Long-term relationships require fair balance between scope and budget
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Advertisers need a smarter approach to agency management if they want more productive and longer-lasting relationships, according to new research from the WFA and strategic partner The Observatory International.
While advertisers do want greater agility, long, productive partnerships are still considered critical. Sixty-five per cent of big multinational advertisers believe a long-term relationship with their agency is either important, very important or essential in producing great work, with just 12% saying it is irrelevant.
Creative and media agencies typically enjoy the longest relationships with 36% of respondents saying their media agency had worked with them for more than five years and 34% saying their creative agency had been a partner for a similar amount of time.
Effective Agency Management is based on responses from 42 senior client-side marketers representing 35 different brand owners in more than 14 categories that collectively spend just under $50bn on global advertising.
Eighty-one per cent of big companies said they worked very collaboratively with their agencies and 45% said external partners were an essential part of their team. Big advertisers are also looking to key agencies to do more. In the past 12 months, 65% of respondents said they had increased scope of work significantly or somewhat for content and social agencies. The figure for media and creative agencies was 40% and for PR agencies it was 35%.
The research found that agencies typically produced better work when they were retained. Respondents were far more likely to rate the work of their agencies as excellent or very good if they were retained compared to those who worked with agencies on a project basis. The biggest gap was found in creative among the respondents who ranked their agency’s performance as good, 86% worked with retained creative agencies and 14% had project-based relationships.
Clients also recognised that they could make improvements too, changes that would both improve outcomes and prolong relationships:
- Better briefing is essential. While 79% agreed that great briefing was essential to produce great work, not one respondent company felt they were excellent at briefing, and only 17% described themselves as “very good”. Forty-three percent of respondents admitted they are merely adequate, poor or very poor in this regard.
- Improved collaboration between marketing and procurement is critical. Eighty-three per cent of marketers and 73% of procurement said they work together on fee negotiations. Making sure this works seamlessly means defining process and having absolute clarity of roles and responsibilities in relation to the various aspects of agency management.
- Balance scope with budget. Marketers may be ambitious to do more in today’s complex communications ecosystem but without a realistic budget and a clearly defined scope, procurement is unlikely to be able to negotiate the right relationship. If agencies find that what they have signed up for isn’t what is expected from them, this will create frustration on both sides. While 45% of respondents say they supply their agencies with ‘reasonably’ detailed scope of work, 24% only provide a general overview of key initiatives.
“No one can guarantee a great agency-advertiser relationship, but marketers and their procurement partners can behave in a way that will make it more likely. The end result will be longer, more effective relationships that will grow businesses and create more powerful brands,” said Stephan Loerke, CEO at the WFA.
“Clients play a huge role in ensuring whether their relationships deliver at an optimum level. Changing their behaviours can play a critical part in ensuring minimum disruption and the cost of having to find new agency partners. A commitment to regular monitoring of agency performance also ensures outputs and relationships stay on track by identifying issues before they become critical,” said Stuart Pocock, Co-founder and Managing Partner of The Observatory International.
WFA members can download the report here.