by David Ogilvy
The manufacturers who dedicate their advertising to building the most favorable image, the most sharply defined personality for their brand, are the ones who will get the largest share of market at the highest profit.
The time has come to sound an alarm, to warn our clients what is going to happen to their brands if they spend so much on deals that there is no money left for advertising to build their brand.
Deals don’t build the kind of indestructible image which is the only thing that can make your brand part of the fabric of American life.
I had a client called Bev Murphy. Bev invented Nielsen’s technique for measuring consumer purchases, and went on to be President of Campbell Soup Company. I once heard him say:
“Promotions cannot produce more than a temporary kink in the sales curve.”
Andrew Ehrenberg of the London Business School has one of the best brains in marketing today. Dr. Ehrenberg says:
“A cut-price offer can induce people to try a brand, but they return to their habitual brands as if nothing had happened.”
Why are so many brand managers addicted to price-cutting deals? Because the men who employ them are more interested in next quarter’s earnings than in building their brands. Why are they so obsessed with next quarter’s earnings? Because they are more concerned with their stock options than the future of their company.
Deals are a drug. Ask a drug-addicted brand manager what happens to his share of market after the delirium of the deal subsides. He will change the subject. Try asking him if the deal increased the profit. Again he will change the subject …
Marketers who have inherited brands built by their predecessors are dealing them to oblivion. Sooner or later they discover that they cannot deal brands which nobody has heard of. May the Lord have mercy on them.
Brands are the seed corn they have inherited. They are eating their seed corn.
These rascals who sell their product by cutting the price, expect me to sell my product at a cut price. Clients who haggle over agency compensation are looking through the wrong end of the telescope. Instead of trying to shave a few measly dollars off the agencies’ 15 percent, they should concentrate on getting more sales results from the 85 percent they invest in time and space. That is where the leverage is. No manufacturer ever got rich by underpaying his agency. Pay peanuts and you get monkeys.
Sound an alarm! Advertising, not deals, builds brands.
Outside his study at Touffou – conducting his worldwide orchestra.
“Principles of Management” and “Corporate Culture”
Principles of Management
From a paper written in 1968 as a guide for Ogilvy & Mather managers worldwide:
I have been managing Ogilvy & Mather for twenty years. I have learned from my own mistakes, from the counsel of my partners, from the literature, from George Gallup, Raymond Rubicam and Marvin Bower.
Now I want to share with you what I know about managing Ogilvy & Mather.
I have no desire to impose my personal style on the rest of you. Nor do I seek to freeze the style of Ogilvy & Mather after I retire. I hope that future generations will improve upon the Principles I enunciate in this paper.
Ogilvy & Mather is not a mere holding company for a group of independent agencies in different countries. It is one agency indivisible.
Our clients must see no basic differences of style between any of our offices. Ogilvy & Mather must never become a company of incompetent amateurs in one country, superb professionals in a second, waffling bumblers in a third.
In this paper, I will set down the principles of management which, in my judgment, are most likely to make our company prosper.
If you endorse these principles, promulgate them, apply them, add to them and revise them during the years to come, our offices will be inspired by unanimity of purpose. This will give Ogilvy & Mather a competitive edge over international agencies which lack such unanimity.
Ogilvy & Mather is dedicated to seven purposes:
1. To serve our clients more effectively than any other agency.
2. To earn an increased profit every year.
3. To maintain high ethical standards.
4. To run the agency with a sense of competitive urgency.
5. To keep our services up-to-date.
6. To make Ogilvy & Mather the most exciting agency to work in.
7. To earn the respect of the community.
PROFITS
Ogilvy & Mather is in business to earn a profit through superior service to clients.
The Board of Directors agrees on the profit objectives of each office. The governing consideration is the forward thrust of the entire agency.
Profit is not always synonymous with billing. We pursue profit – not billing. The chief opportunities for increasing our profit lie in:
1. Increasing income from present clients.
2. Getting new clients.
3. Separating passengers without delay.
4. Discontinuing boondoggles and obsolete services:
To keep your ship moving through the water at maximum efficiency, you have to keep scraping the barnacles off its bottom. It is rare for a department head to recommend the abolition of a job, or even the elimination of a man; the pressure from below is always for adding. If the initiative for barnacle-scraping does not come from Management, barnacles will never be scraped.
5. Avoiding duplication of function – two men doing a job which one can do.
6. Increasing productivity.
7. Reducing wheel-spinning in the creative area.
8. Putting idle capital to work.
MORALE
Advertising agencies are fertile ground for office politics. You should work hard to minimize them, because they take up energy which can better be devoted to our clients; some agencies have been destroyed by internal politics. Here are some ways to minimize them:
1. Always be fair and honest in your own dealings; unfairness and dishonesty at the top can demoralize an agency.
2. Never hire relatives or friends.
3. Sack incurable politicians.
4. Crusade against paper warfare. Encourage your people to air their disagreements face-to-face.
5. Discourage secrecy.
6. Discourage poaching.
7. Compose sibling rivalries.
I want all our people to believe that they are working in the best agency in the world. A sense of pride works wonders.
The best way to “install a generator” in a man is to give him the greatest possible responsibility. Treat your subordinates as grown-ups – and they will grow up. Help them when they are in difficulty. Be affectionate and human, not cold and impersonal.
It is vitally important to encourage free communication upward. Encourage your people to be candid with you. Ask their advice – and listen to it.
* * *
THE FUTURE
At a question-and-answer session after a recent talk, David was asked to comment, from the vantage point of his decades in the business, on the future of advertising.
“I have a diminishing interest in the future,” he replied.
* * *
Senior men and women have no monopoly on great ideas. Nor do Creative people. Some of the best ideas come from account executives, researchers and others. Encourage this; you need all the ideas you can get.
Encourage innovation. Change is our lifeblood, stagnation our death knell.
Do not summon people to your office – it frightens them. Instead, go to see them in their offices. This makes you visible throughout the agency. An office head who never wanders about the agency becomes a hermit, out of touch with the staff.
The physical appearance of our offices is important, because it says so much about Ogilvy & Mather. If they are decorated in bad taste, we are yahoos. If they look old-fashioned, we are fuddy-duddies. If they are too pretentious, we are stuffed shirts. If they are untidy, we are inefficient.
Our offices must look efficient, contempora
ry, cheerful and functional.
I believe in the Scottish proverb: Hard work never killed a man. Men die of boredom, psychological conflict and disease. They do not die of hard work. The harder your people work, the happier and healthier they will be.
Try to make working at Ogilvy & Mather fun. When people aren’t having any fun, they seldom produce good advertising. Kill grimness with laughter. Maintain an atmosphere of informality. Encourage exuberance. Get rid of sad dogs who spread gloom.
But good morale also requires our top people to be eternally vigilant as to the discipline in their offices. The staff must be made to arrive on time. Telephones must be answered promptly and politely. Filing must be kept up-to-date. Due dates must be kept.
Security must be policed. Indiscretion in elevators and restaurants, premature use of typesetters and Photostat houses, premature display of new campaigns on bulletin boards and indiscreet gossip can do serious damage to our clients and even lose accounts.
It is also the duty of our top people to sustain unremitting pressure on the professional standards of their staffs. They must not tolerate sloppy plans or mediocre creative work. In our competitive business, it is suicide to settle for second-rate performance.
Training should not be confined to trainees. It should be a continuous process, and should include the entire professional staff of the agency. The more our people learn, the more useful they can be to our clients.
RESPECT
One of the most priceless assets Ogilvy & Mather can have is the respect of our clients and of the whole business community.
This comes from the following:
1. Our offices must always be headed by the kind of people who command respect. Not phonies, zeros or bastards.
2. Always be honest in your dealings with clients. Tell them what you would do if you were in their shoes.
3. If we do a good job for our clients, that will become known. We will smell of success, and that will bring us respect.
4. If we treat our employees well, they will speak well of Ogilvy & Mather to their friends. Assuming that each employee has 100 friends, 250,000 people now have friends who work for Ogilvy & Mather. Among them are present and prospective clients.
5. In meeting with clients, do not assume the posture of servants. They need you as much as you need them.
6. While you are responsible to your clients for sales results, you are also responsible to consumers for the kind of advertising you bring into their homes. Your aim should be to create advertising that is in good taste. I abhor advertising that is blatant, dull, or dishonest. Agencies which transgress this principle are not widely respected.
7. We must pull our weight as good citizens.
HIRING
The paramount problem you face is this: advertising is one of the most difficult functions in industry, and too few brilliant people want careers in advertising.
The challenge is to recruit people who are able enough to do the difficult work our clients require from us.
1. Make a conscious effort to avoid recruiting dull, pedestrian hacks.
2. Create an atmosphere of ferment, innovation and freedom. This will attract brilliant recruits.
If you ever find a man who is better than you are – hire him. If necessary, pay him more than you pay yourself.
In recruitment and promotion we are fanatical in our hatred for all forms of prejudice. We have no prejudice for or against Roman Catholics, Protestants, Negroes, Aristocracy, Jews, Agnostics or foreigners.
PARTNERSHIP
Each Ogilvy & Mather office is a partnership of individual practitioners. Our growth depends on our ability to develop a large cadre of able partners.
Each of our offices has a managing partner. The total responsibility for the office rests on his shoulders. However, if he is wise, he will treat his lieutenants as equals.
If he treats them as subordinates, they will be less effective in their jobs; they will come to resent their subordination – and leave. Only second-raters accept permanent subordination.
For this reason our Top Management in each country should function like a round table, presided over by a managing partner who is big enough to be effective in the role of primus inter pares, without having to rely on the overt discipline of a military hierarchy – with its demeaning pecking order.
This egalitarian structure encourages independence, responsibility and loyalty. It reduces the agency’s dependence on ONE MAN, who is often fallible, sometimes absent and always mortal. It ensures continuity of style from generation to generation.
No office in the Ogilvy & Mather group has a monopoly on brains. The more we bring the resources of our offices to bear on each other’s problems, the better. This requires close liaison at many levels; it also requires that each of our agencies conquer their chauvinism.
If we help each other, the sum of our individual parts will give us a competitive advantage over international agencies which allow iron curtains to separate their offices from each other.
It is as difficult to sustain happy partnerships as to sustain happy marriages. The challenge can be met if those concerned practice these restraints:
1. Have clear-cut divisions of responsibility.
2. Don’t poach on the other fellow’s preserves.
3. Live and let live; nobody is perfect.
4. “Why beholdest thou the mote that is in thy brother’s eye, but considerest not the beam that is in thine own eye?”
ISLANDS OF LEADERSHIP
It is impossible for our office heads to carry the whole load of leadership single-handed. Their partners and department heads must be islands of leadership – inspiring, explaining, disciplining and counseling.
It is not enough for people at this level to concern themselves only with their professional function; they must also be leaders.
In selecting heads of service departments, it is not always wise to select those whose professional qualifications are the best; outstanding professionals do not always turn out to be good leaders. It is often better to give management jobs on the basis of leadership ability, leaving the professionals to practice their profession.
This is particularly true in the creative area. Some of the best copywriters and art directors make poor Creative Directors. If you give them recognition in terms of salary and glory, you can persuade them to let others pass them on the administrative ladder, while they continue to create the campaigns on which the whole agency depends.
COMERS
The management of manpower resources is one of the most important duties of our office heads. It is particularly important for them to spot people of unusual promise early in their careers, and to move them up the ladder as fast as they can handle increased responsibility.
There are five characteristics which suggest to me that a person has the potential for rapid promotion:
1. He is ambitious.
2. He works harder than his peers – and enjoys it.
3. He has a brilliant brain – inventive and unorthodox.
4. He has an engaging personality.
5. He demonstrates respect for the creative function.
If you fail to recognize, promote and reward young people of exceptional promise, they will leave you; the loss of an exceptional man can be as damaging as the loss of an account.
CREATIVE PEOPLE
I think that the creative function is the most important of all. The heads of our offices should not relegate their key creative people to positions below the salt. They should pay them, house them and respect them as indispensable Stars.
MANAGEMENT SUPERVISORS
I respect the value of Management Supervisors. At their best, they keep the agency out of turbulence; keep service costs under control; emancipate the office heads from perpetual fire-fighting; and stimulate our service departments to do good work for clients, thus winning new business of the most profitable kind.
Our Management Supervisors are equivalent to the partners in great law firms. T
hey must be stable, courageous, persuasive, professional and imaginative. They must work in fruitful partnership with our creative people – neither bullying them nor knuckling under to them.
Above all, they must have the thrust of independent entrepreneurs. This is not a job for lazy, frightened mediocrities; nor is it a job for superficial “contact” men.
Intellectual snobbery towards clients is common – and dangerous. When a Management Supervisor comes to regard his client as a boob, he should be transferred to another account. While our clients may not always be good judges of advertising, their jobs are broader than ours; they have to encompass areas about which we are ignorant – research and development, production, logistics, sales management, labor relations, etc.
TREASURERS
I respect the importance of our Treasurers. They must carry the guns to make their voices heard in our management councils. They must be tough and unafraid. They must be privy to all our secrets – and they must be discreet.
RESEARCHERS
No agency has greater respect for the importance of the research function – particularly in the creative area. The most valuable quality in a Research Director is his scientific integrity. A dishonest Research Director can do appalling damage to any agency.
It is also important that a Research Director be able to work sympathetically with our creative people.
And he should be able to use research fast and cheaply.
NEW BUSINESS
The most difficult decisions which confront our managements are decisions as to which accounts to take and which to reject. The primary considerations should be: