Agency and client relationships have historically built, and will continue to build, wildly successful campaigns and brand experiences: Apple’s promise that 1984 won’t be like 1984, Volkswagen's lemon, Nike’s challenge, Dos Equis’ Most Interesting Man.
When things are good, they’re great.
When things are bad, well ... the numbers speak for themselves. The average client-agency relationship now lasts less than three years. Whether that’s attributed to the shift toward project work, shrinking budgets, agency complacency, or brand management turnover, the bottom line is brands are hiring agencies and getting buyer’s remorse.
Agencies and brands alike must remember that if either side doesn’t invest the time and resources necessary into the relationship, it will fail -- inputs drive outputs.
Despite the demands of an ever-evolving marketing landscape, a smart partnership built on shared goals can and should provide value for longer than three years.
From AOR to IAT
Just two decades ago, the average client and agency relationship lasted eight years, more than twice as long as they do today.
So what’s changed since the days of hiring “Sterling Cooper” to be your agency of record (AOR)?
Well, let’s start with the obvious: There are no longer four channels on TV and the same magazines on every coffee table.
Digital has fragmented the customer across an ever-growing number of channels, each of which requires its own specialization from an agency partner. The one-stop shop has been replaced by integrated agency teams (IAT) made up of a social AOR, media AOR, digital AOR, public relations AOR, creative AOR, shopper AOR, and sometimes more.
At first, everyone stayed in their respective swim lanes, but shrinking margins have caused agencies to develop overlapping capabilities. Public relations agencies now offer social -- and vice-versa. Everyone at the table is fighting for a bigger piece of the same pie, creating tension and a lack of transparency that often derails the entire team.
Eugenio Perrier, veteran global marketer and CMO of Sabra Dipping Company, believes that strong alignment with both the brand positioning and the marketing objectives is critical to the success of agency teams.
“To make it work, each agency needs to be unselfish and understand that they are all there playing for one common purpose, which is the strategy that the team is trying to bring to life," Perrier said. "Everyone needs to think like they are a part of something that is bigger than themselves. You need to partner with the best creative talent. I'm not just talking about the most creative people, but those that are most aligned with the culture of the company and the culture of the brand so that the chemistry clicks.”
Despite the shift toward integrated teams and project work, agencies and clients don’t have to give up on lasting relationships, but the nature of these relationships must evolve.
Agencies must respond by constantly evolving their capabilities to market on emerging platforms for emerging behaviors across varying channels. Stay ahead of the curve, and clients will feel comfortable committing to the innovation that you bring to their brand.
Time for a Review ... and a Response
Any number of things can dictate an agency coming up for review, but it's typically the result of stagnant growth, mismanaged expectations, or the appointment of new brand leadership. Whenever there is a changing of the guard (which happens on average every 44 months), the new team will undoubtedly call a review to get their favorite agencies or friends at the table.
Changing budgets also increase the likelihood of a review. For example, Unilever now uses a zero-based model that forces brand managers, and agencies, to fight for their budget each year and continuously evaluate the success of partnerships.
Lisa Colantuono, co-president of marketing consultancy firm AAR Partners, believes it often boils down to one word: complacency.
“I've gotten calls, ‘I love the agency. I love the creative. I love the strategy. But, I feel like I'm the only one worried about the business every single day. I just feel like they've become complacent,’” said Colantuono.
She continued: “There was another one [comment], and I swear to you it was the exact words, ‘I just feel like they know my brand, but they don't know my worries.’ 'They've become complacent' is like this evil-headed something that comes out in different forms.”
It goes without saying that the agency under review needs to understand why and adjust accordingly, but the agencies responding to an RFP must also understand what went wrong in the previous partnership. Not only is this the single largest predictor of what could go wrong should you be awarded the business, but if your RFP doesn’t demonstrate what you will do differently, it's dead on arrival.
So what can an agency do to come out of a review with new business?
“90% of the time most agencies look and sound alike,” said Mike Palma, president of The Palma Group and former BBDO rainmaker. “To me, it comes down to who's able to make an emotional connection with the client and understand their challenges,”
For client-side CMO Eugenio Perrier, it’s all about chemistry and shared thinking.
“If you simply buy into the name on the work, you are buying into an agency in a superficial way,” said Perrier. “If you don’t know the specific talent that was attached to the work, the outcome can be very different from what you’re expecting. I think it’s very important to establish personal relationships with the folks that will actually work on the account so that you understand the talent the agency will actually be displaying.”
Perrier is speaking to the client’s worst pitch fear: the bait and switch. A potential agency partner or executive comes in and wows the brand team with fresh thinking and a great rapport, but a month into the brand engagement, the members of the pitch team are replaced with different agency members.
“Don’t even think about only putting the people in the room that are the best presenters,” Colantuono said. “The clients want to know who am I going to work with every day? Who is my daily team?”
To the client, the “dog-and-pony show” feels like the result of an agency’s obsession with new business -- which is fair. As an agency-side marketer, we fight hard for the brands and projects we know our teams are capable of knocking out of the park.
Clients also need to realize agencies are facing shrinking profit margins and constantly battling for top talent. Shared empathy for one another’s business is key: Care about mine, and I will care about yours.
That being said, there is no excuse for the bait and switch. I’ve been on both sides, and it’s essential that project and account teams are aligned with the client.
But, if clients want the pitch process to be transparent, they must consider whether they are asking for an unreasonable amount of speculative work for creative, ideation, and strategy.
When agencies are expected to go out on a limb and spend what could be hundreds, or thousands, of billable hours on spec pitch work, it incentivizes them to do whatever they can to win business.
Even worse, there are cases where brands solicit the thinking of many different agencies, only to not award any of the competitors.
This is not commonplace, but is not rare either. In fact, this has actually happened to me both as an agency founder and a former agency employee. I’ve also seen unawarded spec creative end up in brand assets six months later. There are clients that use the RFP process to solicit free ideas, which sounds my ethics bell loud enough to keep my ears ringing.
Despite everything that makes it problematic for an agency to pitch, it is even more expensive not to.
A small fee that covers costs for the agencies that come in and pitch could go a long way toward starting relationships off on the right foot. It says, “I care about your business. I value your time.” If costs are covered, the agency team is able to dig that much deeper into a brand and create smarter solutions.
There has to be an expectation that the estimate and work will only be as accurate as the time an agency is able to invest.
For example: When a contractor comes to your house to give you an estimate, he almost always exceeds the original estimate by a long shot. An attorney won’t spend more than an hour with you unless you get a retainer in place.
Why should our service-based businesses that demand ongoing evolution to stay on top of the latest trends and best practices be expected to give our work away?
I respect agencies that have pledged to reject spec work, but the reality is, if you don't do it, somebody else will.
“I've come to the point where I believe that a pitch is fair, but it needs to be compensated,” said Perrier. “We're not talking about huge amounts of money, but clients need to understand that an agency has to invest resources to be part of a pitch. They need to invest the time of their people and whatever else is necessary to show their thinking.”
Perrier recommends clients be very clear about what he calls "stage one of the pitch." The first stage won’t represent the entire solution, rather it allows an agency to show their capabilities, mindset, process, and ideation. The full scope of work and budget must also be defined for transparency.
“The compensation for the pitch is like when you're playing cards, you're chipping in to say, ‘Okay, I want to see this first round,’ and then the agency that is going to win the pitch, they will win the reward, which is the full scope of work,” said Perrier.
Palma suggests legal protection for both sides. Clients should make agencies sign a legally binding pitch team warrant that stipulates the client will terminate the relationship if they don’t get the team they were promised in the pitch, and if agencies have to provide spec thinking, clients need to sign legal forms that dictate the ownership of the presented ideas.
Colantuono believes clients must refrain from asking for full-blown creative spec work to streamline the process and keep momentum going.
“Nine times out of ten the client isn't producing what's created in a pitch anyway," said Colantuono. "Maybe some derivative of it, but it's very rare that what comes out of the pitch process is what goes right into production. Instead, try to understand how the agency thinks as a whole with relevant case studies that demonstrate similar problems and solutions.”
Palma has streamlined agency reviews by implementing video requests and responses.
“It gives the agency great creative license and opportunity to wow us with what's essentially a 5-to-10-minute commercial, but also we get to see the team that they're proposing," Palma said. "We're able to detect certain things in the video that you can't on paper."
He continued: “Don't hire people, don't hire category experience, don't hire case studies. Hire culture. All other things being equal, you hire the culture that you feel is most consistent with your team and your needs.”
Agencies, if you start a relationship with a bait and switch, you are only setting yourself up for failure.
Clients, if your agency is forced to start the relationship with a financial deficit, the quality of the output is going to suffer. And perhaps worse, the empathy they have for you and your business will start from a negative place.
Getting on the Same Page
The new biz dance is done, the contracts are finalized and signed, and a client-agency relationship has begun. So now what?
Too often, it starts with an excited rush by both parties to begin the work -- akin to the mutual infatuation that dominates high school relationships -- without any meaningful discussion aimed at understanding each other’s needs and expectations
Shared expectations of how the teams will work together are typically either assumed or treated as arbitrary, when they should be neither. They really do matter. As in any relationship, the root of upset and disappointment usually lies in one (or both) parties’ expectations not being met, so it’s a tragedy when client-agency relationships can become mired in mutual frustration and compromised output because the right discussions weren’t had at the start.
It’s much easier to discuss how the work is going to get done in the time available, the number of alignment and collaboration calls per week, what criteria the client will use for judging the work, etc., before rather than after any issues have a chance to arise.
Diggi Thomson is the Founder of The Dot Connectors, a facilitation and training consultancy that specializes in creating healthy client-agency relationships by helping client and agency teams learn and put into practice the skills and behaviors that enable them to get to better ideas together, faster, and more cost effectively.
“For an industry that prides itself on ‘consumer understanding’ and ‘meeting people’s needs,’ it is surely a great irony that neither clients nor agencies invest much, if any, effort in asking and understanding how to get the best out of each other,” said Thomson. “The quality of the end product is a function of the quality of the relationship not of one side or the other -- it is a joint responsibility.”
Thomson’s 15 years in brand management at Unilever has taught him that mutual curiosity and clear communication between clients and their agencies is essential to successful marketing efforts of every scope and size.
“I know from experience that clients usually have no idea how agencies work (and vice-versa)," said Thomson. "They typically get very little training in brief writing, judging creative, or even managing the agency relationship overall. Proper training and communication skills ensure the best return on their agency fees.”
Simple, honest and direct communication can be tricky -- not least of all because of the power inequality innate to the client-agency relationship. Unfortunately, it often leads to a lack of openness and honesty on the part of the agency for fear that it might jeopardize the business.
And because clients can’t fix what they don’t know is broken, the dysfunction continues with the work, the agency, and the business all suffering.
Fortunately, much of this can be avoided by starting as one means to go on: through simple, honest, and direct communications at the outset about people’s expectations and optimal ways of working.
The most helpful conversations will go beyond the "what" to the "why" and "how." Teams will create a plan that gets them from point A to point B within the time and budget allotted.
This conversation will also help the team to better face challenges along the way, creating the conditions for better relationships, better work, and better brand marketing.
The First 100 Days
No matter how smoothly the hiring and onboarding process goes, a good client-agency relationship is built on communication, trust, transparency, and alignment on the desired results of the engagement.
Steve Wages, a 20-year plus industry veteran and founder and CEO of Juxt Interactive, now serves as a principal consultant at AgencyAgile where he trains agency teams and management on how to better communicate, collaborate, brief, and align with clients around scope and estimates.
“I would say, by and large, there are a lot of good clients," Wages said. "And then there are clients that are either poorly trained, under a lot of stress, potentially inexperienced, or have a difficult boss or work structure. It’s generally not their fault, but we [agencies] sometimes get the short end of it.”
It’s common for agencies to complain about these clients, and yet we’re often the cause of many of the problems clients face.
“When most agencies talk about work, they refer to project scope, which are all the tasks and things the agency must do to produce the work," Wages said. "This is a problem, as most clients don't really understand or care about how we do our work. They perceive little value in understanding our tasks and processes.”
What clients do care about is what they are getting, so they can see if it is in line with their business objectives. They want to know the features, functions, and capabilities of your work, not the tasks that are required to create it. AgencyAgile refers to this scope as product scope.
By focusing on product scope, your clients can better understand how your work is positioned to achieve their business goals and what will be delivered.
“If we [agencies] just built stuff, clients would expect to be able to pick it off a shelf," Wages said. "In the end, we’re about the service that makes clients and brands more successful.”
He continued: “A lot of agencies are very comfortable being creators or builders, and they are probably very good builders. But they really fall down on the service side. We all need to understand that we in the business of making our clients successful, and these are real people.”
Better Marketing Relationships
As I wrote earlier, quality inputs drive quality outputs.
Agencies and clients must both recognize the upfront work that needs to be done to support and grow the relationship. There must be a shared understanding and empathy around the challenges that each face.
To create better marketing relationships, there must be:
- Alignment on product scope or what is actually being delivered.
- Empathy and comprehension on project scope.
- Proper communication across the mediums that work best for both parties.
- A focus on establishing shared language that matters -- check all jargon at the door.
- Transparency -- both sides have to share the good and bad news.
- An aversion to vanity metrics and a commitment to establishing metrics that matter to their business.
- Shared passion and comprehension for the brand.
- An agreement on the timetable. Is it a marathon or a sprint?
- Cross-functional agency teams with shared language and goals. These teams should intelligently resource accounts and avoid driving up billable hours without adding value.
- Shared expectations. Is this a high-touch co-collaborative process or a turnkey hands-off solution?
- A point of view on the future of your businesses.
- Strategic alignment on what you are trying to achieve, by when, and what will define success.
- Defined ways of working and collaborating.
- Focus and prioritization.
- All agency partners must play well in the sandbox. The days of one agency partner are few and far between.
- An agreement on budget, media mix, and how it is driving metrics that matter.
- A brief that lets the agency know what the client needs, but that allows the agency to deliver maximum value strategically and creatively.
- An understanding that a relationship is a two-way street.
- Alignment on the business and human metrics that define success.
There have always been, and always will be, obstacles that stand in the way of lasting client-agency relationships. While these hurdles threaten to doom the success of partnerships, they have also helped shape the constraints that have led to some of the most compelling creative work of the last five or six decades.
In today’s digital-driven media landscape, there are more opportunities than ever for client and agency relationships to create impactful work -- let’s not waste them. The burden falls on agencies and clients alike to avoid buyer’s remorse with a mutual investment in the relationship that allows both parties to do their best work.