a billion. And what they care about is uh principle-based media. You know, they want to be the biggest media buyer in the world so they can have more principle-based media and make their margin off of selling uh to their clients uh inventory that they bought cheaply. Well, that's that's hardly making the advertising business effective. Uh that's hard that's not even close to helping brands grow. So I'm excited about independent agencies because I think the the holding companies are gonna go down into a black hole over time because they have so relied on cost reduction and principle-based media for making their margins that they're now too big to turn around and it's it's too complicated. I just don't think they can face up to it. But you take an independent agency, like a huge that goes to a clients and says, Look, uh we're we've we've noticed that mate that most legacy brands have not grown in the last 15 years. We're gonna be in the business of helping our clients grow the brand. We're gonna develop an understanding of the reasons for brand uh the brand's not growing. We're gonna be smart about the kinds of scopes of work that we recommend. We're not just gonna buy into programmatic because it's cheap. And that's where we're gonna go. And I think that I think we're at a tipping point where CMOs have to do something because they are still on the hook for growing the brands, even if they don't brief the agencies to do that. And I think that they would welcome hearing from professional partners that they respect that someone is gonna help fight that battle with them and they have a different way of working. So I'm and listen, in pharma, uh there's a lot of money. There's a lot of money in marketing, and no one's gonna argue that the people running the brands in pharma companies have long experience in marketing for many, many of the brand managers. It's sort of a way station between the the sales jobs that they had and perhaps the bigger sales job that they will be getting. And there's plenty of room for uh agencies in the pharma space to commit to help their clients grow their brands and get more get more performance out of them in the time where there's patent protection. So I'm quite excited about the possibility for independent agencies. Uh, but they're gonna have to be smart, they've got to develop some consulting-like skills, they have to use AI to help get rid of junior people that are just doing manual work that can be easily done by AI. And then they've got to sort of retrain their senior people to be more brand effective with their clients. But I think that this is this is what's gonna happen in the next five years. I'm quite excited about it.

Well, well, then you know what I'm gonna say? I'm I'm gonna end on excited because that's not something that we often hear in the uh in the industry. Um, where I think you're launching your next book in Cannes in the spring, is that right?

Uh yeah, and it'll be in June. Uh, it's called Madison Avenue Revisited. And it uh it it what it does that the first book didn't do is to track the evolution of media, track the seven crises that have occurred in the industry since the media agencies were split out from the creative agencies. Uh, look at all the bad decisions that the holding companies have made on every single crisis, and look at the degree to which advertising effectiveness has been uh reduced. And I'm thinking that, yeah, it really, you know, I think the big holding companies are not very good at conducting advertising. They can't make money at it. They're not moving the brands, and they're making their money from brokering media. So let's let's see the independent agencies get in the business and and up their skills for improving advertising effectiveness to start moving brands again.

Well, I I think that uh I was keeping I was sort of keeping score as we as we were uh chatting for the last little while. And I think I think you mentioned four or five of the of the seven uh key crises. So folks, folks are are well primed for the book. If they're not going to come and visit in uh Cannes in the spring, which by the way, I highly recommend. Um, where can they find uh your writing? You mentioned Substack, and where will they be able to find the book when it launches? I assume.

Oh, the book will be on Amazon for sure. Okay. Uh Madison Avenue Revisited. Um, and uh I can be reached on my Substack column, which is called C Suite Blues, C hyphen suite S U I T E blues. I try to write about uh once a week. Try to get a and you know you can either subscribe for free or or you can be a really nice person and subscribe for a fee.

Well, well, I uh I I'm I'm not only do I read a lot of that content, I get a lot of it sent to me by people who say this is really, really good writing, and I think that you should read it. So highly recommend the Substack. Uh, Michael, thank you so much. We could have we could have kept going. There's no question. I appreciate you uh setting the time aside. I really enjoyed the candid, insightful conversation. Thank you.

Well, thank you so much, Neil. And it's been a great pleasure speaking with you in Canada. My daughter works for a Canadian firm, by the way. She works for Blue Ant Media. Oh, nice in Toronto. And she loves her job. Absolutely loves it. Awesome. And she's even happier that it didn't have anything to do with me.

Well, a plug for a Canadian agency to wrap up the show. Thank you, Michael.