Advertising Agencies: The Decline and Fall of The Client Relationship
Posted by Mike Harris on Mon, Apr 26, 2010 @ 10:31 AM
There's a great article in Advertising Age today that talks about a declining respect for advertising agencies by their clients. Following the article, the comments from agency executives show pretty clearly that many, many marketers and agencies are simply dinosaurs. CLICK HERE TO READ ARTICLE
For example look at this advice for healing the client/agency relationship: "For marketers this means getting closer to the sales process, becoming partners in the lead generation and win conversion process."
Huh??? Where has this guy been the last 5 years? We should get familiar with lead gen discussions? Marketing is all about lead gen and has been for years. Is it possible that many agencies haven't been willing to get their hands dirty with sales and thus lost the respect of clients?
My marketing career includes working on the client side with agencies that were very hip in their time, such as Fallon McElligott. The agency business prior to Web 2.0 was heavily dependent on convincing the client that the agency had exclusivity on the creativity and big ideas that kept the client's image innovative.
Today, this model is one for the history books. The cost of high quality marketing is declining rapidly due to the convergence of some amazing new marketing technologies with a highly talented mobile workforce. Creativity is practically free and CEOs/CMOs are telling us that they know it. Clients are recognizing this faster than some agencies...many of whom appear to be in denial. Perhaps this is a reason for the client's procurement to step in...they know more about the advertising industry's economics than many of the agencies.
When an economic sea-change descends on an industry, a successful response includes a heckuva lot more than adjusting the product line or adding a specialist in a vertical marketing function such as social networking. When prices decline, the successful competitor adjusts the entire business model to recognize and profit from the change. It would seem that a critical adjustment for agencies is to understand that the supply of "big ideas" is soaring and that clients may no longer be willing to pay tens or hundreds of thousands dollars for "Eureka!". Further, perhaps those clients have decided to hire only those marketing agencies who are willing to get down in the dirt with them and contribute hugely to the sales and conversion processes.
My guess is that agencies will start to give away the creativity in order to sell the execution and measurement. To make this model profitable agencies will adjust overhead sharply downward and focus every ounce of executive brainpower on creating profits for the agency by creating new and better value for the client, focused on what the client is telling you it needs...better recognition and use of marketing technology and lower marketing labor costs.
When agencies stop peddling dinosaurs that's when we'll see the client/agency relationship improve.