Clients and creative risks

Most clients tend to accept evolutionary creative work more easily than they do the challenging because it is easier to relate to unoriginal advertising. However, there are several drivers that push clients toward accepting creative risks.

Prospect theory (Kahneman and Tversky 1979) states that most people and companies (Fiegenbaum and Thomas 1988) are risk seeking when they are below their targeted aspiration levels. Clients that perceive that they are underachieving or failing to hit their targets are likely to be more willing to take a creative risk than are clients that feel they are succeeding. Furthermore, risk taking is known to be sensitive to the perceptions of those whose resources are being risked, that is, the "stakeholder perspective" (Berle and Means 1932). Agency theory is useful here, as it examines risk relationships between agents (managers) who have different perspectives than principals (owners) (Spake et al. 1999). According to agency theory, most managers do what is safest for themselves, not always what is optimum or best for their organizations (Murray 1991). Owners generally diversify their shareholdings across several firms, so their diversified portfolio enables them to take risks. By contrast, managers are risk averse, because if they take a risk, it may go wrong and risks can directly jeopardize their incomes (Chatterjee and Lubatkin 1990).

Advertising agency personnel empathize with their clients (Michell 1986) but will be more risk seeking. The reason is simple-the client has the final say and controls the level of compensation (La Bahn 1996). This removes agents one stage from the direct consequences of the decision. An advertising campaign's outcome rarely threatens an employee's livelihood, especially for senior executives, except when a major client may be lost to an agency and/or a team has been allocated solely to one big client. As a rule, agencies diversify their client base across multiple firms and are rarely dependent on a sole advertiser for their prosperity; therefore, they can act like agents rather than principals. Agents are able to take more risk-seeking positions because clients have the final say in the decision. Indeed, risk taking is an important part of any creative enterprise. Writers, directors and even creative directors often are hired, in part, for their ability to define and negotiate risk in the communication moment. According to a survey by Advertising Age (1992), creatives often try to convince their clients to take risks by emphasizing that safe advertising is a big risk in itself because it is unlikely to break through the clutter and by involving clients in the campaign process from the early development stage so that they take some ownership.

Most clients do not have sufficient knowledge of the advertising business to understand whether agents have acted professionally on their behalf. This is common to all professions. Thus, the most effective sanction on risk-taking behavior among agency staff is peer review and comparison of work (Sharma 1997). Just because advertisers have difficulty verifying the actions and activities of agency personnel, it does not mean that agencies and agents are uncontrollable. Agencies as a whole that take unwarranted risks likely will damage their reputations. Consequently, they will find it increasingly difficult to obtain new business. For example, Wills (1992) found the main factors in winning accounts were positive recommendations by satisfied clients and personal contacts with top management. At a micro level, unwarranted risk takers who disregard their clients' interests may damage their personal reputation with peers at their agency and find themselves out of ajob and in trouble finding a new one. Furthermore, experienced managers provide an additional layer of control by imposing professional codes and norms in risk taking (Sitkin and Pablo 1992). Such controls on risky behavior may be particularly important and effective. Within this general risk architecture, an agency's philosophy forms the foundation of its staff belief structure of how advertising works and is inextricably linked to risk taking.