Why the Client-Agency Bond Just Isn't What It Used to Be
NEW YORK (AdAge.com) -- One of Shelly Lazarus' most vivid experiences in more than three decades in the ad business was the afternoon a young creative director strolled into her office, irate over a confusingly written instructional pamphlet client IBM had enclosed with a desktop computer.
"People were so caught up in thinking about what IBM stood for, but here was a flimsy piece of paper and [the creative director] was so involved," Ms. Lazarus, chairman of WPP's Ogilvy, said. "He cared. You can't buy that."
Like many of her contemporaries, Ms. Lazarus, who in the 1990s sold IBM on the notion that it didn't require countless relationships with shops around the globe when it had an agency as dedicated to that company as hers, recalls clearly a time when the relationship between client and agency was sacred. But that time, for a long list of reasons, feels to be fading away.
Consider the past 12 months. Harley Davidson parted ways with Carmichael Lynch after 31 years, with the iconic motorcycle maker pointing the finger at the agency for initiating the split and the agency citing differences of opinion creatively. Dr Pepper Snapple Group ended its 40-year relationship with Y&R, after shifting bits and pieces of the business to Deutsch and McGarryBowen. MetLife after 83 years cut ties with Y&R, moving its account to CP&B. And after nearly 100 years of working with McCann, Exxon Mobil is now in the midst of a review.
"Fifty-plus years is a big ask in this day and age," said Brian Martin, a New York-based search consultant. "Most clients seem to be happy if they can get five to 10 years out of a relationship. The average client-agency relationship, I think, is about four or five years. You need to look at all your business as though it's only going to be there that long, and there are many factors that could derail it along the way."
On the agency side, there's a serious talent crunch. Even in Don Draper's day, the best talent at any shop was just a salary raise away from a job at the agency down the street. The revolving door still exists, but far more worrisome is the idea that fewer talents are coming through the door in the first place, while some of those who already have worked their way up to the top of the creative ladder are now departing for other industries.
It's not all agencies' fault, of course. Procurement is now a fixture in conversations between agencies and marketers, and talent is an issue on the marketer side, too. The latest figure for the average tenure of a CMO, though growing, is still shy of three years, according to Spencer Stuart, and many continue to make hiring a new agency the first order of business after landing in a new gig. And where agencies are spending time and money getting up to speed on digital, some clients are still not catching up fast enough and are struggling with reorganizing their legacy internal structures.
"Once upon a time, the advertising agency was the center of the universe for the marketer," said Bill Duggan, exec VP at the Association of National Advertisers. "It was the key partner ... they used to be the keepers of institutional knowledge on an account. There are always peaks and valleys in relationships. Before, clients were more willing to ride out the valleys because they knew that the peak was around the corner. Unfortunately, brands don't value agencies as much as they once did."
And relationships are more complicated when you're not monogamous. The fragmentation of media resulted in fragmentation for the agency world, so there's no shop that's as singularly important as it once was. Many younger, digital shops are used to working on a project basis and are less quick to boast about "agency-of-record" status.
"Our industry is in the midst of breaking down old connections and establishing new ones. A pessimist would say that, as an industry, we lack commitment," said Elizabeth Zea, partner at Juel Consulting. "Agencies aren't investing in their people, and as a result, employees are on the move. An optimist would argue that we are in the midst of an evolution and to evolve as a species, we need to introduce new ideas, new genes, new ways of working and that the fraying of relationships is a natural course of our evolution. We need to break down old relationships in order to build new ones."
So what does all that mean for the industry?
"It means that the agencies need to be able to attract and keep top talent on their side, and deliver fresh ideas, thought leadership and bottom-line results," said Mr. Martin. "In order to maintain a long-term relationship you need a cultural orientation toward valuing a long-term relationship ... the clients have a responsibility for creating an atmosphere that allow agencies to do their best."
It also means results are expected a lot faster.
And it means that you have to evolve to keep pace with new technologies and set higher standards for talent without losing focus on putting in the necessary time to maintain a healthy relationship.
"There's a concern that top management in the agencies have lost the concept of being involved with the top management of clients," said Phil Geier, former chairman-CEO of Interpublic Group of Cos. and now a consultant. "There's got to be more of a concern at top management of agencies, and they need to figure out how to be involved with not just advertising, but their businesses. Part of it is that they don't have the time they used to have ... and part of it is just a lack of desire."
Ms. Lazarus said she agreed.
"If you think about campaigns and work that everyone admires, for the most part they come out of long-term relationships, where the agency understands the brand at depth. They don't need briefings; they have it in their souls.
"It's like a good marriage," she said. "I've been married for over 40 years. It's trust, very open dialogue and a presumption that this relationship will continue to get stronger."