Are Advertisers "Bad Hombres" for Their Ad Agencies?

There39s more to this Auctionbased bidding of SOW projects Inhouse agencies Advertising relationships embracing management consulting firms Significantly shortened agencyclient relationshipsProfits required by holding company owners have been hard to come by leading to agency restrictions on travel salaries and hiring amp160Where will this end amp160Clients particularly procurement look like quotbad hombresquot to their agenciesA global agency CFO put it to me this way quotClients will do what they want to do If they39ve decided to cut fees they39ll cut fees They39ll benchmark with irrelevant benchmarks They39ll ignore Scope of Work arguments One of our largest clients cut our fees by 30 last year and they told us that there will be another 25 next year amp160We have no recourse Take it or leave itquotAgencies caught as they are between feecutting clients and profithungry owners take this personally feeling like victims in a situation that they cannot influenceThat39s what happens when the symptoms of a larger problem are defined as the problemFee cutting SOW inflation declining influence increased competition agency turnoveramp160These are symptoms of dissatisfied clients who are failing to grow their brands and in the face of this failure are disinvesting in their agency relationships which are not delivering the goodsIt39s not personal It39s strictly business amp160It39s not as if the client need for quotincreased shareholder valuequot is a mystery or surprise amp160The shareholder value concept has been around for more than 30 years amp160The problem is that ad agencies never specifically aligned their services or capabilities to deliver quotincreased shareholder valuequot under all market conditions They instead have focused on delivering creativity and solving creative brand problems in a particular wayWith the benefit of hindsight we now understand that creative solutions amp224 la ad agency deliver more reliable results when the economy is growing and consumers are ready to pull out their wallets amp160It is much less effective during periods of economic instability which we have had for the past decade and when there are major disruptions like the disruptions caused by ecommerce social media and the demographic shift from highspending Baby Boomers to more frugal and fussy MillennialsBrand growth has eluded McDonald39s CocaCola PepsiCo Kraft Heinz Mondelez Unilever Budweiser MillerCoors Nestle and many other legacy brandowners Creative rejigging of their brands has thus far not been successful amp160Advertisers and particularly CMOs whose careers are at stake are cutting the marketing investments that do not appear to be workingTheir problems remain unsolved though and the management consultants who cut their teeth on corporate performance problems are pouncing on their problems reinvigorated as they are by their many ad agency acquisitions amp160Until agencies gear up to focus more broadly on solving client brand growth problems they will get more quotbad hombrequot behavior from their clients amp160It is thus in the hands of agency CEOs to reposition their agencies to deliver quotimproved brand performancequot and upgrade agency skills to deliver itThey need to become more like Deloitte Accenture and IBM amp8211 management consulting firms with creative capabilities amp160Can they transform themselves short as they are of money and the required talent They39ll never know if they don39t first give it a tryCartoon credit Victoria Roberts The New Yorker The Cartoon Bank With permissionClick the social buttons above or below to share this story with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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Are Advertisers "Bad Hombres" for Their Ad Agencies?

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Michael Farmer

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Are Advertisers "Bad Hombres" for Their Ad Agencies?

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