The advertising industry is imploding. For years margins from traditional services have been squeezed as clients are offered increasingly more options to get projects completed. As Michael Farmer writes in his book "Madison Avenue Manslaughter", the ad industry is paying the price for bad practices that were acceptable in the days of richer margins.
CFOs HAVE THE TOUGHEST JOB IN ADVERTISING
Agency CFOs have the unenviable task of maintaining (if not increasing!) agency profit margins in this very difficult environment. Agencies face competition from their traditional peers, from nimble upstarts (often founded by former agency stars), from large consulting firms, from clients' in-house creative groups, and even from technology itself. Adobe Creative Cloud, for example, continues to bring amazing advances that simplifies the execution on creative vision.
CFOs haven't had a fighting chance. They've been fighting with one hand behind their back...and blindfolds on their eyes. The data they receive from operations (usually derived from manually-submitted timesheets) is often weeks late and inaccurate.
Even the government is making it more challenging. As I wrote previously in this blog, ASC 606 goes into effect on 12/15/2017, and it requires additional compliance to properly recognize revenue...or else risk fines.
TECHNOLOGY IS A DOUBLE-EDGE SWORD
Fortunately, there is hope. Just as technology empowers the upstarts to be more nimble, it also empowers traditional agencies to run their organizations more profitability... while simultaneously improving employee conditions.
For example, the TimeTracker plug-in provides Finance and Operations with accurate timesheet data in near real-time...empowering them to be more effective with negotiations, staffing and resource planning. It's a simple, yet powerful, plug-in designed originally by former Adobe employees for the ad industry. TimeTracker generates accurate timesheets based on employee behavior, allowing them to privately review, revise and submit their timesheets. This also lets employees focus on what they do best: billable client work...increasing billable hours and client satisfaction in the process.
These advances in technology are slowly helping the incumbent ad agencies compete more effectively...while improving the overall industry work-life. However, it will take time before new tools become standard practice.
And that's why CFOs have the toughest job in Advertising.
(This is the second in a series of blogs: The Empathy Blogs)