In the current high pressure business environment where there is an ever increasing focus on efficiency, cost saving, margin management, profitability and cash flow, an inevitable casualty is relationships.
One would think that during these times the opposite would be true and great relationships would differentiate one business from another, however it is often not the case. While partnerships may take strain in all areas of business I believe it is most pronounced between clients and their advertising and marketing agencies.
The good times
During good times the marketing teams generally get to spend their budgets as they please with little interference from the finance or procurement departments. They work closely with their agencies to create successful campaigns and talk fondly of the win-win partnership relationships they have with their agencies.
These relationships benefit the creative process where both the client and the agency are able to take creative and calculated risks to differentiate themselves from the competition.
Budgets under pressure
As soon as margins and profit come under pressure, however, the marketing budget inevitably comes under the spotlight and is often an area that suddenly receives attention from finance and procurement. Contracts are scrutinised, long standing relationships are questioned and marketing departments are put under pressure to ‘get comparative quotes’ or even to put out a tender or hold an agency review.
The agency remuneration structure is reviewed and shorter term or ‘no-retainer’ agreements are requested. Since the agencies are typically facing the same economic pressures as clients these negotiations are often successful and procurement and finance can pat themselves on the back for a job well done.
What’s the price?
The question to ask, however, is at what price have those cost savings been won? Marketing is not a commodity and therefore the comparison of ‘apples with apples’ is extremely difficult, especially if conducted by finance or procurement people. In many instances long term relationships between the marketing teams and the agencies that have seen great success over a long period of time are severely damaged and the ‘partnership’ feeling is lost.
During the good times it is critically important that the marketing team are held accountable for the money they spend and that ROI is measured and performance is tracked against past experience as well as against industry standards and competitor performance.
By keeping the agency client relationship accountable when times are good a culture of fair partnership is created that can be respected as each partner takes some of the pain in the bad times. By holding everyone accountable all the time and acknowledging that marketing and advertising are part art and part science, the hard work completed during good economic times is not thrown out of the window as soon as times are tough.
The most important aspect of a good agency client relationship is trust. Accountability throughout the full business life cycle is the best way to ensure the trust relationship both internally and to external stakeholders.