Good morning. Constant erosion of creative agencies’ premiums might not be as good for clients as you’d think.

A bracing data point on the agency business has implications for marketing leaders, too, the WSJ Leadership Institute’s Patrick Coffee writes for the newsletter:

The price of creative agency services has dropped by some 75% over the past three decades, the longtime consultant Michael Farmer wrote last week.

The trend line isn’t surprising—Farmer earlier wrote a book on the subject called “Madison Avenue Manslaughter”—but the new number is stark.

It’s based on Farmer’s calculations of client data and his metric for creative work, where the effort to make a typical TV commercial comprises one unit and a banner ad is about 1/135th that.

Farmer blames the plunge in pricing power on factors including:

• cost pressure from CFOs and procurement teams that undermines agency fees and favors cheap programmatic ads over brand-building
• and snowballing rivals for budgets like experts in SEO, email and AI.

“CMOs are now just arbitrators among the competing interests within their own departments,” Farmer told me when I reached out to him.

The dynamic isn’t much better for marketers than it is for creative shops.

So what now?

Agencies should push back on client briefs when necessary. It’s hard to be effective as you execute an ineffective scope of work.

But marketing leaders could do better, too. Farmer said he’s never seen a marketer use a request for proposal to ask agencies how they can help a brand grow.

“They're talking about the degree to which they're managing a transformation of spend in certain directions, and not talking about brand growth,” he said.

CMOs should also encourage agencies to move away from their longstanding model of basing fees on the number of hours their employees spend producing client work and instead charging for the value they provide, according to Farmer.

Overcoming all the players’ suspicion of change won’t be easy, however, even in an industry that’s seen much better days.

As we noted in this newsletter last month, creative services will make up less than 20% of revenue at the new Omnicom, now the largest advertising agency group. Historically, the numbers have been higher, according to analyst Brian Wieser, who said creative accounted for around 40% of IPG’s total revenue before it was acquired by Omnicom.

Hershey is defending its Reese’s peanut butter cups from a frustrating critic, the WSJ Leadership Institute’s Katie Deighton reported in a surprising piece over the weekend: Brad Reese, the grandson of the cups’ inventor.

The 70-year-old Reese, a self-appointed defender of his family brand, recently accused the company of forgoing milk chocolate and peanut butter for cheaper substitutes across “multiple Reese’s products” (he didn’t specify which). His open letter went viral after MrBeast, who sells peanut butter cups of his own, pointed it out to his 34 million followers on X.

I asked Katie how Hershey found itself here—and where it goes next.

How did Brad Reese get on your radar?

I’d written about Hershey’s new marketing strategy for its flagship chocolate and Reese reposted it to his LinkedIn page. His takeaway, unsurprisingly, was that the Hershey brand was flagging behind Reese’s.

I was intrigued by this evangelism (and his name).

Has he been good news or bad news for the Reese’s brand?

A few weeks ago I’d have said good: He was a human billboard for Reese’s and any criticism he posted about the brand reached only a modest amount of followers. But then MrBeast, the star YouTuber, came along. He amplified Reese’s letter to Hershey, the national press picked it up, and before long millions of people knew not only about Brad Reese but his contention that Reese’s had been swapping out “real” ingredients.

Hershey was on the back foot: It couldn’t shut him down (he isn’t an employee), it couldn’t use soft publicity tactics to get him on the company line (he isn’t a journalist) and it couldn’t really dispute some “recipe adjustments” (even as it said the cups haven’t changed and any adjustments involve new product lines with new “shapes, sizes, and innovations.”)

All that said, Hershey’s stock is trading at or near a 52-week high, so it doesn’t yet look like Reese has done too much damage with investors.

What are the lessons for other marketers here?

Hershey, in public at least, has tried to take a passive-aggressive high road in all of this. It published a blog post saying that Reese’s cups are still made of freshly roasted peanuts combined with milk chocolate and answering questions like “Is the Reese family still connected to the Reese’s brand?” (“No”), without mentioning what prompted the discussion.

That was probably the best way to handle it (although I of course would have loved to have interviewed their comms team).

But I think that if Reese hadn’t made a run at the ingredients, someone else with a TikTok account or a Substack would have eventually. For better or for worse, Americans in the MAHA era are reading ingredient lists more closely, scanning for any sign that they’re being misled or ripped off, and loudly publicizing any perceived injustice.

Any food company making ingredient changes now needs to be prepared for a backlash or, even better, ahead of the story.

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