One of the bigger conversations in the agency world in the last year has been whether there is really a decline of agency-of-record relationships. Agencies have different opinions depending on their clients, but some marketers, like Chobani, have recently moved to a project basis, planning to only occasionally enlist an agency for a project.
And now a new complication is arising: Agencies can find themselves in a bind if they've handled projects for a client, only to find a potential new client from the same category viewing that project as a conflict. "We've seen our business has changed, there's more project work," said John Butler, executive creative director at BSSP, during a senior agency leadership panel at the 4As Transformation conference in Austin, Texas. "If the project world is going to continue, then the whole conflict thing has to go away."
"That's what we have to figure out as an industry," he added.
He used a personal example, one in which the agency had a three-month project come in from a client, only to find that down the road, another potential client saw that short-term project as a conflict.
If marketers want to prevent their rivals from hiring agencies they work with, they should consider hiring agencies for more long-term work, Mr. Butler suggested. "I wanted to say, 'Why don't you book us for a year?'"
While the decline in the AOR relationship and movement to a project basis is still relatively client-specific, some agency leaders suspect that marketers now moving toward project work will migrate back to more persistent, deeper agency ties.
"I think we're going to get back to some kind of [long-term] partnership with big brands," said Leo Burnett North American Chief Creative Officer Susan Credle. "In order to be able to think long term, you need relationships."
Mike Sheldon, North American CEO of Deutsch, said that lately the agency has been seeing mainly AOR relationships come through the door, though he noted that Target, now one of Deutsch's biggest clients in Los Angeles, started as a project. That relationship continues partly because Deutsch brought additional ideas to the table that resulted in more work, he said, suggesting that agencies benefit from bringing more to a pitch than is outlined in the brief.
Mr. Butler also said that "the worst part about projects is figuring out the next year." The problem is complicated because it is "non-recurring revenue, and how do you staff for that?"