What is the right set-up for your work with your agency? Last Friday, I have tried to answer this question in my workshop with marketing executives at the Brand Academy of the “Deutscher Markenverband”, hosted at the European Business School (EBS) in Oestrich-Winkel, surrounded by the lovely vineyards of the Upper Rhine valley. With this Blogpost I will give you a short summary of the workshop.
The solution is not obvious as the relationship between advertisers and their agencies becomes more and more complicated leading to an increasing level of frustration on the client’s side. Recent research shows that client’s trust in agencies is eroding dramatically in the last six years.
The reasons are manifold. Above all, digitisation has fundamentally changed the demand for agency services. It is no longer just about creativity as consumers get information from numerous sources and by an increased number of media channels. The crucial point is that the communication environment has become more complex. This has three severe consequences.
First, advertisers demand real-time communication instead of campaigns and advertising analytics to precisely target the communication. Thus, IT plays a more and more important role in marketing.
Second, as the number of consumer touchpoints and media channels increases, more and more specialised agencies are used. Research shows that the average multinational company operating in a large European market has about 50 agencies. But who steers its multichannel management? Some clients see this task on the agency side. These clients demand more and better collaboration among their multiple suppliers, each addressing a slightly different role but all under the brand or company umbrella. Good collaboration is seen as a prerequisite. Clients seek that their multiple agency partners co-operate.
Third, the number of project wise co-operations has increased at the expense of long-term contracts. This results in a less intense work with the respective agencies. In return, those invest less due to missing security and volumes in qualified personnel. But just in the light of digitisation, expert advice is needed.
By consequence, most agencies currently don’t fulfil the changed needs of their clients resulting in a significant erosion of trust in agencies by clients. We have a rather unhappy picture of client-agency relationships which is frustrating, fragmented and stands in sharp contrast to the last millennium’s stereotype of advertising agencies seen as Holy Grail of innovation. Today, however, when a CIO is looking for inspiration, he rather makes the pilgrimage to Silicon Valley to visit some start-ups.
“Clients want to trust their agencies and want these ‘trusted’ agencies to collaborate in a more trusting relationship with each other. But in both areas, trust is declining.” (Jeremy Caplin, CIO Aprais Agency Assessments)
The underlying challenge lies within the fact that digitisation is even questioning the business models of the agencies’ clients. From their perspective, it is more about introducing completely new products and services for the digital customer. Sometimes this entails fundamentally different service processes. It may also result in the need to change the company’s structures and procedures. This is more the field of management consultants given that such projects require a high level of expertise in process modelling and re-organisation.
What has to be done to solve the problem? Creative minds might target their efforts towards the business of their clients:
"The task for tomorrow's agencies will be more about developing business cases. They must provide their customers with target-specific communication products that support marketing and with which value and profit can be generated in a digital market", explains Christoph Bornschein, digital agency CIO.
I am researching currently in the field of advertiser’s expectations towards agencies. Therefore, I interviewed in the last months more than 60 marketing executives. It clearly came out that the advertisers’ expectations are actually shifting:
First, real-time communication, customer analytics and multi-channel management are in the centre of the demand. Advertisers seek for experts able to improve company’s processes and organisational structures. Behind this lies the need for multichannel communication management.
Second, when it comes to the preferred organisational structure, the full service agency as well the lead agency models are perceived to be out-dated. The first one is seen as too ponderous and expensive. The latter is represents a bottle-neck for creativity. In contrast, the single source agency model, where the customer steers multiple agencies, has much potential for innovation, but the downside to entail high project management efforts. From the clients’ perspective, the agency model of choice seems to be the fluid network. There, the client manages with many, but collaborating agencies. Each agency is responsible for specific communication means, e.g. advertising, social media, press, events. There has to be a facilitator in the centre of the fluid network covering planning and consultancy. This facilitator leaves the implementation to its network partners. He ensures an infrastructure that is designed to guarantee the agencies to get quick and easy access to all relevant information, documents and systems. In analogy with IT-management, the facilitator can be seen as scrum master because the preferred way of collaboration is agile project management. The disadvantage of high project management efforts is more than compensated by the high innovative potential through pooling the know-how of the network partners.
However, most of my interview partners ignore that agile project management needs strong interaction between them and their agency. But there is strong evidence that the model only works when the client himself is ready to collaborate and professionally integrates all his departments.
“Clients who are not open to understanding their role in how well things work between themselves and their agency partner cannot and will not get the best out of them.” (Jeremy Caplin, CIO of Aprais)
The way in how advertisers and agencies work together is a crucial factor in the digital era. Thus, one may ask why creative people still work in the agency’s offices whereas it’s a proven practice of management consultants to realize their project work on the client’s site. The answer actually lies in close interaction between advertiser and agency. So agency guys, join the client!
Moreover, transparent mutual assessment and feedback drive continuous empowerment. Thus, whenever trust is becoming an issue, parties should initiate a structured process of mutual evaluation and dialogue in the spirit of a true, open partnership. The time for straight-up-and-down-thinking is over! Transformation needs heart and mind, the zany and the traditionalists.
Thus, the advice I give to my scholars at Brand Academy and that I personally esteem the most important is trust. Have trust in your agency!
And if you are interested to learn more about how to follow a structured, two-way feedback process of selecting and steering an agency and to develop a perfect fit with the needs of your marketing department, then join my next course at the Brand Academy on June 30.
Do we meet at Brand Academy?