We Broke Up a Long Time Ago

How do we repair trust between clients and agencies?

Nurturing healthy relationships went to the wayside eons ago. Somewhere along the path of courtship between agencies and clients, the art of having an enlightened and mutually beneficial partnership vanished. Trust is on the endangered list these days between these two parties, and the slate needs to be wiped clean. Partnership rules and strategies need to be defined, from the first conversation.

According to a study cited in Adweek “Nearly all advertising and marketing executives (98%) say that the best work comes when clients trust their agencies, collaborate (94% agencies, 100% clients), and maintain long-standing relationships (84% agencies, 81% clients).”

The first date……. Agree to measure what is measurable……

Agency consultants are drilling the point home about defining tangible and measurable objectives in the very first meeting. There is a huge disconnect on how clients and agencies perceive one another.  “In fact, marketers and their agencies differ on many basic business goals. While nearly all agencies (90%) say they understand their client’s businesses, only 65% of clients agree.” It’s vital both parties clearly define what the client’s problems are, how advertising can assist, and what is measurable.

Agencies have never had so much pressure to measure ROI. Despite living in a world filled with data usually there is not an exact number showing how an ad put a consumer in a store for purchase, but sometimes there is. Software capabilities and data resources are constantly updated and are evolving, but they are not free. According to Forbes To survive into the future, agencies must become Agencies of Return. To do that, you have to be prepared to measure everything that you do and take an honest look at your own results.”  Having an initial conversation defining capabilities and tangible goals can truly help nurture healthy expectations. 

It takes time to know someone….

Understanding a business, no matter how big or small it is, takes time. Clients are more and more targeted on choosing agencies that have experience in their category. While this has some substance, a good team of smart agency leaders have the same learning curve on any piece of business. That may come as a surprise, but there are parts of the advertising process that don’t require category specific experience. Brands are bringing a lot of creative work in-house or they are parsing it out to freelancers or boutique agencies, “project by project, not relationship by relationship.”  A smart team of advertising professionals will achieve success if given ample time to learn a business.

Creative payment plans….

Shooting from the hip and expressively offering his opinion, Michael Farmer (CEO of Farmer & Company and 25-year veteran advertising consultant) states quite candidly about how agencies failed to keep pricing models current. Gone are the days of 15% commission and hourly rates, but in the process of shrinking fees agencies are also burdened with knowing not just how to create or place ads on TV, radio or print, butnow they are expected to be experts in traditional marketing, social, digital, programmatic, influencers, e-mail marketing, native advertising…. and pretty much anything else you can imagine.”  “who cares what an exterminator charges per hour? You need to know what he charges to get rid of rats! In the same way, brand leaders—especially CMOs—need a partner that can help them achieve very specific financial goals. An hourly rate tells them nothing about what the agency can or will accomplish.”

This war of the wages began in the 80’s with the rise of popularity of the holding companies buying up Madison Ave. They sliced commissions down to 6% and put a lot of small shops out of business. Now however new pricing models have gained traction, and clients are on board with tying agency fees in with an ROI factor. The playing field is leveled if Agency of Record is replaced with “Agency of Return”. As Michael Farmer stated “I’ve had marketing executives look me in the eye and say, “when you can analytically prove that the money I spend with you is providing a return, then I have an unlimited budget.”

Dating the prom queen….

Madison Avenue has most certainly put the cherry on top of trust issues these days. “I’m convinced it won’t change the way these large holding-company agency executives operate. And that is a huge disappointment to me.” Farmer says. “Executives at these large agencies somehow continue to eke out profits through these sweatshop conditions, and they get huge bonuses for doing so. They’re all just praying they retire before the whole system blows up.”

Despite being cleared of all federal investigations this past November, the holding companies did put a temporary scarlet letter on the ad industry. However ugly this chapter of the book is, trust can be established from the first introduction, and like all successful relationships, communication is the key. Instead of going to bed mad, client’s and agencies need to stick together, ask the hard questions and seek out the best resolutions together.