Companies can see the advantages of long-term agency relationships but they often behave in a way that makes this hard to deliver, says Stuart Pocock, founder and managing director of Observatory International
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Many agree that a long-term partnership is better than a short-term fling. In fact, in a recent survey of major multinationals, conducted with the World Federation of Advertisers, we found that 65% of senior marketers and procurement executives thought that a long-term relationship was critical to better work.
The reasons are fairly obvious; long-term relationships enable agencies to understand brand challenges better and develop a far greater knowledge of the strengths and intentions of their clients.
That’s vital at a time when marketers are time poor and when good briefing remains a significant issue; a rather shocking 43% of those who responded to the WFA survey admit they are merely adequate, poor or very poor in this area.
And yet many of those same companies will behave in a way that makes it harder for their chosen partnerships to thrive. Right now, the industry convention is that most relationships average around three years across all specialisms.
A key issue is that relationship problems can be sparked even before the contract is signed, often for two key reasons. First, too many advertisers do not align their goals between marketing and procurement when they reach out to the market.
Second, too many advertisers do not fully connect their scope (often badly defined) with their budget. All too often, procurement is sent off with a budget and a somewhat “thin” scope. The agencies negotiate in good faith, only to find that what they have signed up for isn’t what is expected, leading to issues at a very early stage.
The WFA research found that only 45% of respondents said they provided a “reasonably detailed” scope, with 24% simply providing a rough outline. And that’s among the biggest marketers, spending just under $50bn a year globally. Such companies should have the resources and structures in place to do this properly.
But there are simple steps that marketing organisations of every size can take to improve the situation, thereby giving every relationship the best chance of success.
First, they need to define a process that ensures absolute clarity of roles and responsibilities between marketing and procurement. This will also avoid issues occurring when one party is under the impression that the other is dealing with it when they may not be.
Second, they need to be realistic about budgets. It’s understandable that brands want more for less in today’s communications ecosystem, but realism needs to be brought into play to ensure that agencies can deliver powerful work for the actual budget. Being overambitious in the money versus deliverables stakes inevitably leads to agencies moving to staff the account with lower-cost and lower-calibre people to “balance the books”, resulting in slower or poorer work or both.
Third, they need to create a single point of focus – one individual with oversight of relationships or at least the relationships with certain agency types. This individual must have clear definition of their role and be accountable for monitoring performance and escalating any issues before they hit critical. We have seen this produce real benefits, especially if the individual has good working knowledge of both client bodies and agencies.
Fourth, they can ensure that they’re aiming for value rather than cost. Procurement needs to understand the difference between the two and it is incumbent on marketing to work closely with their counterparts to educate them and discuss remuneration/compensation schemes that are geared to deliver this.
Finally, marketing can communicate better during negotiation. All too often, it is left to procurement to negotiate the contract in isolation. Of course, this is procurement’s role, but it is important that marketing is involved and aware of any issues occurring during negotiation that may cause difficulties over time.
The truth is that while no relationship can be guaranteed to last for ever, advertisers that do not take these steps are building the potential for an early marriage break-up and putting their business goals at risk.
This opinion piece by Stuart Pocock was originally published in Campaign.