Even as the economy bounces back and marketers have more to spend, they are being extra cautious about how they allocate resources to agency work and select agency partners.Agency business is picking up, as demonstrated by recent account wins and the amount of new business activity reported by agencies.
"A year ago, we might have had three or four deals in the pipeline, and we probably have two to three times that now," said Rick Segal, chairman-CEO of HSR Business to Business, Cincinnati, which recently was named agency of record for Contech Construction Products and Allianz Global Risks U.S.
"We’ve seen more new business cycles in the last four months than we’ve seen in the last two years," said Steve O’Keeffe, president of ad agency O’Keeffe & Co., McLean, Va., which recently picked up market research and Web design business for MCI’s government division and was named agency of record for EzGov, a software company serving the government sector.
An era of greater scrutiny
John Quartararo, managing director of ad agency Citigate Albert Frank, New York, which recently conducted research among CEOs and CFOs on agency selection criteria, said the down times have brought greater scrutiny to agency reviews.
"Now more than ever, in light of the tough times in the economy and the corporate scandals, the ability to come in and solve a problem and bring a very creative idea to the table is probably the No. 1 reason why someone would hire an agency," Quartararo said. "The emphasis is on helping clients break through the clutter, often with half the budget."
The survey was conducted among a small group of respondents—only 25 senior executives—but the findings point to an increased demand for agencies to think outside the box to solve client needs.
Only two of the 25 respondents disagreed with the statement that creative is more important than experience in the selection of an agency partner.
All respondents agreed that they want to be treated as an important client, and they expect their agency partners to dedicate appropriate resources to their account.
"They don’t want to see the A team now and the Z team later," Quartararo said, referring to the pitch and follow-up.
Clients that have recently conducted reviews for agency partners agreed that excellent creative ideas and sound strategy are of primary importance in their selection process. Other factors, such as industry experience and range of services, varied by account.
Corn Products’ tight timetable
Corn Products International, a major supplier of food and industrial products, engaged in an agency search last summer after breaking ties with Slack Barshinger, Chicago, its former ad agency.
"It was a very tough time, because it happened four weeks before launching at a national trade show," said Deanna Heuschel Estes, marketing communications manager at Corn Products.
The company hired Jones Lundin Beales, a Chicago-based search consultancy, to provide support for a search, although it did not conduct a full review due to time constraints.
After analyzing the client’s needs and reviewing its database, the consultant provided Corn Products with a list of about 25 agencies that met its initial criteria.
Following a credentials review, Corn Products narrowed the list to eight or nine agencies. It met with each of these and ended up with four agencies on its short list: Davis Harrison Dion, Chicago; Gabriel deGrood Bendt, Minneapolis; HSR; and Shafer Condon Carter, Chicago.
Corn Products brought the finalists to its offices to brief them on a business challenge, giving the agencies three weeks to prepare presentations.
"Because we ended on a creative difference note with our previous agency, creative was very important and strategy was very important," Heuschel Estes said.
Industry experience wasn’t even on the list of criteria during the first round of meetings, she added. "If you hire bright people, they will dig in and understand the marketplace, competition and products," she said.
However, having similar corporate cultures and personalities that mesh is very important, Heuschel Estes said.
Following presentations at the agencies’ sites, Corn Products selected Davis Harrison Dion.
"DHD was very strategic, very creative, and our cultures really fit," Heuschel Estes said.
Lenox Saw seeks single shop
Lenox Saw & Manufacturing Co., a manufacturer of cutting tools and saw blades, also recently conducted a review for an agency of record. The company, which was acquired by Newell Rubbermaid in early 2003, wanted to find one agency to handle services including advertising, PR, direct, Web and merchandising. Previously, it had farmed out these jobs to several different agencies on a project basis.
"The objective was to find a common agency to provide an integrated communications strategy," said Susan Spalding, marketing communications director at Lenox.
The company conducted a formal review, although it did not use a search consultant. Instead, it created a list of criteria then searched through ad agency directories, trade magazines and its own database of contacts to come up with a list of candidates it felt were a good fit.
The most important criterion was creative, Spalding said, followed by the ability to provide multiple services. Having strong PR was also high on the list, she added.
The initial RFP went out to between 25 and 30 agencies. Then, after a credentials review, Lenox created a short list of six shops. Spalding declined to name the agencies that were included.
"Ideally, we wanted to find one shop to do all or 80% [of the services needed], so we’re not shopping things out to 10 different places and having to manage communications between all the agencies," Spalding said.
Lenox created a two-part assignment for the finalists. For the first part, the client gave the finalists a briefing on a hypothetical new product and asked them to develop a plan for the product launch.
For the second part, which included all six finalists, Lenox asked the agencies to put together a creative execution for the hypothetical product.
The finalists came to Lenox’s offices for that part of the process and had two hours to present their creative strategy to the president and representatives from sales, marketing and IT.
Lenox selected Eric Mower & Associates, Syracuse, N.Y.
"They put together a very comprehensive plan, they met all of our criteria and they understood our environment," Spalding said. Also important, she added, "They have a b-to-b unit, but they also have a brand promotion group."
No formal review for some companies
Some clients that have recently hired new ad agencies have done so without formal reviews. For example, software company EzGov, which sells to the Defense Department and other government agencies, recently conducted an informal review, putting together a short list of agencies based on word-of-mouth referrals, conferences and events.
"The government is a very unique market and to market to them effectively you have to have an agency that understands their needs," said Elisabeth Estes, director of communications at Atlanta-based EzGov.
After meeting with just a few agencies, EzGov selected O’Keeffe & Co.
"Steve O’Keeffe and his group demonstrated a comprehensive understanding of the government structure, how they like to receive information and what kinds of messages are most effective," Estes said.
She said another selling point was O’Keeffe’s branch office in Atlanta. "Our previous agency was in San Diego, and we only had face-to-face meetings once a quarter," Estes said, adding, "It is important to have someone to sit across the table from to have face-to-face dialogue."