With Advertising Week about to kick off in New York, today’s Mad Men should become concerned about the state of their industry: The majority of clients, 62%, polled by my marketing consultancy Avidan Strategies admit that they now view agencies as suppliers, and that today’s relationships are no longer a partnership.
Ad agencies have been going through a spell of massive upheaval in recent years: their margins are being squeezed, their services commoditized, and their roles disrupted by technology. Agencies frequently talk about transforming their business models, but their challenges keep mounting. Clients are increasingly frustrated with them, according to our 5th annual Client/Agency Relationship survey. The clients, mostly CMOs, were polled in an online survey fielded September 15-19.
Among the most damaging findings: strategic stewardship of brands is slipping away from agencies as clients are taking steps to shift strategic thinking and planning in-house. Agencies continue to struggle with the practice of Integrated Marketing Communication, managing consistent messaging across channels. At a time of rapid media fragmentation this continues to be the agencies’ Achilles heel.
Clients also don’t feel that agencies have quality personnel or that it is well trained, and are skeptical about traditional agencies assimilating a more relevant digital model.
All this is happening against a background in which the majority of clients report that they are forced to work with a leaner marketing staff, and are asked to do more with less. They are overwhelmed by having to deal with making sense of vast volumes of data while the media is fragmenting rapidly and consumer loyalties are shifting. However, agencies are not stepping up to partner with clients effectively. That might, I believe, lead to the emergence of a completely new way in which clients will seek partnerships, outside the traditional manner.
Nothing is more damaging to a relationship than the breakdown of trust. Without it, the foundations of any client/agency relationship are brittle. Asked to name the main areas of discontent with agencies, 73% of those polled point to their agencies’ incapacity to come up with genuine consumer insights, while 58% feel that agencies don’t make recommendations that are “media neutral”, even though it could be good for brands. Instead, they are still too focused on television as the solution to every communication problem.
Fifty-three percent feel that agencies have a poor level of knowledge of issues that impact on client business, and almost as many feel that agencies have a limited knowledge and comprehension of the client’s business and are slow to respond to market dynamics.
Other Points Of Friction
In this era of audience fragmentation and a greater need to integrate offline and online marketing, agencies come up short. Only 16% of those polled say that agencies are “very good” at orchestrating integrated solutions, while 78% are frustrated by the way agencies manage a holistic approach to communications.
Understaffing and inexperienced personnel on the agency team is another major problem. Over half the respondents say that lack of quality agency people and high turnover is a problem.
Only 32% of the respondents polled think that the traditional agencies are doing a good job of evolving and extending their digital marketing capabilities, while the overwhelming majority, 68%, believe that agencies are struggling to transition their business model and are playing catch-up in digital. Some clients don’t think that digital agencies figured it out yet either.
New Manner of Partnerships
The exclusive AOR arrangement is becoming a thing of the past. The vast majority of those polled, 82%, plan to move to a hybrid relationship of AOR and project assignments. And 62% of clients plan to take more agency business in-house, primarily in the areas of digital and creative.
While it is not clear yet how the communications ecosystem will evolve, the survey suggests that the fragmentation of the marketing mix will push toward the emergence of non-traditional agency partners. Clients, it seems, are looking for alternative solutions to their current partnerships.
