Over the holidays, I was talking with a fellow agency CEO who was grappling with this scenario. Her agency does work for a large health-care concern down South. A second, and competing, health-care organization asked her agency to do some work as well. That's where her conflict ensued.
Should she provide full transparency for her original client about the prospect of doing work for a competitor?
Does she even HAVE to ask permission, or is that a matter of respect?
Can a client that does not commit its full marketing account to one agency expect exclusivity from that agency?
Should an agency be able to handle as many clients in one category as it wants, when the work is all project-based?
Essentially, what defines an exclusive agency-client relationship?
These are tough questions in changing times. In my experience, agencies have to make judgment calls. I believe that an agency has to set its own criteria for exclusive relationships. For instance, Brownstein Group does a lot of business with Microsoft. It is a project-based client, and has been for nearly 10 years. It is a valued client of ours, and has earned our loyalty. On the other hand, a client that gives us one or two projects every now and then might not earn the same loyalty. To me, I evaluate the scope of the relationship; the volume of work; the quality of the assignments; profitability of the work; and the interpersonal dynamics of the people on both sides.
You may apply different criteria when forced to make a decision on handling two or more project-based clients that are competitors. And in the end, you need to make the best decisions for your agency. But I recommend that you come clean with your clients, if each of them really matters to you. Tell them that you have been approached by a competitor. See what they say. If you do a very limited amount of work for the existing client, they'll be hard-pressed to ask you not to work for the competitor. In fact, bringing up the subject could help the client realize the value of the agency relationship they have with you, and open the door to more work or even an exclusive relationship.
But I am certain you will be faced with this decision soon, if you haven't already. If you apply your criteria and handle the situation properly, it'll be a lot easier than Sophie's Choice.