How to Save the Troubled Agency-Marketer Relationship
NEW YORK (AdAge.com) -- It hasn't been this bad for 66 years.
Our annual dive into agency revenue figures shows shops of nearly every stripe lost revenue last year. In total the agency industry tumbled 7.5% to $28.4 billion in revenue in 2009. That's the sharpest decline since we started this listing in 1944.
Some blame the rise of social media, which has agencies rapidly trying to expand their offerings and sometimes promising capabilities they are unable to deliver, some blame even more agency partners at an already-crowded marketing table. At one point the No. 1 enemy was Google (no more) but today it's more commonly the procurement officer, often called a cost-cutting zealot who treats advertising like office supplies. We decided to get their side of the story and spoke to the chief procurement officers at Pfizer and Intel. Yes, they actually care about quality and creativity and no, to them shopping for an agency is not just like buying paper clips.
Make no mistake: Examples of successful longstanding relationships between clients and agencies, such as the one between Apple and TBWA/Media Arts Lab, still abound in many corners of Madison Avenue. But some of the things those types of relations are built on, such as the trusted keepers of the client-agency relationship, are becoming marginalized.
Meanwhile, everyone's getting into everyone else's business, which can be confusing for marketers and create new competitors for agencies. Take, for example, the kerfuffle around Home Depot's recent Hispanic agency review and the tension it's created between Hispanic agencies and general-market shops that are growing their multicultural practices. Or the media companies that have started to tread on traditional-agency territory. Want to create an integrated campaign for your latest luxury launch? Cond? Nast is open for business -- and you don't even have to buy ads in Vogue.
In all, it's leading to an unprecedented strain for the agency community and the marketers it services -- and we hope in Ad Age's first Agency Issue to diagnose some of the problems and help point the way toward solutions.
Yes, there are solutions. To find them, we canvassed people across the industry to get a feel for what's prompting the problems in the first place -- Kimberly-Clark CMO Tony Palmer flagged five areas keeping him up at night -- and what sorts of actions can be taken to remedy the relationship.
What's straining the agency-marketer relationship today?
How can the relationship be improved?
Five pain points in the marketer-agency bond
1. CREATIVITY HAS BECOME AN END VERSUS A MEANS TO AN END. In doing so, agencies and marketers have fallen into what I think is a destructive and binary debate -- "creativity vs. business" vs. "creativity as a means to driving business." Both must return to this thinking. Agencies need to rearticulate their value equation in terms of ideas -- ideas that are designed to build business and are commercially driven -- and then deploy their creativity against the delivery of those ideas.
2. AGENCIES AND MARKETERS HAVE NOT FOUND A MEANINGFUL WAY TO USE MEASUREMENT TO ELEVATE AND EMPOWER CREATIVITY AND COMMERCIAL IDEAS. Measurement, instead of being a powerful enabler, is becoming a source of tension, particularly when viewed through the lens of the false construct above. If agencies embrace, lead, drive, integrate and make measurement an intrinsic part of their product, they will immediately change their value perception to marketers. However, today it seems that research and analytics (most notably in creative agencies) is seen as the enemy designed to kill the opportunity for creativity.
3. AS AGENCY SPECIALIZATION CONTINUES, THE HOLDING COMPANIES HAVE NOT WORKED TO FORCE AND ENABLE COORDINATION, DE-DUPLICATION AND VALUE CREATION. Instead they have allowed creative agencies to be marginalized. In my view they have enabled massive inefficiency driven by duplication and, sadly, have enabled open strife and conflict in full view of marketers, which only serves to diminish the value of all agency parties in the eye of marketers. The holding companies need to confront this issue fast or they risk being marginalized. Agencies need to collaborate amongst themselves to create client-focused value vs. playing out strife in public view of their clients. This, in my view, is killing agency credibility and value among marketers.
4. THE ECONOMIC MODEL OF AGENCIES IS BROKEN. They are not set up to make a respectable margin and as such, instead of rethinking their model, they make short-term, superficial cuts that only serve to exacerbate the declining sense of value they offer marketers. It is easy to make client procurement the villain. To be fair, there are many cases where client procurement is executed in a destructive way -- yielding no value to either the client or the marketer. Agencies need to seriously re-examine their model. They are becoming transactional with clients, which can destroy any chance of a long-term business partnership, and they are not able to attract and retain top talent, which helps in driving a destructive cycle.
5. THE INDUSTRY IS OUTSTANDING AT PUBLIC PRONOUNCEMENTS AND DEBATES ABOUT TRENDS AND THE IMPENDING NEED FOR CHANGE. Yet, they are unable to take action against this in a way marketers would expect a creative agency to. There are looming issues on the table now that agencies appear to be ignoring. Take, for instance, the expansion of production costs, driven by expansion of media and only to be compounded by real-time data. With this issue on the minds of marketers, there has been no material move by agencies to find ways to drive down production costs and improve cycle time. In my mind, this is either going to be an opportunity to lead or a basis for value erosion.
In the simplest of terms, agencies need to look deep within and ask themselves who their customer is, what their value equation is, how they are going to stay relevant and how they are going to ensure margin expansion, revenue realization and growth on behalf of their clients. These are the issues marketers are focusing on every day.
Agencies must stop being inward-focused and insular. They have to look at themselves, their models, their measure of success through the eyes of their clients. However, I will also say clients are part of the problem, as they (we) enable agencies to act this way. We as marketers need to place the pressure on agencies. We need to be clear with them and ourselves what we value. We need to make it clear we want change and will enable this change, as well as reward this change. If we don't, the cycle will continue and we as marketers will get what we deserve.
|ABOUT THE AUTHOR|
Tony Palmer is chief marketing officer, Kimberly-Clark Corp.