Jay Haines on why the advertising industry needs a new breed of CFO.
Advertising’s legacy model is under pressure; it is prohibitive to quick decision-making and customizable workflows and is not built for the world we find ourselves in today.
We’re living in what I call The Agility Era, a time when clients are beginning to forgo AOR relationships in lieu of specialized partners working on a project-by-project basis. In other words, even the biggest agencies are fighting for their revenue every day, week, quarter and year.
What that means is there is a need for a new model of doing business. Agencies are searching for a new way to pitch, create and charge for the work they’re doing. At the end of the day the traditional structure is outdated, and there are few with a better opportunity to create change in that model than the CFO – but it has to be the right one. The executive who figures out what the new, agile and successful set-up looks like will be greeted as a legend – and everyone else in the industry will copy it.
The new-breed CFO doesn’t just need to be good with numbers. There are already many who are great at managing day-to-day finances. What advertising needs are people who are scrappy, innovative and open to the idea of doing things in new and different ways.
One of the biggest hiring trends we’ve seen in the past 12 months has been an upswing in searches for creative chief financial officers—financial executives with ambitious visions and personalities strong enough to impact the culture of the agencies they work with. The reason is both large and simple: money. In recent years, it’s become increasingly difficult to grow business organically. New business pitches are becoming rarer, and the expense of entering them can be astronomical. Perhaps even more pervasive is the procurement push, which places increasing pressure on executive teams to meet strict financial goals. Add that to the disappearance of guaranteed revenue from AOR relationships, and CEOs are beginning to realize that one of the most direct (and efficient) ways to shore up an agency is through streamlining finances and expenditures internally. A good CFO not only pays for herself, she does it quickly. A great one can have an enormous impact on your bottom line, top line and margins. It’s nearly the equivalent to winning a major new business pitch.
The Skills Required
Tradition says that the No. 1 quality in a good financial executive is caution. In a world dominated by excitable creatives, it makes sense that the CFO should be the voice of caution and reason in the room. But what we’re seeing in our CFO searches is that caution can actually be a detriment for the job – at least in modern advertising. The really successful CFO needs to be three things: fearless, forward-thinking and full of ideas.
Fearless, so that they can enter an existing business and really challenge the way things are being done. The executives that are going to change the world of advertising should be questioning not just the way an agency is spending its money, but also how it’s billing, who they are billing and the type of work they are looking for.
Forward-thinking, because the only way to build a new model is to start from scratch. Ten years ago, digital-centric agencies forced larger, traditional ones to re-shape themselves to meet all the creative needs of the modern clients. But the problem goes deeper than straightforward integrated thinking or building out digital capabilities. Executives should anticipate what their clients’ needs will be 12 months from now and organize their model to meet those needs now.
And full of ideas, because moving the agency model forward is about thinking in a way that hasn’t been done before. The business world is in a “disruption boom,” with startups looking to reshape everything from retail to taxis to banking. The creative CFO needs to have the talents of a hedge-fund operator and the creativity of a tech entrepreneur. Not easy – but not impossible either.
Who Will It Be?
Judging from our experience, the new breed of CFO can come from anywhere, be it a big, established agency or a small, dynamic content shop. The most innovative CFO candidates we’re meeting have a unique outlook on the overall communications industry and have the energy to drive the need to do things differently – no matter where their career was first established.
It’s not a matter of if someone cracks the problem but when. If you want to build for the future, ask your CFO – or hire one.