Ad agencies have always
been at the mercy of client anxieties. Now that it's 2010 planning season, agencies are getting hammered on process, productivity and price. Agencies have always been the whipping
boys for all manner of brand or product performance issues. Everyone
understands that agencies exist so they can be fired. Everyone also realizes
that the core agency value proposition is either “we know or can do something
you cannot” or “we have arms and legs to get things done faster, better and/or
cheaper than you can do it yourself.”
But during this recession
agencies have had even more tenuous relationships with their clients. The list
of clients that broom agencies quickly seems to be growing. The research
indicates that clients change agencies, on average, every 2.5 years, twice as
frequently as before. There are all kinds of reasons but the bottom line is
that few clients believe that agencies are long-term partners.
You can’t be a partner if
they don’t know you well. Rarely are agency chieftains, part of a client’s
inner circle. It is unusual for agency heads to be considered the CEO’s or even
the VP Marketing’s consigliore or to even have a voice in crafting client
strategy. Instead agencies and their leaders have become receivers of strategic
output and implementers of tactical plans.
Very few clients believe
that their agencies actually know the fundamentals of their business, their
category or the critical processes within their enterprise. Agency expertise is
understood as generic, plain vanilla project management and content creation.
Agency outputs are commodities that can be priced and negotiated by purchasing
agents.
And even that role, too,
has a built-in trap. Aggressive cost controls and benchmarking have given savvy
clients unusual leverage. Many specify upfront the time, cost and staff to produce
a postcard, a website, an e-mail campaign or a #10 mail package. Few are
willing to pay for anything but minimal staffing. Even fewer are willing to pay
for senior people who allegedly bring added value, insight or experience to
their accounts.
Yet agencies, from the
2-person shops to the global conglomerates, seem to be impotent to affect the
size, timing or sequence of client spending. Agencies are output. It is a
sobering thought, which fundamentally changes the game. Yet changing these
circumstances requires changing the way agencies do business.
Consider three areas to
creative an opening for agencies to have a greater impact on their own fate.
Leadership. Clients hire agencies that have a point of view.
If you don’t have a POV you are just another vendor cranking out pretty
pictures or punchy copy. Unfortunately too many agencies either haven’t
developed or articulated a distinguishing POV or are unwilling to expose their
POVs for fear of rejection. In a corporate and financial environment that risk
averse, having a POV is a point of distinction, which must be leveraged to an
agency’s benefit
Agencies often have
practical knowledge not only about a client’s strategy but generally understand
the distribution channels, the media, contact centers, customer service,
fulfillment, retail traffic patterns and nuts and bolts operational reality. Agencies
are often in a position to traffic information, data and ideas among and
between different business units and to infuse grand schemes with a healthy
dose of reality.
Leadership requires
agencies to get out ahead of their clients by thinking through and anticipating
events, sketching out likely competitive scenarios and contingency plans,
understanding the personalities and power dynamics within client organizations
and presenting “crazy” ideas or trial balloons for client consideration.
Doing this requires
proactive thinking and investment spending. It also requires that use senior,
seasoned people to get top-level access and to put this stuff across
persuasively. Account people who take reasonable risks, get beyond the
day-to-day and become trusted, memorable or effective on the basis of their
personalities play a critical role in offering clients the leadership they
crave.
Efficiency & Transparency.
Developing tools to train, manage, deploy and effectively use agency resources
is critical to maintain margins and grow profitable businesses. Clients
routinely ask skeptical questions about rates, billing and productivity. Though
most agencies have adopted the professional services fee model, they haven’t
used professional services norms to maximize the value, productivity and
utilization of their people.
This is not a software
problem. It is a matter of understanding who is working and what they can do
and mapping these resources transparently against client needs in real time. Improved
real-time resource planning in-tandem with clients is a necessity.
Agencies have not parsed
work among or between teams to capitalize on expertise or economies of scale.
Nor have they used time zone differences, cost differentials or global
resources to move projects ahead faster or to squeeze out better margins. Force
utilization tactics and productivity measures, beyond counting billable time,
are virtually unknown in the ad business, even though other industries have
used these techniques to great effect in reducing costs and cycle times while
motivating their best people.
Alliances.
Every agency has loads of alliances. They are usually touted in press releases.
Yet few can actually capitalize on these relationships to the benefit of
clients. And while they sound good in credentials presentations, far too many
agencies can’t, don’t or won’t
leverage these alliances because they cannot control the ally’s end product or
they fear disintermediation.
These twin demons ---
paranoia and the need for control – have undercut most agencies claims and
seriously burned credibility in offering clients the ever elusive “integrated
solution”. The ability to leverage resources within networks is still the
exception rather than the rule and has led all but a few clients to reject the
idea that they can get full service from any one company.
Clients believe that each
agency has one or two core strengths. Nobody really believes that any given
agency is tops in everything. Having, using and delivering credible, expert
allies is critical to consolidating, maintaining or expanding any standing with the leading marketers
and brands, especially at a time when they are working with skeletal staffs.
Being able to field a
coordinated team of agencies who will uniformly understand client objectives
and culture, work in a coordinated manner, deliver against integrated
timetables and husband precious marketing dollars is the Holy Grail.
Orchestrating alliances is the best chance for finding and delivering the Grail
to our clients.
Leadership, efficiency
and alliances are three areas directly controlled by agencies. They have
traditionally influenced relationships with clients. Whining about the economy
isn’t the answer. Leveraging agency assets is the only hope.
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