Agencies must rethink the ways they work with clients
Now that Procter & Gamble has announced they are changing their agency compensation arrangements, it is time for all agencies, not just P&G shops, to completely re-examine how they service accounts. Recently, we've heard lots of complaints from agency executives about how clients treat agencies as "vendors" rather than "marketing partners."
With P&G taking the lead, many companies will move toward agency compensation based on results, not on fees or commissions. Performance-based payment moves the agency-client relationship closer to an agency-client partnership.
The idea of "pay for results" is not new. In 1997, Keith Reinhard, CEO of DDB, and Peter Georgescu, CEO of Young & Rubicam, promoted
the concept in a joint interview. Georgescu stated: "At the end of the day, our reason for being here is a simple one--to get results."
To achieve the desired results, agencies will have to rethink their client relationships. If agencies are to become true partners with clients, they'll have to become smarter about agency service and more sensitive to the needs, desires and uniqueness of their customers. To accomplish this, I believe agency account service people and creative staff need training.
As a consultant to a number of clients, I have been frequently asked, "Why doesn't the agency listen?" and "Why can't my agency stay on budget?" As one client recently reported, "We ask a revision on a storyboard or print ad and, when it comes back, agonizingly late, maybe they've changed a comma. I guess I'm tired of the agency treating me like a dummy." General comments about budgeting range from "Everything cost more than I ever figured" to "They don't have much respect for money--especially when it's my money."
Two years ago, Jane Maas and I developed a seminar titled "How to Manage the Agency Relationship" for the Association of National Advertisers. Since then, we have met with more than 100 client representatives, all of whom deal directly or indirectly with agencies. That experience, coupled with my work for clients, has convinced me that agencies must take a good, hard look at how to work more effectively with the client.
If agencies are going to meet the challenge of performance-based compensation, they'd better start reinventing the entire process of client service. How can agency management play a more significant role in the client relationship? How can agencies reduce personnel turnover? How can agency creatives become better listeners? How can the agency become a true "marketing and advertising partner" without losing objectivity?
These and other questions should become the focus of a seminar for agency personnel. Not only will this help agencies prepare for the new client relationship, but it might also substantially reduce account turnover. Let's face it: If clients are willing to spend the money to send their advertising and marketing people to a full-day seminar to help improve the agency relationship, it benefits the ad business to do the same.