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Good Money After Bad?

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In the U.S., the proportion of reviews that are consultant-led has declined from 40 percent in 2007 to 23 percent last year, according to a recent analysis by the 4A’s. Yet agencies still spend tens of thousands of dollars and countless hours wooing domestic and overseas search consultants, most recently during AdForum’s annual summit in New York two weeks ago.

Why? Because leading consultants have longstanding relationships with major marketers and can influence who they consider for their accounts. Also, agency leaders believe that consultants tend to be attached to larger reviews. “Consultants remain a significant factor in a lot of larger reviews,” said Jim Heekin, worldwide CEO of WPP Group’s Grey Group. “The good ones add value and make it a better process. The not-so-good ones don’t.” Added Gotham CEO Peter McGuinness: “There’s a whole extra sphere of influence around them. They need to know what you’re all about.”

That said, even established consultants, like their agency brethren, have to compete on price, which can lead to commoditization and therefore less pull with clients. You wouldn’t sense that, however, from what 14 agencies and two holding companies (WPP Group and MDC Partners) poured into presentations to 31 consultants from 18 firms that participated in the weeklong AdForum summit.

Top Ogilvy & Mather executives, including worldwide CEO Miles Young, donned tuxedos and turned their headquarters’ ground floor theater into a cabaret lounge, with help from outside performers, said sources. The same day, the WPP agency also hosted a dinner at the Museum of Arts & Design. Sources estimated the total cost -- including the fee that AdForum charges agencies -- at nearly $50,000.

Havas’ Euro RSCG spent about $25,000 on a dinner and presentation, which took the form of a mock game show at the members-only Soho House, according to sources. Publicis saved money on outside space by holding its meeting at sister shop Publicis Modem but nonetheless spent an estimated $20,000, including the cost of iPod Touches for consultants, said sources. (Data from their presentation was loaded onto the devices.) Grey, Havas’ Arnold and WPP’s Young & Rubicam held their meetings in house, though Arnold hired Blue Water Grill to cater a plated lunch, sources said. Other participating agencies included Droga5, Saatchi & Saatchi and R/GA.

AdForum charges shops anywhere from $4,500 for 20 minutes of “speed dating” to $19,500 for dinner, according to a solicitation document it sent to agencies. Consultants, in turn, pay a fee of $1,200, said AdForum founder Hervé de Clerck.

All but four of this year’s participating consultancies were from outside the U.S., with most coming from Europe, including Grupo Consultores (Spain and Portugal), The Oyster Catchers (U.K.), Agency Assessments International (U.K.) and Marketing Efficiency (France). The U.S. firms were Roth Associates, Ark Advisors, AAR Partners and Avidan Strategies -- a relative newcomer to the space.

The two-thirds/one-third overseas-domestic mix is typical for the summit. But rather than focus on individual international markets, agencies generally provide a global overview, with regional highlights and an emphasis on an overall marketing philosophy. Many of the consultants, however, conduct country-specific and pan-regional reviews, which means their knowledge of, say, Y&R Paris is more germane than the shop’s global marketing strategy.

Nevertheless, consultants and agencies keep signing up. This year’s turnout was about the same as last year’s and average for the summit’s nine years, de Clerck said.

Consultants enjoy rubbing elbows with agency CEOs, and such interaction has resulted in agencies getting into their reviews, de Clerck said. Agencies, in turn, find presenting to a large group to be efficient, though it’s obviously no substitute for one-on-one relationships that their executives develop with consultants in local markets.

Such presentations enable agencies to update consultants on new senior hires, standout work and industry recognitions -- in short, painting a picture of the year. “The clear objective was to re-establish and reset their perception of what Arnold is as a global micronetwork,” said global CEO Andrew Benett. Added Matt Ryan, president of global brands at Euro RSCG: “It’s a great opportunity to level set what they know about us.”

Agency attempts to break from PowerPoint slides are welcome, though a little theatrics goes a long way. Some criticized Ogilvy for its cabaret. “I’m embarrassed for them,” said one source. Young defended the approach as a colorful attempt to illustrate how the agency has changed. “The first, most critical thing is to provide them with privileged information,” Young said. “The second thing is to do it in a way that’s exciting and creates a sense of energy.”

Less -- as in fewer bullet points and presenters -- is more in the eyes of Avidan Strategies’ Avi Dan, a former agency executive who attended his first summit as a consultant this year. In a blog entry, Dan noted that “most of the agencies presented to our group on PowerPoint. One long, tiring slide after another. A couple of the agencies...were more relaxed and chatty. They won, by a mile.” He added that “it’s a mystery to me why an agency, even the big ones, cannot have a meeting by putting forward three or four people. It will make for better conversation and better intimacy with clients and prospects.”