AdAge reported that Toyota is thinking of firing its ad agencies and doing everything in-house. My friend Andrew Jaffee has some interesting comments:
Toyota spends $900 million in measured media in the U.S. alone, according to Nielsen. That means they're probably paying $90 million to $100 million a year to their several ad agencies including, by my count, Saatchi & Saatchi /Torrance, Team One/El Segundo, Attik/ San Francisco, DentsuAmerica, New York and some dogs and cats who probably work on a project on an occasional basis. I'll bet someone told Yukitoshio Funo, CEO of Toyota Motor Sales USA, Inc., that he could create an in-house agency that could produce the same amount of work with the same punch for one-third the cost.
Who wouldn't want to save $60 million on ideation and production and $100 million on media in an economy like this?
Right? Wrong. This is the latest in an unhappy series of examples of client impatience with the high cost of advertising, as search and other digital forms of communication become more important and agencies have increasing problems with proving the ROI of what they do. Clients want communications that are measurable, have more punch, are produced faster and with less cost and that can be repurposed across multiple formats as audiences multi-task and become more elusive.
That's a worthy goal. But, if in trying to meet it, you conclude that advertising can best be made in the same kitchen that manufactures and sells Corollas, then you're missing the whole point of using arms length creative resources.
Creative people–the men and women who actually unlock the puzzle of how to communicate brand messages in fresh ways that people hear and remember-are hard to recruit and retain. Coming up with ways to make the oddly shaped Scion or the pricey Prius seem as charming and appealing as a square Taurus is not an easy task.
Toyota makes great cars at a great price, sans doute. As a result, according to a senior Saatchi executive I interviewed for my 2003 book, “Casting for Big Ideas,” Toyota USA executives “have contempt for just about everything that we do.”
How many ubiquitous American brands have felt the same way? Howard Schultz of Starbucks, after all, launched his brand by just building stores without any advertising. As a result, his customers have forgot that what he was really was selling is a personal reward and have begun to think of a Starbucks as a $2 cup of a black, caffeinated beverage. Wal-Mart kept their ad agencies on a tight rein, limiting them to cheap commercials featuring yellow smiley faces, until the anger consumers felt for the way Wal-Mart stores destroyed the retail environment of their small towns and pretty suburbs grew stronger than the desire to go into a noisy, dirty, giant warehouse and buy something cheap.
Eventually brands have to communicate not only price and availabiliy but value and emotion. Even as our attention moves to the Internet, where brands are often accessed as a button on a search page, there still has to be a reason for picking a J.Crew wedding dress over one bought at Macys.com. We have plenty of research proving we're not really rational animals when it comes to shopping. If we were, then I suppose Toyota is right: it's a lot cheaper to hire several 100 20-somethings and lock them away in a windowless office with plenty of free coffee and pizza, to grind the work out 24/7, then it is to deal with a number of different agencies, each with their prima donnas and occasionally over-the-top notions of great ideas.
But it won't take long, as it did for Wal-Mart, for Toyota to realize there is something very wrong with the captive agency model. That, in fact, it's better to have professionals knock themselves out-and even trash half of what they present–then to try to shoot “junk” and run it so often, the Toyotathon message finally gets stuck in people's brains. Even if you saved $50 or $100 million a year this way, sooner or later your sales department is going to complain that the work is not “making the cash register ring.”
I wager that before long you're going to hear from Toyota that the press release about firing its agencies “was an exaggeration.” And all Toyota Motors USA wanted to do was have a little in-house design agency in Torrance that could knock out an occasional sales brochure. Fire their agencies? Where did the “media” come up with such a bizarre idea?