Why Clients Are Rethinking Their Agency Partnerships Right Now

The tail end of 2020 is generating a wave of media reviews. September alone brought news of the NBA, Home Depot, T-Mobile and JPMorgan Chase reviewing their media accounts. The Covid-19 pandemic has accelerated shifts in the media landscape and consumer habits and has also led some to reassess marketing investments. All of this is compounded by clients delaying or pausing reviews earlier in the year. Those reviews have reemerged as agencies with thin resources respond to an array of pitches, and clients are looking for partners who can handle new challenges and are forced to be selective about what new business they pursue. While total dollars under review will be down for the year as a whole, global data consultancy COMvergence estimates current media under review at $6 billion globally, excluding about $2.5 billion of concluded reviewed billings added since early July. “We have seen some kind of new business opportunity, big or small, almost every week since the Fourth of July. … Since then, it does seem that media pitches have been fast and furious,” Mediahub U.S. president Sean Corcoran said. He added that Mediahub was seeing twice the new business activity it typically would at this time of year. Expected delays A backlog of media reviews earlier in 2020 was bound to produce a flood toward the end of the year. Many clients decided to put on hold ongoing reviews, including those in their late stages, while others delayed planned reviews or decision-making processes that would lead to agency reevaluations. At the time, "a lot of clients decided they can’t make this important decision on a Zoom call," Mediahub global CEO John Moore explained. At a certain point "wait and see" no longer made sense for these clients, and they decided to pursue reviews of their media agency partnerships in the current landscape, even if that meant conducting such business over Zoom. But that's not the whole story since the pandemic has accelerated existing trends and upended marketing practices in a way that extends to agency partnerships. “A disruption in the market can often lead to disruption in agency-client relationships. And modern marketing has never seen a greater disruption than Covid-19,” Omnicom Media Group CEO, North America Scott Hagedorn said. Changing landscape and shrinking budgets The pandemic fueled and accelerated changes in the media landscape as more consumers found themselves confined to their homes. Sports were suddenly canceled, meaning an avenue advertisers had relied on for a guaranteed large audiences was suddenly not available. Advertisers realized they needed to change with the times and that many companies are simultaneously dealing with internal shifts that are placing greater emphasis on ecommerce. "A lot of these companies are going through digital transformation as brands, which has pushed them into new ways of measurement," Corcoran said. MediaLink managing director Donna Sharp explained that the past six months has seen many clients reevaluating agency relationships as they look for partners that can help facilitate greater measurement across channels or that are more adept at responding to internal digital transformation. Of course, clients are also looking for ways to save money under constrained budgets. Among the sources Adweek spoke with, opinion was split about the degree to which pricing was fueling the trend. “Clients are trying to cut costs and they’re looking at media as an area to start doing it effectively,” Avi Dan, CEO of search consultancy Avidan Strategies said of both reviews and in-housing, while search consultancy ID Comms CEO Tom Denford contended that most clients his consultancy works with are "looking beyond hiring an agency just to give them the cheapest media buying." That doesn’t mean clients struggling with the business impact of the pandemic aren’t making budget-based decisions. A move toward placing greater emphasis on measurement and data integration is designed to make media investments more efficient beyond a narrow view at the cost of a relationship. Clients are making efforts to better understand the benefits of their media investments and align with agencies to meet common goals. “Many clients are still leveraging budgets as a way they plan around media,” Sharp said, “and say, 'If we ramp back up the investment, here’s what the business impact is going to be." Sharp added that MediaLink is spending significantly more time working with agencies and clients on an outcome-based approach. Keeping up The volume of reviews has stretched agency resources at a time when many were forced to lay off employees earlier in the year. “It’s a challenge to [keep up with new business]. We allocate talent for new business, but you almost have to earn back some of your ability to bring resources in,” Corcoran said. Corcoran noted that Mediahub has had to decline pitches to focus on those it has a higher probability of winning. Agencies are also turning down pitches in their strength areas to focus on strategically diversifying the client portfolio. “Any CEO of a media agency is looking at its client list like a stock portfolio,” Moore said. “You can’t be overly reliant on brands impacted by economic or health crises.” And this reevaluation process goes beyond the review process. Sharp explained that MediaLink is seeing twice as many client-agency restructures as review processes. In these processes, MediaLink works with clients and agencies to evaluate existing client needs and see if agency partners can pivot to provide solutions. “In the last 30 days, we’re seeing a lot of clients wanting to reassess relationships, which can be a precursor to a review,” Dan said, predicting more clients would launch reviews over the course of the next six months. Regardless of the number of reviews in 2021, the ways in which 2020 has impacted agency-client relationships and the review process will prove lasting. “There are agencies that are really pivoting their offering to respond to a new kind of brief that is coming out,” Sharp said. In many cases, this looks like highlighting the agency's ability to utilize data and measurement to ensure greater return on investment for clients' marketing investments. Integrating agency and client data stacks has become an important part of the process. As many clients take more services in-house, agencies often find themselves handling a reduced scope. "There’s a bigger existential issue for agencies, which is what role they can play to support advertisers," Denford said. "Marketers are always self-reflecting but now that tools are available to handle content creation themselves, to manage a lot of media buying themselves, they need to do the analysis of what makes sense to invest in having in-house and what doesn’t."