Bloated Scopes of Work Are Unhealthy for Advertisers and Agencies Alike

By Madison Avenue Makeover Archives
Cover image for  article: Bloated Scopes of Work Are Unhealthy for Advertisers and Agencies Alike

Agency scopes of work, like American waistlines, have ballooned during the past several decades, driven by clients' insatiable appetites for digital/social work and accepted by their agency partners, who are keen to demonstrate their integrated capabilities. Agency fees have not kept up with the workload growth. Has it been worth it? Advertisers' sales have been flat for more than a decade, and agency staffs are severely overworked. The bloated scopes of work are not delivering value for either advertisers or their agencies.

You would think that either a CMO or an agency CEO would take the lead to fix things. Let’s imagine this Professional Discussion between the parties:

  • Let's revisit our relationship. Let's cut out the unnecessary crap, figure out what is really needed and focus on what works.
  • Let's work together to drive brand sales growth and eliminate all other distractions.
  • What does it take? We have some thoughts for you, and we'd like yours, as well.

Sadly, this is an unlikely discussion.

First, client-agency relationships are not really founded on the need to achieve commercial success. They should be, but they are not. Marketing departments seek to enhance their total marketing budgets and to enhance their internal reputations by being "relevant" and low cost in all current and emerging media disciplines. No CMO wants to be accused of being out of touch with developments in the marketplace. Better to place your media and creative bets across all the channels, even if the payoff is slight or (more typically) unknown.

Agencies, for their part -- and especially the large holding company agencies -- are all about revenue maximization, new business wins and awards. These goals and associated KPIs fly in the face of simplification. Simplification means "doing less," even if it is more effective for clients, and no one wants to be tagged as "doing less."

Second, there might be an inherent fear of what might be discovered if both parties "figure out what they really need" to improve brand performance. What if many of the elements of the marketing partnership are irrelevant? What if much of the communication via TV, OTT, radio, print, mobile phones, OOH, Instagram, Facebook, TikTok, YouTube and other channels contribute more to consumer annoyance than to consumer sales? What if the key to brand success is improved customer experience rather than higher brand awareness? Who would be embarrassed by this finding? Whose job security would become even shorter as a result? Both parties are at risk, so the effort is rarely undertaken.

Third, most clients and their agencies are not in the kind of partnerships that foster this type of Professional Discussion. The center of power shifted away from agencies and towards clients long ago, so that their relationships today are much more like customer-vendor or master-slave relationships than true partnerships. Clients keep their performance challenges private; they then design brand strategies, scopes of work, fee structures and other relationship requirements on their own (or with the help of search consultants). Agencies are more often told "how it will be" than asked "how can you help" or "what are your thoughts?" Unfortunately, this shift of power has not benefited brands, as the decade-long stagnation of brand sales underscores.

That said, relationships can be established "from scratch" during new business pitches, and smart agencies, who realize that playing in today's industry is simply a loser's game, would do well to initiate their own Professional Discussion, which might go something like this:

  • We're in business to help our clients improve their growth and overall business performance. If you're looking for an agency to crank out a high number of deliverables for low fees, we're not right for you. But if you're interested in rekindling your growth, and you're prepared to work with us on a partnership basis, you've come to the right place.
  • We'll need an understanding of your performance challenges so we can help recommend the right program of work. The scope of work will be tailored to solve your performance problems -- no more, no less.
  • There will be give and take in our relationship, because we expect to be challenging and challenged, but if you're up for an ambitious set of outcomes, let's talk and develop the elements of this partnership. You won't be disappointed.
  • We'll recommend a fair fee that makes sense for both of us, and if the fee exceeds your capabilities, then we'll reduce the program and fees to what you can afford, provided it's large enough to do the required job.

In my 30 years of consulting for major ad agencies and their clients, I have met only one holding company agency CEO who is leading this kind of change for his agency -- and he's less than one year into the transformation, which began in 2021.

Stay tuned for updates in the coming months.

Cartoon at top: Charles Barsotti, The New Yorker, The Cartoon Bank. With permission.

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