A client’s relationship with its agency is one of the most complex in the business environment and requires a substantial level of collaboration from both parties to make it effective and sustainable. However, advertising industry professionals believe that this relationship has broken down, bordering dysfunctional. There are many possible reasons why this has happened on both sides. Some believe the strain has been caused by the lack of trust, decreasing respect, a failure by agencies to articulate their added value to the client and even a perceived lack of skill and competence. Others believe that the agency model has broken and needs fixing.
This entry provides my personal take on behavior patterns that may affect client-agency relationships and seeks to outline ways to build successful business partnerships that are based on trust, confidence, understanding and open communication.
What clients want vs. what clients really need?
When a client assigns a new agency or when an agency signs on a new client, there has to be a clear expectation on the onset. It is extremely important to define objectives and align on how performance is measured. We find ourselves in difficult times for client-agency affairs. Fall-outs regularly occur as many relationships fail to meet expectations. In today’s state of business, a clear trend is to terminate agencies that “under-perform”. In 1984, the average client-agency tenure was 7.2 years. By 1997, that number declined by 25% to 5.3 years. Today the average client-agency relationship is less than three years.
In the past, an agency was used as an outsource service for a client’s marketing activities. Clients bought time and experience as their responsibilities increased and became more complex. Expanding remits required to cover new and emerging channels meant certain functions were no longer at the business core. An agency would serve their clients under one integrated marketing communications umbrella and success metrics were very much integrated into the clients’ business objective.
Today, businesses face accelerating change with a greater need for specialist expertise. Clients are forced to hire multiple agencies to help them perform specific executions of the marketing mix, each agency responsible for a specific task to be completed at an agreed price. The trend is for clients to appoint multiple stakeholders – PR, social, media, creative, digital etc. As such, there is mounting pressure from agencies to align their performance on advertising/media objectives instead – an increasing and apparent disconnect from the client’s business objective. In today’s new world order, more responsibility is required from the client to manage these resources and define expectations of each agency.
Yet, there is a lack of consensus on how advertising effectiveness should be reviewed and evaluated. Agencies and clients have largely failed to find a meaningful way to measure, judge and compensate advertising’s contribution to overall business performance. As a result, fragmented agencies continue to operate with greater blurring of functions – all converging in a way not seen before. Who does what now is much harder to tell.
Set obvious paths for integration.
When clients work with multiple agencies, it is essential to set clear expectations on scope and responsibility. It is paramount for clients to articulate what exactly it is they want done when the task is handed off. When clients assign agencies to tasks, are they delegating responsibility for that activity or are they delegating the authority to do it? Most often, clients have not sat down and interrogated themselves as to what they are looking for. Are they looking for a strategic partner, a strong negotiator to help protect their bottom-line or a think-tank for ideas and new opportunities? Without knowing, and without formally recording that in a brief, clients are setting themselves and their agencies up for frustration and failure. A lack of interest/understanding of a client’s business is a reason frequently cited by clients why they decide to terminate agency relationships.
How much of the clients’ efforts costs or how effective they are start with the direction provided to agencies. A brief is not a one-way dialogue: not a physical object, a soft or hard copy of a document. Before the client commissions the task to the agency, it is important at the outset of the programme to get full buy-in across all levels of their organisation and align inputs before the work has started.
To increase results-based accountability, collaboration and shared responsibility is required. Clients, as givers of tasks, must be clear about what is needed and be able to explain what they are looking for as an end-product. It is essential that critical information is passed on to the agency for them to complete the task in an agreeable manner. Clients must be prepared to invest valuable time to getting the agency up to speed on strategy and big bets during the planning period. No matter how challenging this may be, providing a line of sight into the immediate future is the least clients can do to prepare their agencies.
Just as important, agencies, as the recipients, must understand how to manage upwards and suggest improvements to the process to be more effective. If sensitive, yet materially important information is not made available, it is a serious handicap for any agency. It becomes difficult to provide a point-of-view, help clients make business decisions and execute effectively without being fully informed. Too often agencies develop deep subject-matter thinking to help clients going in a specific direction to only discover the client has had a “change of heart”. Independent of company size, clients’ internal organisations can too be siloed and the agency’s contact may not necessarily be a decision-maker nor an influencer, but a mere pawn. Therefore, it is important that the agency tries to identify and connect with the right stakeholder(s) to have a seat at the table and be involved in discussions at the start of the process.
Making sure everyone makes a fair profit.
At the end of the day, both marketers and agencies look for the same thing – profitable growth in their businesses. Budgets end up in the hands of the agency given the task of turning them into gold. Yet no other business partnership has received so little oversight or historically been so poorly managed. Only a few savvy marketers know how to take advantage of their agencies skills and resources to fulfill their vision, leveraging these entities as powerful competitive assets. For all others, agency relationships are merely treated as commodities with an overemphasis on the bottom-line.
“What did you say your overhead was again?”
Clients often want the ‘very best’ to work on their business but they are unwilling to remunerate for the resources. It may come as a shock, but the all-star talent pool is rather scarce. To even meet any new business asks, the agency would require to clone these people thrice over. For any chance to win a pitch, agencies are compelled to put their superstars in the team organogram to look good on paper but often the client fees alone barely cover overheads – thus failing to staff the operational team accordingly.
When Finance throws off the balance of Art and Science.
Advertising like its parent, Marketing, can be viewed as an expense not an investment for any business. We often find that the ad budget can become a healthy piggy bank ready to be broken when the expectation of immediate ROI is not met. Too many clients rely on their procurement department to drive the conversation about value. The danger here is the measurement of cost, not the measurement of commercial effect from great thinking.
Agency fees have been fiscally ‘commoditized’ by procurement’s forceful entry into the marketing spend category – based on competitive benchmarks, audits and financial negotiations. The constant stretching of the agency to deliver value results in clients looking to get more for less. This is fine so long as both parties are still in agreement of what is fair and equitable. Otherwise, clients must be prepared to get what they pay for – an unmotivated and uncommitted group of professionals who will give as little as possible creative and intellectual brainpower on their business.
When fees are negotiated, a very clear scope of work must be developed with all clients, especially junior staff, so they are aware of its specificity. Both parties must be open to having honest discussions to build a fair remuneration system that aligns the client’s needs with the agency’s interests and priorities, and which is flexible enough to accommodate possible changes in the future.
Ultimately, the advertising business is essentially a people business. Building and maintaining the client-agency relationship is an integral part of working life. Therefore, it is our duty to affect positive change in our everyday business dealings in order to develop strong and rewarding relationships.
The work of an advertising agency is warmly and immediately human. It deals with human needs, wants, dreams and hopes. It’s ‘product’ cannot be turned out on an assembly line. – Leo Burnett