Problem: Why companies use media agencies?
1. What’s the process & interaction between a client company and a media agency?
Client/Agency Relationship Sustainability: A look at industry trends and relationship behaviors
Relationships permeate every aspect of our lives – both personal and professional. There are good relations, which we look forward to, and poor ones, which we tolerate. The advertising business is essentially a people business. In a world that revolves around things as abstract as brands, perceptions and ideas, and where judgments are largely subjective, relationships are bound to be highly volatile and emotionally charged.
A client’s relationship with its communications firm is one of the most complex in the business environment and requires a substantial level of collaboration from both parties to make it effective and sustainable, especially in these trying times where patience is thinner, loyalty is weaker and understanding is more shallow.
This paper provides some insights into industry trends and behavior patterns that affect agency relationships and seeks to outline best practices to build successful business partnerships that are based on trust, confidence, understanding and open communication.
The State of Business Partnerships Today
Despite promise, many business partnerships fail to meet their expectations. According to a study, 30% of all business alliances essentially fail, 17% eventually wind down as priorities and people change, 9% are bought out by a partner, 5% are spun off as independent and only 39% manage to achieve or exceed initial expectations.
These are difficult times for client-agency affairs. With economy still sluggish and consumer-spend in decline, cracks are appearing in an already complex relationship. The good old days when clients were happy to see increases in brand awareness metrics are gone. Now the agencies are increasingly judged not by their creative output but on the ROI they deliver.
A clear trend in client-agency relationships is to terminate those that under-perform. In 1984, the average client-agency relationship tenure was 7.2 years. By 1997 (13 years later), that number declined by 25% to 5.3 years. Today the average client-agency tenure is thought to be less than three years.
The Changing Dynamics of Agency Relationships
The marketing environment has become vast and complex. Few agencies offer the entire spectrum of marketing services in a way that is satisfactory and acceptable to their clients. The need for greater specialization is forcing clients to hire multiple agencies but is making it difficult to bring these fragmented agencies under one integrated marketing communications umbrella. With the increasing use of social media, there is also greater blurring of functions such as advertising, PR and digital strategies. These are all converging in a way not seen before.
The volatile economy is forcing both agencies and clients to do business with smaller teams than they had in the past. This leaves both the partners with young but less experienced personnel and contributes to a general increase in stress and distrust as they are asked to do more with fewer resources.
Agencies complain of having to deal with more decision-makers on the client-side. These increased points of contact slow down the decision-making process and increase frustration. Agency executives also complain of being treated as commodities with overemphasis on the bottom-line.
Both agencies and marketers have largely failed to find a meaningful way to measure, judge and compensate creative ideas. There is a lack of consensus on how advertising effectiveness needs to be reviewed. Solutions that are transparent, cost-effective and, at the same time, motivational enough to sustain the relationship further in a productive way are hard to find and agree upon.
Why Clients Terminate Agency Relationships
Clients continue to cite the same reasons for terminating their relationship with their agency. Most of the time, these issues might have been resolved if they were acknowledged and addressed earlier.
- Turnover – new management on one or both sides
- Lack of interest/understanding of client’s business
- Strategy and creative linkage unhinged
- “Outgrown” the agency
- Understaffing and inexperienced personnel on the agency team
- Research scores consistently below norms
- Creative intransigence and arrogance
- Mandated consolidation
- Loose attention to budgets
Avoiding the Pitfall of Failed Relationships
Smart agencies and clients understand that a strong partnership will produce the best work that leads to better business results. They also understand that, to build such a strong relationship, all lines of communication must be open and honest. They seek iterative feedback to ensure that an honest effort is being made to meet the expectations of all the parties involved.
Making information accessible and sharing it freely is essential in building trust between the agency and the client. The expectations need to be transparent and both sides must have a clear idea of what the other party expects from them. When there is no consistency in expectations, trust will erode and blame games begin.
To create sustainable long term relationships, both parties must have a mutually agreed upon definition of what success means to each. To increase accountability of the results, necessary metrics should be developed to evaluate the performance of the campaigns. A fair remuneration system must be built that aligns the agency’s aims with the client’s needs and priorities.
How to Get the Most Out of the Relationship – A Client Perspective
Obviously, sustaining a successful relationship is a two-way street. Neither just the client nor the agency can exert all the effort. On the client-side, there are a number of simple attitudes and behaviors that foster communication and create a long-term, successful agency relationship.
- Install a spirit of partnership in the relationship. The best advertising can only be created in absence of fear. Lack of respect for agency’s expertise, threats of canceling the contract and other undercurrents of intimidation will only create an atmosphere of mutual distrust and aversion.
- Establish clear expectations. Define your goals unambiguously and let the agency people know what you want to accomplish with the campaign. Provide all the relevant information they need to soak in your product, people and corporate culture and formulate a satisfying strategy that best achieves the intended results.
- Provide a well-written and effective brief. An agency is more effective if clients are clear about what is needed, provide the critical information necessary to complete the task in an agreeable manner and motivate the people to do their best. In the advertising world the end product is less tangible and failure to define the precise purpose of advertising dooms the creative process from the very beginning.
- Treat the agency people well. You are in for a very complex and inter-connected relationship and you need to do everything possible to make your agency see that they are working with you, not for you. Approaching your agency as just another vendor hinders the collaboration and disrupts the synergy. Create an environment of friendship and teamwork to get the best out of them.
- Keep the approval process simple. Limit the points of contact when it comes to approving or rejecting the campaigns. Be honest. If you don’t like something, say so. Be specific. Don’t ask for a new execution simply because this one “doesn’t work”. Great clients state precisely why they disagree, then challenge the agency to find a solution both parties can agree upon. Be kind. Think of the commentary as if you are evaluating the person.
- Establish clear paths for integration. Set clear expectations on scope and responsibility and give them the authority they need to succeed. Be sure they have an open and productive working relationship with partners from other disciplines if they exist. Be collaborative and share responsibility for the end result.
- Regularly schedule assessments and evaluate the progress. Having a formal agency assessment process is a great way to make course corrections. Develop metrics to increase accountability and put in place the means to gather the necessary and relevant data to analyze and evaluate the effectiveness of the advertising programs.
- Make sure the agency makes a fair profit. At the end of the day, both the advertisers and the marketers look for the same thing – profitable growth in their businesses. Have wide-ranging discussions to align the client’s needs and agency interests and priorities. Have a mutually agreed upon remuneration contract and a well-defined State of Work both of which are easy to understand, simple to administer and flexible enough to accommodate possible changes in the future.
2. How do they make use of big data to get customer insight?
Treat Your Network Traffic as a ‘Gold Mine’… and Mine that Gold! – Your network contains a wealth of Data in Motion that many companies don’t take advantage of. Harvesting this valuable information is the first step in truly understanding your customers’ experience.
Don’t Always Assume You Know What Your Customer Wants or Needs – Embrace your customers for what they do, rather than what you think they’re doing. Stay objective and allow the data to provide insight.
Capture Everything to Avoid Blind Spots – Blind spots can lead to missing critical information and a skewed overall picture of a customer’s experience. Make sure you truly capture everything that can influence the customer’s experience and behavior.
Focus on Quality of Your Data Rather Than Quantity – After capturing everything, focus on feeding your analytics solution with the data that matters most.
Be Agile – Customer needs and priorities are always changing. Technology must be agile and able to adjust as well. To ensure that your analysts don’t lag behind, you must be able to adjust the data you capture & process on the fly to meet continuously changing requirements.
Your Business Operates in Real Time – So Should Your Analytics–The ability to gain insights into your customers’ experience and behavior in real time allows you to understand what’s happening as it’s happening and take appropriate action steps as needed to ensure optimal user experience and business results.
Analytics Should Never Impose Risk on Your Production Systems – Nor should analytics have a negative impact on your customer’s experience. Capturing everything and avoiding blind spots should have no impact on your site performance.
The Data is Yours, Use Every Bit of It – Aggregated data can hide critical insights. It is the granular information about your customers’ behavior and experience that will render the most valuable insights required to continuously improve your customers’ experience and business results.
Look at the Full Picture – Capture the data whether your customers interact with your website/web application from a smart phone/tablet/computer. Enrich that data by correlating it with data that resides in different data stores to make sure you are able to “connect the dots.” Correlate the data as early as possible in your processing to gain complete, accurate and timely and effective insights.
Be Platform-Neutral – Ensure that you can capture customers’ experience and behavior information from any type of device (laptop, desktop, smartphones, tablets, etc.).
3. What is earned, owned, shared and paid media?(PESO)
Paid Media – Often thought of as “traditional” online advertising through display ads, pay per click search ads and sponsorships. The pro for paid media is it’s ability to be implemented pretty much on-demand, the ability to have some degree of control and also that it scales. The growing popularity of social advertising on sites like Facebook, Twitter and LinkedIn (YouTube as well) adds another option for marketers to gain presence in channels where consumers and buyers are spending their time. The appearance of brand messages and content within paid media can work together with social sharing and organic search.
Earned Media – The result of public & media relations efforts to gain coverage in publications – on and offline. Or essentially, brand presence within media without having to advertise. This definition also extends to brands that behave online in such a way that “customers empowered to publish” create content on the brand’s behalf inspiring buzz and word of mouth.
Owned Media – Media, content and assets that the brand controls, like websites, blogs, newsletters and brand social media accounts. Brands are increasingly behaving like publishers with editorial staff managing content creation steams. “Content Marketing” is the hot topic when it comes to Owned Media and can facilitate brand information discovery through search and social channels. Content engages customers and fosters relationships throughout the customer lifecycle. Brand content to serve both broad and niche audiences is not immediately scalable, but can provide long term growth benefits without corresponding growth in costs.
Shared Media – Brand social web participation and interaction with consumers on content on sites like Facebook, Twitter and YouTube that results in content is “shared media” since it’s a result of a shared interaction. Because of the nature of social sharing and engagement on social media sites, Shared Media can propagate across an individual’s network to others, and so on and so on. Paid and Owned Media can inspire Shared Media. Shared Media can inspire Earned Media.