How a client-agency relationship can work for you
Published originally in Entrepreneurmag, Jun 19, 2012. Revised September 2015.
Relationships in the new business environment:
In the current high pressure business environment, there is an ever increasing focus on efficiency, cost saving, margin management, profitability and cash flow.
The inevitable casualty of this profit-based methodology is the relationship between business and suppliers.
Great relationships do not necessarily differentiate one business from another when economic downturns occur, and one area in which the pressure is felt most acutely is the relationship between businesses and their marketing or advertising agencies.
When the economy flourishes…
They work closely with their agencies to create successful campaigns and talk fondly of the win-win partnership relationships they have fostered.When budgets are big, the client marketing teams generally get to spend as they please, with little interference from the internal finance or procurement departments.
These relationships benefit the creative process where both the client and the agency are able to take creative and calculated risks to differentiate themselves from the competition.
When the economy gets tough?
As soon as margins and profit come under pressure, however, the marketing budget inevitably comes under the spotlight and is often an area that suddenly receives attention from finance and procurement. What effect does this have?
The effect on internal marketing departments:
- Contracts are scrutinised.
- Long standing relationships are questioned.
- Comparative quotes are requested.
- The business may put out a tender or hold an agency review.
The flip-side: How the agency is impacted.
- The agency remuneration structure is reviewed and shorter term or ‘no-retainer’ agreements are requested.
- Agencies most often agree to these terms, since they are under the same economic pressures.
- Procurement and finance departments continue the price-reduction cycle because of the forced compliance.
What’s the price?
At what cost have the cost savings been won?
Marketing is not a commodity, and therefore the comparison of ‘apples with apples’ is extremely difficult, especially if conducted by finance or procurement people.
In many instances, long term, successful relationships and partnerships between client marketing teams and their agencies are severely damaged.
So how do we avoid a procurement-wedge from dividing an established client-agency team?
We need to focus on building a solid and transparent working relationship during the upswings. To do this, the following is important:
- The marketing team must be held accountable for the money they spend.
- ROI must be measured consistently.
- Performance must be tracked against past experience as well as against industry standards and competitor performance.
By keeping the client-agency relationship accountable when times are good a culture of fair partnership is created that can be respected as each partner takes some of the pain in the bad times. By holding everyone accountable all the time and acknowledging that marketing and advertising are part art and part science, the hard work completed during good economic times is not thrown out of the window as soon as times are tough.
Trust creates the best relationships
The most important aspect of a good client-agency relationship is trust. Accountability throughout the full business life cycle is the best way to ensure the trust relationship, both internally and to external stakeholders.
Ensure that you measure the impact your activities have, and work together to optimise and improve your campaigns to ensure mutual success.
For a handy guide on the key metrics you will need to ensure your boss, their boss, and the procurement department stay abreast of the growth you are influencing, download our Metrics eBook: