Comments on: “Shareholder Primacy” And Why It May Have Been A Legal Requirement To Can Your Ass

By: Ronan Doyle

Ronan Doyle — Sat, 14 Mar 2009 06:37:30 +0000

Well said, MattM, twice.
Of course quality matters. It hasn’t mattered at some jobs I’ve had, unfortunately, but it matters at places that matter. It matters at Weiden and Fallon and Goodby and Crispin. It matters at boutiques that put principle above profit like Fort Franklin, David & Goliath or Red Tettemer. A lot of people have never heard of that last one, Tettemer. They’re in Philly and they’re awesome. But the most impressive, I think, are the first one’s I mentioned. The ones able to get huge and hold on to creative principles. Too often financial success is armageddon for creative success. Look at DDB New York. What have they done in the past, say, 15 years?? I’m pretty excited to see how Eric Silver shakes that place up in the coming months and years.

By: MattM

MattM — Sat, 14 Mar 2009 04:53:31 +0000

Harry,

If the product we produce (advertising) doesn’t matter, why do clients even use agencies? They could save (make) more money by doing it themselves.

Of course product quality matters. It doesn’t matter to every agency. But it matters.

By: sad to say

sad to say — Fri, 13 Mar 2009 21:06:05 +0000

@Harry:

And the really shiddy part of it is that most compensation models make cheap and cheezy work more profitable for agencies than work that actually works.

As long as you can find employees soulless or desperate enough to produce garbage, and clients dumb enough to buy garbage, it’s a sure-fire way to make a fortune in this business. Look at Zimmerman in Ft. Lauderdale as an example.

By: Harry Panek

Harry Panek — Fri, 13 Mar 2009 20:25:56 +0000

The thing you’re not understanding MattM: product quality doesn’t matter.

People buy shoddy products all the time. Clients buy shoddy (shiddy) ads all the time.

Quality really doesn’t matter. Money still gets made regardless of quality, and that is all that matters: making money.

By: me

me — Fri, 13 Mar 2009 18:01:03 +0000

well said MattM.

By: MattM

MattM — Thu, 12 Mar 2009 19:53:43 +0000

The problem is, it’s all short term thinking.

Sure, if I lay off 10%, I’m cutting my costs, which increases my profit, which makes my stock price go up.

But next quarter, when the people I kept are doing more work at a poorer quality, then my profits will suffer because my product sucks. And that’s what happens at big agencies. They look at salaries and say “Well, that person makes a lot” or “that person’s salary matches up with how much we have to cut” – but they don’t take into account talent.

So good talent gets cut. The product suffers. And down the road you end up worse off.

By: Steven

Steven — Thu, 12 Mar 2009 19:31:47 +0000

If publicly held companies have a legal duty to maximize profits for their shareholders, then why do shareholders allow the CEOs and other upper management to have multi-million dollar salaries plus million dollar bonuses? Isn’t that, then against the law?

Surely another CEO at half the price could do just as good of a job.

By: Ronan Doyle

Ronan Doyle — Thu, 12 Mar 2009 18:53:22 +0000

Interesting stuff. Scary, too. It’s the Gordon Geckos of the world that got us into this mess. Their way of thinking is certainly not what we need now, or in the future.

I haven’t worked for a holding company agency in almost 9 years… and I’m not sure that I would want to again. Yes, it’s an independent that laid me off, but at least I know the decision to do so was made inside our walls, not out.

By: Dylan

Dylan — Thu, 12 Mar 2009 17:21:38 +0000

That’s actually a major hesitance for some owners of companies to take their business public. They believe this shift in priority from their employees to stock-holders can set a negative effect which outweighs the benefit of public investors in their mind.

By: Ben Bloom

Ben Bloom — Thu, 12 Mar 2009 17:13:35 +0000

I don’t think this has as much to do with the structure of the corporation as it does with the short-sighted investment climate we have had in the last decade. Flipping Teldar paper, or Anacott steel, or breaking up blue star airlines (ok I have seen wall street too many times) seemed like a good idea to shareholders, but only because those shareholders wi=ere in the game for the short term.