Can We, Should We, Serve Competing Clients at the Same Time?
I've been running an agency most of my professional life. One of the things that continues to frustrate is that many CMOs and CEOs don't want an agency handling their brand and that of a competitor. Yet their accounting and law firms handle their competitors, without question or pause.
According to Alvin J. Silk, emeritus professor at Harvard Business School, ad agencies in the United States and Europe historically did not serve competing clients simultaneously, but this practice has relaxed in recent decades as "the advertising and marketing services industry has undergone a number of structural changes."
Silk says that to make this possible, "hyrbrid conflict policies" have evolved, featuring "the split-account system long practiced in Japan, augmented by safeguards that serve as partial substitutes for the umbrella prohibition on serving rivals . . . By relying on safeguards and splitting account assignments among different organizational units within or across a mega-agency or holding company, clients exert a measure of control over those agencies' access to confidential information while also offering them incentives to avoid conflicts of interest."
The same thing can also be accomplished in small-to-mid-size agencies, by staffing competing brands with separate teams/units. But it's a tough call. So in the spirit of bi-partisianship, I've outlined the pros and cons of managing agency-client conflicts, and welcome the debate:
Pros (my utopian agency world)
A sales consultant famously remarked: Two clients in the same category = conflict; three clients in the same category = specialty. It's ironic, but there's a truth there. Many clients permit their agency to handle competing brands when that agency has many clients in the same category. Consider all of the vertically-integrated shops around the world -- pharma, real estate, tech, retail and so on. By allowing an agency to handle competing brands, clients benefit from the expertise of an agency that has a deeper understanding of the business, its sales channels and customers. Think of the bench of talent, trained in the vertical industry, that can rotate on a client's business, keeping the work fresh for years to come.
It is in a client's best interest to have a financially healthy agency. Once an agency has acquired clients in all of the key business categories, it begins to bump into conflicting companies in the same category. Clients that trust their agency to handle competing brands enable that agency to grow and thrive.
When a client-agency relationship is built on mutual respect, morale goes through the roof, and the people in the shop will work tirelessly for that client. In my experience, permitting an agency to take on competing brands inspires the agency team to do more than they are asked to ensure success for the client's brand. Sure, we all work hard in our shops, but imagine the benefit of the above-and-beyond efforts that come back to the client.
Cons (my current agency world)
I get it. Your arch enemy seeks to take market share from you and food off your family's dinner table. Coke & Pepsi. McDonald's & Burger King. Apple & Google. I understand the discomfort and the bitterness that comes from such rivalries. If Brownstein Group -- or any agency -- is working on one brand, how can it objectively promote another? How will clients sleep at night, worried their trade secrets will be shared by agency teams?
Who is the favorite son? Exclusive marketing & media opportunities are routinely offered to agencies for the brands they represent. If the agency gives the exclusive opportunity to Client A, does Client B get cheated?
Speaking of 'A' & 'B,' I am often asked by my clients, "Make sure you only put your A-team on my brand." To which I reply, "We have only A players." In my heart, I believe that , but do my clients? I hope so. And if an agency has only a few leading experts in a category, which client do those select few work on?
This is not a black-and-white debate. I've done my best to address the issues from both sides. What do you think?