It is well worth reading the IPA Report From Mad Men to Sad Men as summarised by Leigh Thomas CEO of Dare, and the comments of Debbie Morrison of ISBA and others.
This report is not just another series of platitudes about a crisis in the client/agency relationship. This time the gloves are off and there is some really plain speaking.
Clients say that agencies don’t understand their world. They aren’t good at numbers. They can’t build a business case. They don’t understand their clients’ customers. They live a rarified existence. They haven’t understood the implications of the shift from classic marketing communications to enhancing the customer experience.
Meanwhile agencies are frustrated. They feel unappreciated. They say things like:
- "Procurement has become ever-present, driving down cost at the expense of time to deliver properly"
- "We’re no longer connected at CEO level. We now work with mid-level marketers who lack accountability and sight of the top-table agenda"
- "We’re not getting paid for the true commercial value of our ideas"
Some clients are recruiting talent, and taking in-house what used to be the agency function. Or using crowdsourcing as a source of ideas. Others are relentlessly pitching, because they feel their retained agencies can’t deliver the creativity, success and results they are paying for.
I’ve been convinced for years now that the traditional client/agency model was doomed. Why? Here are ten reasons:
1. The client/agency relationship – for good or ill – is regarded as largely master/servant. The vast excess of supply over demand (far too many agencies) doesn’t help. The success of the huge holding groups is one thing. The fall in agency margins (as recorded by Kingston Smith) is quite another, and is a better indicator of the struggle many agencies have to make a good living. For many, selling out is the only end game. And of course takeovers are the way the groups convince the analysts they are doing well.
2. Enhancing customer experience for so many brand owners has become as important (if not more so) as devising marketing communications and advertising ideas. But have agencies realised the significance of the change? And why is the outcome of pitches still so geared to spec creative? The business model changes as the agency business moves away from a media base.
3. Clients believe that many agencies put a higher priority on winning new business than offering excellent service and delight to the clients on their roster. And for the most part they are right to believe that. Our experience with long term relationship assessment is depressing. Agencies are widely seen to have feet of clay not the twinkle toes of the resident magician. See the admissions in the IPA report.
4. Agencies are not widely regarded as professional and expert. They are seen to sell the services they want to sell. Agencies are just not sufficiently respected, and it is my belief that being prepared to spend a fortune on giving away ideas to win an account has not helped. There are several other ways to pitch for business, just as there are plenty of more reliable selection criteria than which agency puts up the best spec creative.
5. Many clients believe that global agencies are poor at delivering global creativity and service, which should be their strong suit.
6. The painstaking creative development process is a passion-killer, and the advertising model doesn’t work in other disciplines. Media has always been different, and so are activation, social media, events and customer experience.
7. Advertising is proud of its position in the pantheon of creative industries – but maybe it doesn’t deserve it, because in music, film, theatre, fashion, TV, restaurants etc the creators own their Intellectual Property, whereas in advertising they do not. Agencies that find a way to own IP will be ahead of the game.
8. Perhaps the industry should be like sport or entertainment, where performers perform, and suits stay in the background.
9. Procurement has been a disaster in its attempts to quantify creativity. Marketing needed a procurement function, but procurement also needs the judgement of marketers to maintain quality control.
10. The classic fee system - whereby agencies charge people hours, not for outputs and outcomes – is outdated nonsense as a default system. The moves towards value- based compensation are to be applauded
What’s the answer?
You can’t solve problems like these in one short blog. But here are a couple of suggestions.
One for agencies. One for clients.
Agencies – just remember that until the revolution comes, clients are going to call the shots, hire agencies, issue briefs, approve the work, and control the budgets. Everyone now knows that enhancing the customer experience is vital for brand owners in the High Street and online. If agencies can deliver on that, why wouldn’t they put an absolute priority on doing the same thing for their own customers in clientville - thrilling and delighting their clients, new and old? Hence ‘Creating Customer Experiences²’.
One of the more depressing aspects of managing client/agency relationship evaluation projects is the tendency of agencies to ignore the basic principles of providing good service and customer satisfaction. It is never a bad idea to remind your client how much you value their business!
Clients – always remember that agencies are professionals, and that their best people can change the game, give you an unfair advantage, and make your brands unfeasibly successful. Hiring the best experts, and making sure they are aligned with your goals, is a high level strategic and commercial skill. Agencies should be valued in terms of their deliverables and contribution to the business success of the clients that pay them, not on awards, nor on the basis of giving away their best ideas to other people’s clients.
It’s in the client’s interest to encourage and motivate external talent and expertise, in the same way that it is second nature to bring on talented contributors within the team or business unit. I feel that the new business / pitching process has a lot to answer for. Particularly in protracted, procurement-driven pitches, there is a tendency for the client team to become relentlessly critical and demanding. It may work when you are evaluating potential suppliers (although I have 27 years experience at AAI to say it doesn’t). It absolutely doesn’t work when you are dealing with premium partners like agencies, who can make a material difference to your business success.
Read more from David Wethey in our Clubhouse.
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