Two Roads for Ad Agencies

The road more traveled is a road of unequal partners, where advertisers determine brand strategies, plan Scopes of Work on an ad hoc basis, grow the SOWs in a whimsical fashion, dictate and reduce agency fees, manage the integration of their diverse network of agencies -- and think of their agencies as commodity suppliers of creative services.  Relationships are changed every 4 years or so. The other road -- the high road less traveled -- sees a lead agency designated as the client's key strategic partner, jointly working to determine brand strategies and scopes of work that have the highest probability of improving brand performance, fairly paid for the resources required to carry out the work and respected for the strategic and creative value that it brings to the relationship.

This road less traveled is the path for long-term client and agency success and viability.  

How can a strategic partnership be created in today's cost-obsessed environment?  What are the necessary conditions?

1. The relationship must be viewed by both parties as being designed and structured to bring about improved performance of the client.  This means improved client growth and profitability, gains in market share and strengthened brand equities.

2. The agency must be seen as the client's "marketing and strategic performance partner," expected to propose, deliver and execute marketing communications that have the highest probability of achieving agreed performance-improving goals.

3. The relationship must be structured for flexibility and experimentation.  SOWs will change as results are measured.  This fact must be built into the structure of the relationship.

With this as a basis, then a strategic relationship can be constructed, with each party having an understanding of the brand problems to be solved, the action plans most likely to succeed, and the specific Scopes of Work that deliver the hoped-for results. Agency staffing must be based on the size and complexity of the SOW. Each party must commit to running a lean and efficient relationship with a minimum of unnecessary rebriefing, rework and other inefficiencies that raise costs and undermine the ability of the relationship to act and respond rapidly. Process metrics must be developed, agreed and used to monitor relationship efficiencies on an ongoing basis.

A lead agency will manage global Scopes of Work in global situations, and manage on a seamless basis cross-disciplinary Scopes of Work involving other agency partners. It would be highly desirable to have this lead agency responsible for distributing the central pool of fees in accordance with the SOW workloads carried out by the various agency partners.

Clients must balance the often-competing interests of Marketing and Procurement, and agencies must stifle their own office-oriented profit center motivations so that the two parties can work in a focused way on the performance-improvement goals of the relationship. Each party should have a responsibility to the other to ensure the success of the other in its efforts to make the relationship a success.

This road is less traveled because it is more difficult to construct.  

The road more traveled -- the way things work today -- sees growing agency workloads and declining agency fees, with few results obtained for the costs involved.  It's a commodity road to oblivion.

Photo Credit: Donald Reilly The New Yorker Collection / The Cartoon Bank. With permission.