$43.6B U.S. agency revenue
Is the AOR model DOA? Not according to Kraft Foods Group Chief Marketing Officer Deanie Elsner, who is defending agency-of-record relationships in the face of rising criticism that the arrangements are no longer viable in an age of fragmented media.
One of the most-well known critics of the AOR approach is Dana Anderson, VP of marketing strategy and communications for Mondelez International, who wrote in the Wall Street Journal earlier this year that AORs are "no longer the pathway to Oz for clients or agencies."
But Ms. Elsner told Ad Age in a recent interview that she disagrees with her former Kraft colleague. "I don't think it's the end of the AOR, although I have a great deal of respect for Dana, and I've had great years working with Dana," she said. The two women worked together at the old Kraft Foods Inc., which split into two companies nearly two years ago: Kraft Foods Group and Mondelez.
Ms. Elsner -- who will speak at Ad Age's upcoming CMO Strategy Summit -- was named CMO in early 2013 after leading Kraft's beverages business. Ms. Anderson, Kraft's former senior VP-marketing strategy and communications, oversaw significant reshuffling of Kraft's agency roster before she joined Mondelez in late 2012.
Still, Ms. Elsner said Kraft will continue to "pressure test" its roster "for the right agencies … where we can win in this world of precision-based marketing." But even as she scrutinizes her agency partners, Ms. Elsner is committed to keeping AOR oversight of big brands, because she said AORs are needed as the caretaker of large creative ideas.
"The big idea is still alive and well," she said. But she added that the "translation of that [idea] across different media channels may be more executionally appropriate outside of the AORs. Or the AORs will have to figure out a way to translate [ideas] across different mediums in a more cost efficient way."
Ms. Elsner said that creative agencies are still focused on "big glitzy" TV campaigns, but "what we need to get to is media-agnostic, creative platforms that are more agile." A campaign needs to be "flexible enough [so] that it can be adapted based on real-time learnings," she added. "That's a very big contextual difference from where we are today."
Of course, for agencies this can mean less revenue. But several shops are coming to grips with the new reality, while boosting in-house production capabilities to deal with the demand for more -- but lower cost -- digital content. Andrew Robertson, president-CEO of BBDO Worldwide, has called the trend a shift from "tentpoles" to "tadpoles."
Kraft, for its part, has mostly stuck with the same core group of agencies for its digitally-focused efforts. For instance, a trio of shops -- 360i (digital), Olson (PR) and McGarryBowen (creative) -- have routinely collaborated on efforts for Oscar Mayer, including a social media contest earlier this year in which consumers could lease the Wienermobile.
Without AOR oversight, Ms. Elsner said brands risk getting sucked into "stunt marketing" as they seek to breakthrough in different media channels without protecting brand equity. "That is where the AORs come into value," she said. "They can look at those things and say that's not exactly right."
As Ms. Anderson downplayed AORs, she stated that digital has "created thousands of new mediums," so "it is just not possible for one agency to be expert in all these areas," according to her Wall Street Journal opinion piece that was published in March. "So we've significantly expanded our roster of agencies," she wrote. "We went from a handful of agency-of-record relationships to working with over a dozen different agencies."
In one initiative, called Project Sprout, Mondelez has used multiple agencies at once on its gum business, which includes Trident and Stride. The shops launched multiple digitally focused campaigns on accelerated timelines that were pilot tested in different regions. The company also recently cut a deal with video-news provider NowThis News to help create digital content for Halls, belVita, Oreo and Wheat Thins.
Still, Mondelez is not ready to abandon AORs completely. Eliza Esquivel, VP-global brand strategy, who reports directly to Ms. Anderson, recently told Ad Age that there is "not just one answer" for the best agency model. "In some instances it makes sense to have an agency of record," she said, while in other cases multiple agencies or project assignments work best. Mondelez's key agency relationships in the U.S. include The Martin Agency for Oreo and Droga5 for Honey Maid and BelVita.