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Guest Column: Reversing the downward spiral of client-agency relationships

Guest Column: Reversing the downward spiral of client-agency relationships

Author | Libby Child | Wednesday, Oct 30,2013 7:44 AM

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Guest Column: Reversing the downward spiral of client-agency relationships

I see the impact of the pressures every day, having conducted over 200 client-agency evaluations in the past six months, as well as seeing the results of more than 10,000 team evaluations gathered over 12 years by Aprais internationally. These involved each team evaluating each other’s performance, and also self evaluations – holding up a mirror to their own behaviours. The resulting information gives fascinating insights into the state of client-agency relationships.

The knowledge and data we have gathered proves statistically what we all know instinctively: agency team performance is highly dependent on marketing team performance. Every time a client team improves, it is more than 99 per cent likely that the agency team will improve too. And the reverse is also true.

We need to think about what both agencies and marketing companies can do to achieve happier, more productive working lives. But to get to some workable solutions, we need to reflect on the context.

Time is the currency
A 2011 Aprais global study of creative agencies – advertising, digital, event, PR and CRM – showed that most of the fees paid to agencies were linked in some way to an estimate of hours worked, and the people working them. There were ‘total project fees’, but the likely hours/ rates were underpinning the sum agreed. Despite the desire to be paid according to the value of work delivered – to have some ROI metric – time remains the currency. There are bonuses, fixed fees and menu rate cards, but these form a relatively small percentage of the ways in which creative agencies derive their revenue.

On the face of it, this means it is in everyone’s interests to work efficiently – to keep a lid on re-works/ changes to briefs. But the reality is that once the fee is agreed, there is not much wriggle room (unless there are ‘major’ changes to scope), so the onus is on the agency, rather than the client, to be as efficient as possible. Tricky, if you have a weathervane client.

Procurement pressure
In a 2007 report I noted that “procurement can be criticised for ignoring the value of chemistry, not understanding the difference between cost and value and for coming between marketing and agency teams… but it is now a fact of life. It has revolutionised fee and compensation negotiations, forcing both teams to be more financially aware”.

So, has anything changed in the past few years? Not really. Procurement is still criticised and is even more a fact of life. There are a couple of recent trends to note.
• Marketing is leaving procurement to ‘get on with it’ – to handle all the agency negotiations. This results in marketing being worryingly disconnected from the fees agreed and the working assumptions underpinning them. It also means marketing sees changing agency as less of a hassle since another department takes care of the admin details.

• Procurement itself is under increasing pressure. Having had the marcomms responsibility for a few years, the easy savings have been realised. But they still have to keep driving down fees and costs. Witness the rise in the number of media agency pitches this year, cited as a consequence of this pressure. If your incumbent cannot deliver, a new one will.

More fluid relationships with more agencies
Multiple agencies are needed to answer clients’ 360 degree demands. The integrated one-stop is the exception, not the rule. And there are ever-leaner marketing teams trying to manage these agencies. Tensions are inevitable, as was shown in Aprais’ Collaboration for Integration study, which explored cross-agency team working – how they were being managed, if any one ‘model’ was better than another, what worked, and what didn’t. Here are some insights from this study:
• “A revolution still being treated as incremental evolution”, so concluded one of 50 marketing directors and agency chiefs interviewed.
• An agency MD described how interagency meetings were like having dinner at a round table with too small a cloth: everyone was surreptitiously trying to pull the tablecloth towards themselves without attracting undue attention.
• Trying to encourage deeper, more strategic long-term partnerships across a roster can lead a marketer to protest: “I am not a Mormon with time for multiple marriages,” while another admitted: “We use agencies like tissues.” Ouch.

The overriding conclusion? Follow the money. Strong leadership of cross-agency teams is required – and the client is best placed to provide it. The digital mantra ‘always on’ is the work reality. Difficult as it is to get an integrated campaign out of the door, everyone is very aware that this is just the beginning. ‘Launch and monitor’ has become: ‘Create, amplify, feedback, modify, hope it goes viral… hell, it has, and we need to respond NOW!’

Accompanying all this are cries of: ‘I thought YOU were managing social media?’

‘No, we’re the website agency.’

Separation of strategy, creation, production and implementation
And just when you thought it could not get any more fragmented, the bright sparks in procurement decided that decoupling production was a smart idea. Before you know it, there is the upstream strategic consultancy, the creative agency, the digital production agency and the asset management agency – all with their own view of the process.

The shifting sands of corporate structure
Clients’ operating structures are changing even more than agencies’. In the past year within our client base, we have had one change its ownership structure, another merge, a third grow through acquisition (doubling its marketing department) and a fourth swing the pendulum from local autonomy to highly centralised control.

These changes result in distracted, internally focused client teams (often reapplying for their jobs), changing stakeholders and extended approval stages. Agencies can struggle to get decisions, and rarely are they given within the time originally allocated to the task.

Where is the glue? Online project management tools
Clearly everyone is in dire need of some glue to bind the process together, to ensure media slots are not left empty, that the banner ads have the requisite legal sign-off, that the work still meets brand guidelines.

Not surprisingly, technology offers a solution. Project management tools, usually owned (bought or rented) by clients and accessed by the agencies, are there to guide the many teams through each stage so they can all see what is happening. Of course, it still depends on everyone doing their bit to update and action the system. It means yet more screen time, not face time, and a project management approach that is linear and distant. Can it ever feel good to receive creative feedback posted in an online forum? Can a virtual team be a real team? Yet, still these tools are being cited as progress.

How to have happier, more productive working lives
Rather than try to create new working models or brainstorm about the agency of the future, the key to immediate change is more straightforward and can be grouped into three categories:
• What must be done together?
• What must clients do?
• What must agencies do?

What must be done together?
Be much more honest at the outset:
Have a rigorous on-boarding process – even for short-term projects. Clients need to stop pretending they have higher fees/ production budgets and easier approval processes than they do – and that they are looking for a long-term strategic communication partner if it is only for the next campaign. Agencies need to state their core competency – not pretend they can do everything.

Agree the financial and contractual terms before work commences: Despite the rise of procurement and the tighter financial pressures on both agency and marketing teams, there are still many examples of loose fiscal control and management. Often contracts are not signed until nine months after appointment, annual scope of work is only finalised at the end of Q1, bonus terms are set at mid-year, and even one-off projects are not fully scoped with phased, agreed decision stages.

It seems pressure on client workloads and reluctance from agencies to press the point means these important discussions are delayed and then rushed – and then become a festering issue.

Discuss respective cultures and ways of working three months after starting working together: It’s difficult to do at the outset but a check-in after eight to 12 weeks can be the proverbial stitch in time. Discuss how the teams are gelling, whether there are performance disconnects or cultural mismatches. Determine how to adjust course if necessary.

Set achievable objectives and KPIs for each area of activity: This really is a shared responsibility as marketing teams do not always know what is achievable – especially in some areas within digital. Marketing teams can be criticised for being overambitious and non-specific, but agencies need to help them understand what is possible – and client teams should listen.

What clients must do
Write clearer briefs agreed internally and take responsibility for incorrect, revised or discontinued ones:
At a minimum, briefs should be written, state why the work is needed, and have an objective, a timeline, a budget and an approver.

As clients are working with more and more agencies on more short-term projects, there is a lower ongoing level of knowledge within the agencies about the client’s business. Agencies, therefore, require a higher level of consistent briefing competence to work efficiently. They cannot be expected to guess what is required. However, the reverse seems to be the case. As marketing teams work with more agencies, briefs can be more rushed.

Interestingly, Aprais often finds major briefs are significantly better than the day-to-day ones. The ‘set piece’ briefs are comprehensive and include the relevant information (though sadly not always with the full agreement of all stakeholders).

But ad hoc work slips under the radar, has imprecise directions given on the phone or by text, and undergoes multiple reworks beyond what is permissible in the service level agreement. And the volume of such work can be high, so this pattern of working can put a major strain on agency resources.

Is it reasonable for agencies to pick up the extra costs of this poor level of agency management by client managers? If a brief changes, the fee should increase. If a junior didn’t get senior sign-off, is that the agency’s fault?

Agencies are understandably reluctant to name and shame their day-to-day clients. But procurement could do more to probe the impact of reworks, the causes of time over-runs, and to investigate internally, rather than assuming the agency will always overstate its hours and be inefficient.

Manage internal stakeholders: In the Aprais client evaluation questionnaire, the section ‘Briefing and project management’ is usually rated the lowest. Assuming good briefs are received, the next stage becomes challenging because the marketing team’s internal project management skills usually leave a lot to be desired.

Marketing teams need to take more responsibility for mapping out approval stages to the agency in advance, so they know how long it might take. And then they need to actively shepherd the work through their internal approval gates – both domestic and international. Good clients take ownership of the agency’s work; poor ones just set a process in motion and hope for the best.

Lead the multi-agency integrated team: To get to 360 degree communication might not require 360 agencies, but it usually needs at least three. The client owns the brand, the budget and the agency relationships. Rather than assuming the agencies will simply get on with it – play nicely and collaborate – our international research highlighted the need for clients to establish agencies’ roles and responsibilities, to set clear rules of engagement and then lead and inspire the whole team to deliver.

What agencies must do
Invest in retention and reward client loyalty:
Agencies continue to invest in expensive pitches, despite the evidence that tenure is shorter, fees are tight and initial appointments are frequently project based. Agencies court prospective clients religiously with dedicated new business departments. The resultant wins, not retention, are seen as the mark of success.

Many clients remark semi-jokingly that the most agency attention they ever receive is as a pitching client. Others complain when their agency’s attention is diverted by juggling too many pitches. Some suggest that agencies should invest as much in existing client retention as they spend on new business.

Indeed. I have only heard of one agency with a loyalty programme that actively looks to add value back to long-term clients.

Agencies, especially the multinational creative networks, live in hope that things will revert to how they were when long-term client relationships were the norm, not the exception. But they do little to encourage this by proving the benefits of long-term partnerships – such as delivering better ROI, more sophisticated business understanding and more efficient ways of working.

Deliver their own area of expertise, supremely well: In the age of integration, agencies continue to over-promise and under-deliver, claiming their expertise extends further than it really does. Clients would far rather an agency excelled in one field and proved itself the master of that sector. Only then will they will want to extend the agency’s remit.

Be honest about their management of an account: Why do agencies think it is okay to hide the resignations of key people from clients until the last minute, claiming they have been ‘working to find a solution’? This contradicts their request for open, honest partnerships. If you expect clients to share their business dynamics with you, why be reluctant to share yours with them? If you hide this, what else is swept under the carpet?

Help average clients to become better clients: Encourage an internal mindset of thoughtful client helpfulness, rather than slavish client service. What will really help this client? How can I help their business? What will help them to improve? Lead by example – detailed contact reports for the client who rarely briefs in writing, excellent timekeeping for the habitually tardy, smiley enthusiasm to the grudging.

Conclusion
It is possible to create a positive cycle of continuous client-agency relationship improvement. But to do so requires regular, open dialogue, with both teams willing to hear the good, the bad and the ugly – and then doing something about it, together.

Libby Child is Chief Executive of business relationship consultancy Aprais UK.
 

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