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"Too important to leave to the rhetoric of agencies"

"We have to lead this ourselves-agencies overpromise and underdeliver"

"Clients have to drive integration-agencies in-fight"

"Tried it, didn't work"

"No one agency can do everything well"

The clear sense from our qualitative research- 50+ in depth interviews, senior client and agency management, 12 countries, all continents- was that the Lead Agency Model, although seductive in theory, was rarely a smooth running option in practice. The model cannot, in itself, prevent  the turf wars and land grabbing which goes on between agencies, even when they have been asked to play nicely. Clients are now wary of the sell, as the delivery has rarely lived up to the promise.

Part of the issue is that marketing now recognise that it is absolutely vital that they deliver integrated communication solutions. It is a measure by which they are judged, and that means it is their neck on the line.

"Is is what we do"

"It is our job to make it happen"

Given this, it makes it emotionally harder to pass on responsibility to somebody else-or often a group of somebodies.  

But managing a group of disparate agencies, whether they from are within the same holding group or not, is a job in itself, and one which demands true leadership skills.

More about what agencies think of those leadership skills in the next blog...

Whilst some more enlightened clients (e.g. Nestle, Suncorp and Toyota) were not only very interested in the concept, but became our "early adopters", I would have to say that most clients simply were not. The philosophy of "true partnership" between Clients and their marketing and advertising suppliers was the exception rather than the rule, with most relationships working rather on a Master-Servant basis.

As a result of this, few Agencies had any interest in talking to us-let alone supporting us. Why? Because they (wrongly) believed that Aprais was just another tool designed to beat them severely around the ears!

Nonetheless, we totally believed in the work we were doing and so we persisted.

Now, 11 years on:

-  The market has dramatically altered via an explosion in new media opportunities;

-  Most major clients are using some form of relationship measurement or management tool;

-  The Master-Servant relationship culture is in decline, as clients realise it cannot produce the results they both want and need in this environment;

-  Agencies have become some of the strongest supporters of the concept;

-  Relationship measurement and management has increasingly become a standard part of the Marketing Procurement process;

-  Aprais now operates in over 50 countries via 24 offices worldwide and has conducted over 9,000 separate relationship appraisals analysing over 10 million individual data inputs during that time;

-  A whole new industry has now been established with multiple options available from a number of different suppliers both in Australia and around the world.

When visiting prospective clients these days, we ask them a very simple question.

"Why Do You Want To Embark on a Relationship Management Process??"

The answers we hear are many and varied. Some however, can be a little concerning, such as:

"I want to measure my Agency's performance"

"I want to hold my Agency more accountable for their performance"

"I want to be able to compare relative performance between my Agencies"

"I need a measurement tool for PBR"

On a couple of occasions we've even had a response of "I want to show them how badly they are performing so that they understand why I'm firing them"

In that case, we tell them to firstly fire their agency, appoint a new one and then come and talk to us.

But what is it that concerns us about such responses?

It's just one simple fact:

Whilst they are all valid, they are clearly looking for a MEASUREMENT system, not a total RELATIONSHIP MANAGEMENT process.

As far as we are concerned, measurement is nothing but a minor means to a much more important end.

When we come across such responses, we tell clients that there is a myriad of cheaper options than Aprais, ranging from some of our competitors offerings, right down to using Survey Monkey if they wish to do it themselves at almost no cost.

In truth, there is only ONE reason to invest in a process such as Aprais.

That is you sincerely wanting to IMPROVE the relationship you have with your Marketing Partners, resulting in a better understanding of the often complex client/agency cultures and processes, significantly improved productivity, better work and ultimately a better return on your marketing investment. There is literally no other valid reason to use relationship management, and in 90% of cases, we achieve continuous relationship improvement over time for both Clients and Agencies.

Regrettably, there are still a number of marketers who remain committed to a Master Servant approach to Agency relationships, as they truly believe that this is the way to get the best out of their agencies.

It isn't!

The  recently, commissioned study of the Aprais database done by The Advertising and Marketing Roundtable, (a division of Corporate Executive Board) clearly demonstrates this fact.

They found that advertisers, who have achieved "Client of Choice" status with their Agencies, gained an increase in the agencies commitment to their business of up to 28%.

That is, up to 28% greater commitment to a Clients business at no additional cost!

But what exactly does this mean? For a client it means:

     The Best Agency talent working on the business;

     Higher levels of Agency Initiative delivered on the business;

     Senior Management directly involved in the business;

     The agency working beyond pure advertising to become a business partner;

     Understanding and working within Client cultures, systems and processes to improve productivity and working methodologies generally.

What is the Result?

Better relationships, better work and better business results for your marketing investment.

So how do you become a Client of Choice?

Come and talk to us and we'll show you.

The distinction.

First, we created Brand Impact Potential in order to make something distinct. n our work with Aprais we found that on the level of marketing and branding we work the 'having knowledge and experience' is not the problem.

Somewhere, in agency or advertisers teams the knowledge or access to the necessary knowledge is there, but often clouded and hidden by bureaucracy, fuss, turmoil between people, teams, management, etc. In Dutch we call that 'gedoe'. 

Mostly we all know this is happening, that is why we have account managers, client service directors, marketing assistants to deal with the 'gedoe' as well and professionally as possible.

The backside of this is that it becomes really difficult not to be focused the 'gedoe' but on what is clouded. That is all the potential that is accessible, but not used. And potential is more than knowledge and experience. Potential is something that only becomes present when knowledge and experience are being used and applied. In other words; you don't know what it is, until you step into it. 

Therefore, Brand Impact Potential is currently dormant in the teams working on brands that can have a powerful impact on the brand if that is accessed and awoken. It is where the surprises take place, the unseen possibilities.

Dealing with 'Gedoe'.

As I mentioned before, 'gedoe' stands for bureaucracy, fuss and turmoil in working relations. The problem is that we are so used to it that the idea of 'gedoe' not being present seems like a pipe dream. So, it takes willingness both from agency and client to go beyond what is expected in the normal line of work.

In most working relations this is an unknown territory and in itself a mind opener as well. Just imagine that 50% of all this disappears; what would then be the possibilities? Then catch yourself thinking of things like 'get real' and ready to go back to your known way of working. It really takes a commitment to deal with 'gedoe'. Without that commitment not even Aprais can bring you the full brand impact potential.

Performance.

Aprais is all about improving performance and performance is an all human phenomenon. So, dealing with performance improvement is dealing with our own stuff, fuss, turmoil and everything else that is in the way of what we are really capable of. With the distinction 'Brand Impact Potential' we intent to create a new access in order to impact the brand where it counts, with your clients and potential clients.

Large multinationals have historically recruited brand management staff just over the actual headcount requirement on the assumption that there will be some attrition. Another assumption was that more hires in comparable functions would increase competition for advancement in a hierarchical organization which, in turn might lead to enhanced performance. In smaller companies, fewer are hired but benefit, arguably, from exposure and proximity to more seasoned executives. 

One question that comes to mind is if the young brand manager has sufficient experience to effectively manage the practical and strategic aspects of a brand, to be a real brand guardian. Many companies are outsourcing different disciplines within the marketing of function and brand managers are increasingly tasked with integrating or orchestrating these functions, and with expressing opinions which affect the quality and quantity of work developed by outside agencies or outside suppliers. Alternatively, brand managers might interact with house agencies yet face the same challenges of managing in-house and external resources.

I suspect that the primary reason for having increasingly low experience/low supervision brand managers is cost cutting. First, companies invest less in long term, programmed training and it is expected that talented brand managers will learn on the job. Second, companies are loading more responsibilities onto fewer people. This allows less time for non-programmed learning which is quite often as valuable as formal training. Third, line managers of these young brand managers are equally overloaded with not only higher level brand management functions but reporting responsibilities to a board, a division or category management leader.

Managing a brand requires, among other tasks, dealing with marketing communications agencies at different levels - from client service to account executive staff. The young brand manager is the one engaging and often put in position to dialogue with the agency to provide feedback including copy judgement. If the brand manager is not well prepared i.e., qualified by training then empowered by his/her line managers to convey opinions the outcome is often poor quality feedback or unrealistic timing to the marketing communications partners. This can have dire consequences, particularly if the brand manager's line manager/supervisor does not have first hand involvement with the marcoms development process at the critical briefing and planning stages. The consequence of this situation is that feedback does not fully capture the more senior marketing managers' point of view, more feedback is required and often contradictory to the initial appraisal of the work and the agency responds piecemeal, often ignoring some underlying issues on the brand. Over time, this leads to problems for both client and agency: a poor agency evaluation, unrealistic expectations of the agency, or inefficient utilization of the agency's resources as evidenced by the quantity of re-work and changes. The ultimate impact is the client not being a client of choice and the agency assigning second tier talent to work with brand management. 

Companies should renew attention on nurturing and developing talented brand managers. This entails investment. That, in turn, might entail very real reductions in short term profitability to fund training and to lighten workloads to free up time for non programmed but equally valuable learning. But it is very likely that the dividends will be better managed brands, more profitable brands.

Agencies also have a role: if the brand manager is too young to be a brand guardian and a truly competent project manager, the marketing communications agency leadership should raise this with the client's more senior staff. The outcome can only be favourable: managing client expectations early on paves the way to openness in addressing potential problems. It can also open the option to staff a client account with more senior agency executives with a higher reporting line in the client organization on a regular basis, thus also developing deeper relationships in the client organization, better understanding of the client's brands and ultimately, better work.

Sound familiar? It should, because apart from being good, basic management practice these principles are also the plus-alpha factors that make some advertisers get disproportionate attention, hence value, from their agency.

These findings were revealed from analysis of our 1,400 agency-client relationships and several million individual questions answered through the APRAIS client-agency evaluation system back in 2008.

We found that advertisers who are considered "client of choice" by their agencies stand to gain an increase in the agencies' commitment to their account by up to 28%!

How to become a ‘Client of choice'? Here are the three major contributing factors with their relative importance levels:

1. Providing feedback and recognition = 33%
2. Competent staff who know how to use the agency's resources effectively = 33%
3. Openness to risk and innovation  = 27%

So while we look at the hour, fees, commissions and other remuneration aspects, it's worth keeping in mind that through better management of the agency relationship to become a "client of choice", advertisers can extract vastly more value than the bean counters ever will.

After the excitement of the ‘pitch' is complete - the agency wins the assignment convincing the client that they can handle absolutely anything. Then the work begins. The agency has to staff the assignment (people are 80% of an average agency's business cost), and there is generally just a vague idea of the volume of work to be performed. That is when the agency starts to ask proper questions about ‘scope'.

Scope is meant to describe the client's expectations about the work. Partly this is meant to capture the media being used to reach the users and prospects as well as the number of projects that might be involved in each medium. There may be an historical record of the numbers of advertisements, editorials, and promotions by product, brand or service that could be helpful.

But the bigger picture of ‘account service' must also be developed.

•         Does the client have a clear expectation of ‘strategic thinking' from the agency? This generally means that the agency must plan for senior people to spend speculative time - unrelated to specific projects.

•         Is there an expectation that the agency attend meetings that, again, may not be project related but are instead related to forward planning or business review?

•         Is there a requirement for competitive analysis as part of the client's business planning cycle (or should there be)? Is there an expectation that the agency gather this information and report on it?

•         What are the expectations for reporting - administratively and financially? What are the implications for the agency's staffing and role in budget control?

Even more frightening is the possibility that a defined annual marketing plan that can guide project planning may not exist. Believe it or not, outside the disciplined world of packaged goods, there are retailers, financial institutions, manufacturers and service providers who do a great job of building their operating plans but then allow the Marketing to unfold on a project by project basis - "as needed".

In other words, the ‘scope of work' a year after the successful ‘pitch' may bear little resemblance to the initial assignment. The needs of the business are gradually revealed to the agency as the scope ‘creeps' to meet reality. Some clients may take the view that this is ‘life in the service business' and that agencies should just ‘suck it up' and cope. They could not be more wrong!

If the agency cannot plan for its staffing and be appropriately compensated for it, the client will be disappointed. The lack of clear scope definition - up front - has only one possible outcome. Either the agency desperately assigns staffing as needed to compensate for the changing landscape and loses money on the account. They complain, are seen as ‘whining' and precipitate a search sooner or later. Alternatively they fail to meet expectations and are replaced anyway. A constant pattern of agency review is disruptive to the business and ultimately reduces the participation of good agencies as the client's reputation declines. 

A strong working partnership requires a ‘virtuous circle'. The Agency relies on the Client for direction; the direction emanates from the detailed commercialization plan in a clear scope of work; this allows the Agency to put in place resources and be paid appropriately (usually with some mixture of ‘retainer' and project billing); results of the programs are measured and the plan is refined. Lack of planning and scope definition will lead inevitably to inadequate resources and issues of cost control on both sides.

 So how does digital fit into all this? Well because digital is still relatively new, and fast-changing, the picture is fragmented. And because digital is growing so fast in terms of share of marketing budgets, there seems to be plenty of digital business to go around and Marketing Directors have a wide choice of agency partners to help them plan and implement their digital marketing activity. There is certainly a role for the full-service digital agency, for the specialist digital agency (design and build, search, viral, social media or mobile) and also for the ad agency which has 'strategically embraced digital' and/ or 'placed digital at the heart of its culture' (you choose your preferred form of words!).

 Most digital agencies work on a project basis which sometimes causes them frustrations, not least because this can disincentivise them to think outside the confines of the current brief (likely to be subject to tight time and budget constraints). Moreover, many clients still seem to believe they haven't seen a creative idea until they see a TV idea.

 What are the most common reasons digital agencies lose their clients?

 •·          Overselling: because there are often technical and jargon barriers, digital agencies often ask their clients to "trust us, this will be fantastic." This works once or twice before the CMO is called in by the CFO to discuss ROI (is that enough acronyms?).

 •·          Massive error (=catastrophic mistake): rarer than might be expected; most digital agencies are staffed by experienced professionals and have systems in place for checking work which minimises the chance of this sort of thing happening.

 •·          Personality clash (e.g. new Marketing Director): always possible in cases where the new senior client didn't appoint the agency in the first place. Equally, over a period of time people can simply get on each other's nerves.

 •·          'Irredeemable breakdown of the relationship'. ("They wouldn't work with the ad agency; they just don't understand our business" or "They just don't get digital; they kept moving the goalposts; they never really knew what they wanted"...)

 In my experience, the most common avoidable reason for client/agency relationship breakdown is suboptimal communication from both parties, specifically the lack of a formalised mechanism for identifying and addressing problems/ issues while there is still an opportunity to fix them.

 Some of the above is common to all types of agencies' relationships with their clients. Specifically, I suggest that clients might remember that good ideas can come from anywhere, including the digital guys. If you involve them earlier - when the strategy is being formulated - you may get more value out of them.

 As for digital agencies; many would benefit from being (a) less obviously thrilled by their own technology, (b) closer to their client's typical customer and (c) more confident to go to their clients with demystified, jargon-free business-building initiatives and big multi-channel creative ideas - not just cool techie stuff that works as a bolt-on to the ad campaign. Only then can they expect to be treated as top-table strategic partners.

Those who run Aprais offices around the world are uniquely placed to keep you up to date with industry developments and to give their comments on what is happening in our business environment. Their local knowledge will be blended into an overall Aprais perspective, and all who contribute will be acknowledged experts in their specific subject.

Our aim is to make the Aprais blog a point you will return to time and time again to keep track of, and comment on, global developments in relationship management - and how to get the best out of partnerships.

Let us know what you think!'