Ad Agencies or Brand Consultants

Who you gonna choose?

When Bartle Bogle Hegarty (BBH) walked away from Sony Ericsson two weeks ago it appeared to be for good reason.

Sony Ericsson had appointed Wolff Olins to work on its brand strategy at the start of 2006 but failed to mention this to BBH, its agency of five years. Integrity, status and a jam-packed client roster dictated the course of action for Britain's premier agency: amicably resign the £50m account.

But does a client really have an obligation to notify its agency when it hires brand consultants?

The world of marketing has evolved, and today the companies that supply marketing communications and brand strategy are very different. There was a time when ad agencies were also the chief brand builders for their clients. It was called the 20th century. But that era is over and even an agency as big and brilliant as BBH is no longer qualified to work on brand strategy.

Ad agencies should do what it says on their tin - be agents for the creation of advertising - and accept that the strategy work that feeds their creativity will be devised elsewhere and without their involvement.

As brand has become more central to the success of most major clients, it has moved further away from the core competencies of advertising agencies.

Niall FitzGerald identified this separation while he was chief executive officer at Unilever. Nine years ago, he gave the keynote speech to the European Association of Advertising Agencies and noted the 'alarming discrepancy developing between what our brands are going to need and what contemporary agencies are good at'. His prediction has proved to be accurate.

Today, brand strategy requires a fundamental knowledge of business operations, finances, employees and internal culture - subjects most ad agencies, which often struggle even to understand how their clients make money, are ignorant of.

There are whole subsets of brand strategy that most agencies are completely unaware of. Consider brand architecture, for example. It is probably the single-most important brand issue for most major branded companies, yet most ad agencies would have trouble even identifying what the concept means, let alone advising their client on a major brand consolidation or co-branding strategy.

This is not to deride or diminish advertising agencies. There is plenty of money to be made and work to be done in the area of marketing communications. Indeed, with the gradual disintegration of terrestrial TV advertising and the fragmentation of the market, there has arguably never been a more challenging or interesting time to work in advertising.

But it is time for agencies to recognise that the likes of Landor or Prophet offer inherently superior systems, people and solutions when it comes to branding. Just as I would never recommend that a client work with Wolff Olins to create a communications campaign, I would be equally aghast if they asked an ad agency to work on their brand strategy.

In the long and twisting journey to building a brand, the external communications stage usually occurs late in the day, if at all. Consequently, the initial research, positioning and engagement work will always occur long before an ad agency has any reason to become involved.

In the Sony Ericsson case, BBH was informed when it needed to be that a fresh brand strategy was on the way. The fact that it did not like being ignored in this manner is understandable but it is hardly a criticism that can be levelled against Sony Ericsson. It is just the way that brands are built these days. Get used to it.

30 SECONDS ON ... AD AGENCIES AS BRAND CONSULTANTS

- Pat Stafford, former marketing director of BUPA, once said: 'I have never found a lack of willingness by agencies to get involved, perhaps just a lack of skill.'

- A survey by Farmer & Co in 2001 showed that clients rated their agencies highly for their traditional skills. However, while 75% wanted their agency to give them more strategic business advice, 46% were not satisfied with the strategic services provided.

- Cheryl Giovannoni, managing director of Landor London, has said: 'With ad agencies it is about short-lived campaigns, but brand consultancies' work is more enduring because it has to transcend a series of campaigns.'

- Jim Thornton, executive creative director of Leo Burnett, said: 'When the branding consultancy works in isolation from the ad agency, it is insulting. I don't understand why clients do it.'

Fiji Water

David Gilmour felt the warm South Pacific breeze caress his shoulders as he followed through with the five-iron.

He watched his ball sail into a bright-blue sky and then land with a bounce onto the green of the second hole. It was 1992 and Gilmour had more than a great tee shot to feel good about. His luxurious eco-resort on a private island in the Fiji islands, The Wakaya Club, had become an international success in little under a year.

Another golfer caught his eye and Gilmour watched as the man took a long drink from a European bottled-water brand. How bizarre, he thought, to come to a place like Fiji, where the water is famously pure, and choose to drink a European brand instead of the better and more available local stuff. Inspired, Gilmour founded a production company and signed a 99-year deal with the Fijian government to tap an ancient aquifer on the main island of Viti Levu. He called his brand Fiji Water.

Gilmour made sure that his product was right. He had already made a fortune from gold mining, and when he found the Viti Levu aquifer he realised he had struck it rich again. The aquifer is enormous, measuring more than 17 miles wide and 400 feet deep. The water within it fell to earth as rain more than 450 years ago, ensuring that it predates the industrial revolution and all its polluting effects. Great brands start with quality, authenticity and a great story.

The brand also got its distribution right. Ignoring the traditional FMCG philosophy of maximal distribution, Fiji Water launched slowly and selectively in the US through exclusive outlets in Los Angeles and Palm Springs. The brand built its distribution not only on the basis of sales, but also in terms of brand and communication - especially during market entry. Fiji Water first appeared in New York, for example, on the menu at Jean-Georges, an elite restaurant in Manhattan. It was priced $10 a litre and presented to diners in a solid-silver Fiji Water serving case. Great brands also begin with selective, on-premise distribution. Gravity and growth will eventually lead your brand to the supermarkets, but it can never happen the other way around.

Fiji Water didn't suffer pricing vertigo either. Ignore the economists who try to set rational limits on prices. Maybe these apply to commodities, but great brands are incomparably precious and should be priced accordingly. Thanks to the limited supplies at Viti Levu, the growing acclaim of the brand and its high-end distribution, Fiji Water was able to outprice its European competitors. In the UK, the brand retails for £1.95 a litre - significantly more than you would pay for the same amount of milk, beer, petrol or even Evian. Such super-premium prices communicate exclusivity, amplify brand equity and deliver fat operating profits to boot - provided you have the brand equity to justify the premium in the first place, and the bravery to set the price bar that little bit higher.

Like many of the emerging iconic brands of this century, Fiji Water eschewed major advertising campaigns (too mainstream), direct marketing (too tacky) or sales promotions (too commoditising). It relied instead on natural celebrity endorsements, free product-placement and the subsequent buzz to build its appeal. It started in 1999 when former James Bond star Pierce Brosnan poured Fiji Water over co-star Rene Russo in his Jacuzzi in The Thomas Crown Affair. Brosnan was a fan of the brand and, like all the celebrity endorsements that followed, the brand's inclusion was not paid for but was, instead, the natural outcome of its premium position.

In 2004 David Gilmour sold Fiji Water to Roll International - owned by Stewart and Linda Resnick, who also own Franklin Mint and Teleflora. According to press reports, Roll International paid about £30m for the brand - which is probably the first time that Fiji Water has ever been considered a bargain.

30 SECONDS ON ... FIJI WATER

- Fiji Water is now the fastest-growing bottled-water brand in the world and the second-bestselling brand in the US, where 90% of its 130m bottles will be sold this year. The product is now Fiji's fourth-biggest export after sugar, clothing and fish.

- Record UK temperatures in July and August have made the branded water category even more profitable than usual. Sales are reportedly up 80% on summer 2005 and the bottled water market this year is estimated to be worth £1.9bn.

- Selfridges, one of the few UK retailers to stock Fiji Water, reported five-fold increases in sales of the water in July.

- Nobu Matsuhisa, owner of the Japanese restaurant chain Nobu, uses Fiji Water to boil rice.

- Celebrity suppers of Fiji Water include Tom Cruise, P Diddy, Jennifer Aniston and Elton John. The brand has also featured in TV shows such as Sex and the City and The West Wing.