Six Questions For John Connors, Founder & President; Boathouse
Originally Published IN FORBES
John Connors is the founder and president of Boathouse. Boathouse is an independent, full-service integrated marketing and communications agency that is driven by data, guided by analysis and strengthened by artificial intelligence.
John grew up in the advertising business, starting his career at Hill Holliday. John went on to serve as CEO of Zentropy Partners, an internet services business, and served as a part of the McCann World Group Management team—at the time the largest agency in the world. In 2001, he founded Boathouse. John received a BA in English from the University of Pennsylvania, and spent 12 weeks at a transformative executive education boot camp at Harvard Business School.
We emailed John six questions to gauge his thoughts on the advertising business. Below are his responses.
Previously, you have worked at big global ad agencies and now you’re Founder & President of a smaller independent ad agency, what are the advantages and disadvantages of them?
John Connors: I believe every agency-side person should aim to work at both a big and a small shop and decide for themselves what is a better fit. Too many people I talk to say one or the other is better - but they have not actually worked at both. For me it was not even close. I was not wired for the big agency holding company model. Yes, I got to work on big client names that were fun to drop at cocktail parties and it was valuable to see the scale required to truly deliver in 120 countries. But, for my personality, the challenges far outweighed the benefits. At the big, global agency I worked with ridiculously large teams (of very smart people) that too often devolved into political skirmishes for the wrong reasons. Second, the big client names usually came with enormous egos. These folks thought they were better than other people and they treated us as a vendor not a partner. I was a cog in someone else’s machine. Now cue Frank Sinatra’s “My Way” and I will tell you about the advantages of building your own agency. You get to test your own instincts. You get to define what is high value for clients and what is not. You get to build far deeper relationships with clients. You get to build your own culture. You get to hone your skill as a true professional. And while there will always be some client B. S…. you are not working for some holding company spreadsheet jockey. You can truly do what you believe is best for the client and that feels very, very different. Like breathing air with more oxygen.
As advertisers continue to allocate more of their budgets to digital media, do traditional ad agencies have a future?
John Connors: I have seen a few cycles in this industry. I started in the business in the 1980's and so I have worked through the TV era, the digital/social era, the data era and now the A.I. era. It is simple in my mind - if you become old-fashioned you go away. Some traditional agencies held onto traditional models, and they have disappeared. Some traditional agencies modernized, and they have thrived. The great part of this business is that it is constantly transitioning and that gives you multiple opportunities to win or lose. There are always opportunities to modernize. Today, digital agencies are the ones at risk of becoming old-fashioned. This year will be the 30th anniversary of Apple’sApple 0.0% first website. It is a harbinger of the digital era. Over the last 30 years specialization has become rampant in the agency business as it was the key to growth. Site specialists, social specialists, search specialists, martech specialists are now all at risk of becoming narrow-minded and old-fashioned as A.I. enters the game. A.I. will not respect their silos. The vertical digital agency is now the traditional agency. They must modernize, or they will be run over.
What are the biggest challenges in running an ad agency? What keeps you up at night?
John Connors: My biggest fear is failing. Losing a client or two, having to cut people I feel like are part of my family, having the business go upside down, having to eat crow with my father-in-law who said I never should have left the secure, big agency with the great 401K, health, and dental plan. This is a healthy fear. It drives my competitive side and that drives my work ethic, my client work, my culture building, my team building, my focus on staying modern and never becoming old-fashioned. That said, the biggest challenge running an agency is simply getting other people to develop their own version of this fear. I am always trying to get people to think about the whole team rather than simply their job. In this way, the owner mindset is very different from the employee mindset. In the business of law people aim to be a partner. In the businesses of audit, tax and consulting people aspire to the partner track - those industries train people to think they should become owners if they are successful. Unfortunately, our industry trains people to think of themselves as employees. I have not found the secret to this mindset shift…but I am working on it.
You’ve been working at agencies for 35 years, in your opinion what are the biggest changes you’ve seen?
John Connors: I believe there are three layers of change in our industry that we must constantly manage and monitor.
The first layer is the role of the CEO as it drives the way clients behave and buy agency services. In the last 35 years the CEO has migrated from being an insider/business manager/industry specialist to the person responsible for transforming the company, keeping the company modern and being the spokesperson for every issue and every stakeholder. This evolution has put enormous pressure on the CMO which in turn puts pressure on the agencies. I don’t believe we study this layer enough as an industry.
The second layer of change is not surprisingly the technological change which I referenced earlier. The TV to digital transition may have taken 30-40 years, today the cycle time of change has been compressed to 5-10 years. The data/performance era of holding company acquisitions has shifted to A.I. in a very short time span. I believe the pivot to A.I. only accelerates the change and this gives the smart and nimble an advantage.
Finally, there is the increasing role of private equity in our business. The holding companies have largely been replaced by the private equity firms as the primary means of selling your company. I did not like working for a holding company as I felt it was not always in the best interest of my clients. I think that pressure will only accelerate as PE firms buy more and more agencies. There will be some good ones…but there are already a lot of horror stories, and the risk is that agencies think too much about serving the PE owner and not about serving the client.
You started Boathouse 20 years ago, what were the reasons that led you to that decision? Nowadays, there are a number of veteran ad agency executives that are launching their own start-up shops, what advice would you give them?
John Connors: Beware the sin of arrogance. Everyone wants to be a strategist and get away from the dirtiness of execution. That is a trap. If you do the simplest exercise and break down a CMO’s budget into a pie chart you will see most of their dollars are spent in execution. They do not buy very much strategy. The worst thing you can do is try and sell them something outside that pie chart. You end up evangelizing and you will go out of business before you know it. In the early 90’s we sold big companies their first websites. It was pure evangelism. Many times, we would spend a year convincing someone they should build a website and after all that work educating them and they would thank us by inviting us into the RFP process. F’ that. The key to building a good agency is finding predictable revenue streams. They will make you look smarter than you are…trust me!
How do you see agency compensation evolving from Full Time Employees to a model that benefits both clients and agencies?
John Connors: Agency compensation is hard work as clients and procurement departments work to drive down cost. The responsibility falls to agencies to differentiate the high value work from the low value work. We should make good margins when we solve hard problems. On the other hand, we should push low value services to low value agencies, offshore agencies or to in-house client teams. The last thing we want to do is charge $250/hour for something the client can do for $75/hour. That is bad business. Unfortunately, many agencies today want to grab whatever money they can - high value or low value. Equally many clients want to push down margins on high value work. I believe the key discipline for agency owners is to exit low value businesses and invest in the high value work that comes with high margins. You can then decide if you want full time or gig employees…but if you are doing commoditized work at low dollars and low margins you will have a hard time surviving.
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