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Why Clients And Their Ad Agencies Behave Badly

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Why is the client/ad agency relationship so complicated and fraught with drama on both sides? 

Seemingly, the business relationship between clients and their marketing agencies seem to have ever-shorter life spans. True enough, the marketing game is a tough business for all concerned. Lately things seem to be more cantankerous between clients and their agencies. Both are behaving badly these days.

If you’re on the client-side, have you been subjected to these poor ad agency behaviors?

The agency won your business with principals and senior talent then turned the real work over to junior-level (more-profitable) people.

In pitching your business, the agency presented creative work produced by creatives who no longer work at the agency.

In pitching your business the agency claimed expertise they didn’t have.

The agency intentionally low-balled fees to win your business, then made up for it in future ‘out-of-scope’ or “mission-creep” billings.

Account planning made recommendations weighted to those marketing channels driven by profit to the agency rather than results for you.

Or perhaps you’re the Principal of an ad agency, have you ever experienced these soul-sucking client moves? 

Your agency was invited to participate in a Request For Proposal process  – it was never a contest, the prospect knew full well who would be awarded the work (not your agency)– but there had to be a review to meet their internal policies, politics. 

The prospect demanded ownership of the ideas you presented in the new business pitch with no intention of paying for those ideas. 

The prospect did not give you the courtesy of notifying you were not selected when their RFP process concluded.

The client took advantage of your relationship by requesting you perform work outside the scope of the current project then disputed paying for the extra work. 

The client used an RFP process to pressure you to lower your fees. 

The client routinely asks for discounts — does not want to pay you what you are worth.

Whichever side you’re on; there’s enough bad behavior to go around.  It’s interesting to me – in no other professional discipline do the parties operate at such low levels of behavior and disservice to each other. Architecture, engineering, accounting, research and management– consultant firms and their client side colleagues in these disciplines seem to garner much higher levels of mutual respect than those in the marketing and advertising professions.

I think the reason for the growing strain in agency/client relationships is two-fold:

1) The barrier to get into the ad game is low and getting lower.

2) Clients have abundant choice in the marketplace.

The wisdom of the crowd in the idea economy. Unlike the other aforementioned disciplines, marketing and advertising is easy to get into. You just need somebody to like your idea, pay you to implement it and you’re in business. In an era of crowd sourcing, ideas can come from anywhere, anytime and at faster speed.  The wisdom of the crowd is pushing advertising and everything that comes with it further down the value chain and away from where the client’s are making the big decisions. Business leaders don’t crowd source for engineering or finance ideas.

With social media driving this trend, big brands no longer view their big ad agencies as the only place for innovation and transformative ideas.  Seemingly, clients just want their agencies to make low value marketing stuff and manage process. Advertising is a production business now. Clients will continue to be pressured to get stuff made for cheaper and cheaper. Agencies stuck in this side of the game will be low profit enterprises.

It’s simple economics. Anywhere there is an abundant supply of goods and services, buyers will set the price. And in markets that are commoditized, any price is too high. This is high school economics.

There is simply an over abundance of marketing, advertising, PR, brand strategy, design and communications firms. Clients have abundant choice. If you’re an agency of any size and discipline, your clients can easily replace you.  No doubt, you know there is a long line of competitors just waiting their turn to take over from where you left off when the client takes their business into review.

Clients have all the power in the buying cycle. Consequently, agencies are left to compete with each other by giving their ideas away for next to nothing. McKinsey doesn’t create business chasing RFPs. Clients go to them.

To change client behavior, agency executives must change their behavior first.

Let’s not forget, it’s always the client’s money! The customer is king! You don’t have a business unless you have customers. In my view, agencies need to remember their purpose is to serve the client, not the other way around. Advertising executives have two alternatives in how they serve their clients:

1) They can be order-takers focusing their business on responding to client need to simply get stuff done– the cheaper the better.

2) They can be value-creators first focused on contributing useful insights, strategies and ideas that enable clients to see over the horizon, helping them gain more clarity and confidence to make the right decisions that impact their business success.

Of these alternatives, which one do you think will earn and deserve the trust and loyalty of the client over the long haul? Which alternative will enable you to provide more use value to your client than you are paid in cash value–thus enhancing your ability to move up the value chain and command premium fees? Which method will enable you to create unparalleled competitive advantage for your firm? Which alternative will clients love to share with others? Which one do you want to be?

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10 Comments

twitter.com/NewBusinessHawk on June 21st, 2011 said

Too true… and so painful to read! I believe you’ve tapped on a few truths about the client/agency relationship.

A key point we often stress is that “Companies” NEVER fire agencies! People do.

And people fire agencies every day for a wide variety of reasons. They justify their decisions in a variety of ways. The reasons represent a full range of human emotions. Fear of change. Loss of trust. Pride. Poor chemistry. Misunderstandings. Neglect.

Firing an agency is not a business decision, but a human decision made because of human emotions.

Understand this, and you are well on the way to a position of never losing another client. It’s called chemistry. And understanding how to use it will keep the relationship strong for years…

Brian Addison on June 21st, 2011 said

I really believe another source of increasing tension is the ever-shortening average CMO tenure. I probably last read a couple years back that it was down to about 18 months, meaning CMOs more than ever feel the need to swoop in, make a change (often switching agencies), and then look to quickly reap a tangible return from the new agency partner. This emphasis on the short term often sacrifices the long term, placing an unfair emphasis on quick win tactics over thoughtful strategy, leading to frustration for all involved.

Chris Brown on June 22nd, 2011 said

As an advertising person for the last 10 years, this really is painful to read and to understand that it’s just not happening in one part of the world.

Whilst we follow the second principal with our clients, unfortunately, even then the clients still treat us like Vendors.

The problem is on the client side. Most times the new ones especially at the director position don’t understand what’s presented to them given they have no idea of the heritage of the brand. Plus the ego’s need to show whose boss is what kills the relationship with the agency no matter how good the insights or the work.

Plus sometimes there’s just a personal pressure (friend, associate, etc) to switch work. Advertising is a contacts game afterall.

Whilst I agree that there are a lot of agencies, the good ones are still quite few. One or two people agencies are a dime a dozen though.

Al Pittampalli on June 22nd, 2011 said

You point to some very real problems here. Primarily junior staff executing the work seems like a slap in the face to the client. And making agencies go through silly hoops just to win the work is absurd. You are spot on correct, though, it’s up to the ad agencies to improve the relationship first…the marketplace is just too cluttered, and if a client is not happy, they’re just one click away from another agency.

Tom Hammond on June 22nd, 2011 said

This industry is rife with big ego. That may very well be the crux of the problems. One thing is for sure — the best results are produced by those who operate from a platform of mutual respect. It takes longer for some to learn that.

Art McNeil on June 24th, 2011 said

My work with Fortune list CEOs on the pragmatic use of values, revealed that bad (unethical) behavior, typically correlates directly with CEO priorities—expressed explicitly or implicitly. Bad behavior is capable of producing short term gains (an infusion of cash flow), but invariably concludes in long term pain; (the destruction or a reduction of wealth)–for example, Enron, Arthur Anderson and Bernie Madoff . Bad behavior seldom begins with a large “company threatening” transgression. Rather, when CEOs encourage or tolerate small ethical violations they set up a slippery slope—a precursor to failure.

Bob on June 25th, 2011 said

As an ad agency creative, who usually doesn’t own the client relationship, but leaves that to the account directors, I experience an increased notion that clients wonder about the value account people bring to the table – which in turn makes a value-based relationship that much more difficult. I think a lot of the account people are trained too similarly to the brand managers and can’t provide a service or knowledge the client hasn’t already checked off internally. If individual client service folks were really strong, in let’s say, social media strategies or innovation design or something… I think clients would have more respect. Too just be an upstream strategic partner doesn’t seem to be enough anymore.

Ken Roman on July 03rd, 2011 said

As to “Why clients and their ad agencies behave so badly”, you have compiled a disturbingly correct list of bad behaviors — on both sides of the fence.

But I don’t think it’s new. There have always been bad actors in the business. And it is not just advertising — it’s just that we are more visible than lawyers or architects or consultants. McKinsey, for example, never publishes its client list. And they don’t announce new clients.

The trend that disturbs me is the negotiation of fees by the purchasing department rather than the marketing people — who know how to value ideas.

David Ogilvy always said clients get the kind of advertising they deserve. Great clients ask for big solutions. All the best campaigns I was associated with started with a client asking a big question — not with our coming up with a bright idea and trying to sell it.

My largest client at Ogilvy & Mather for many years was Lou Gerstner at American Express — before he went to IBM. He thought clearly about what Amex needed to build its businesses, so we were able to organize our resources to develop campaigns to meet these needs. When he came to American Express, the Amex Card was seen as a “mature” business. By the time he left, it was growing 23 percent a year.

He also paid us enough to invest in his business with talented people in his key markets. “Pay peanuts and you get monkeys,” said Ogilvy.

~ Ken Roman former Chairman of Ogilvy & Mather and author of “The King of Madison Avenue: David Ogilvy and the Making of Modern Advertising.

Ron Strauss on July 05th, 2011 said

Ken Roman’s remarks are spot on.

I was and am fortunate to enjoy decades long relationships with clients.

The key to long-term successful relationships is to be in tune with the client on their values, and on what they are trying to accomplish. That means truly understanding their business. It also means that the client also respects your values, and what you stand for.

If you don’t have that depth of mutual understanding and insight, it’s impossible to be viewed by the client as a trusted advisor. You wind up being viewed as a vendor, with predictable outcomes.

As long as agencies are willing to give away their thinking in competitive pitches, they’ll likely be viewed as vendors, and as inept business people. And that’s no way to begin or maintain a relationship…

I write about the agency/client relationship, and how to restore it, in a book I co-authored with Bill Neal: ‘Value Creation: The Power of Brand Equity” Read Chapter 13.

-Ron Strauss, Founder & CEO Brandzone
-www.LinkedIn.com/in/ronstraussbrandzone

Vivian Ihaza on July 06th, 2011 said

I worked for four and a half years with 2 agencies and thereafter moved over to the Client’s side where I have been ever since.

I think it’s clear; Agencies need to deliver better practices and account management and show that ‘value to Client’ and not ‘profit to the Agency’ drives their strategic approach. This way, over time, mutual trust and respect is developed which will in turn translate to Clients willing to pay that little bit extra to maintain a consistently mutually beneficial partnership. Truth be told, there are indeed a lot of agency options available out there for Clients to choose from.

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