Improving the Ad Agency Business Model Pt. 3: Client/Agency Relationship Building/Maintenance
As I've mentioned in the last few posts, I write this series knowing one thing: I am an idiot. I find the older I get (I am 34), the more I realize how brazenly stupid I actually am.
This series began by centering on improving the ad agency business model via focusing on ways to improve meetings and moved onto improving the agency/client billing model of operation.
This week I will focus on something a bit more touchy and feely: improving and maintaining the agency/client relationship.
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Ideally, the agency/client business relationship should be one of respect, honesty, and partnership however, as anyone who has ever worked for an agency or client-side knows, this is not the case. In the vast majority of situations, the agency/client dynamic resembles and acts more like an abusive relationship than a well-functioning one.
The reason: the agency billing model + multiple agencies competing for the same business + chop shop agencies under-bidding project work + agency willingness to say "yes" to all requests.
This equation makes for a toxic dynamic wherein all clients know they have their agency on a leash because they could always turn to another agency for less money. The power dynamic that exists within most agency/client relationships promotes abused deadlines, over the top requests, and a culture wherein the agency feels they have to say yes to anything because both parties know the business could be moved to another agency at any moment.
So, the question becomes: how do we fix the broken agency/client relationship. Professionally, I think it comes down to three things:
- Say No & Offer a Better Solution
- Realize This is a Partnership
- Pitch Work Needs to Change to Share Responsibility
1. Say No More Often and Be Honest
Scenario:
Agency Account Team Member: The client has asked us to build them an entire website in two days
Agency Strategic/Creative Team: Sorry, but this can not be done
Agency Account Team Member: So you are saying we can do this in three days?
The above scenario, while made up, happens often enough in agency life. Clients will routinely make requests which they know are out-of-bounds and unfeasible yet fully expect their agency partners to say yes to.
This type of relationship, wherein one side holds the power to enforce unrealistic expectations, is not a partnership, and is not sustainable.
For the balance of power to be restored, helping both sides move towards a partnership, the agency team must say no more often, offer a better solution, and set honest work expectations.
Without the ability to clearly and definitively push back against unreasonable requests, the relationship is wholly one-sided and continually forces the agency to choose between "good/fast/cheap - pick two" execution.
Lesson: For the agency-client relationship to improve, agencies can not be afraid to say no to unreasonable requests and offer a better solution.
2. Realize This is a Partnership
I know. The agency is getting paid to do work by the client. But let's be honest here: in a fair amount of situations, the client is working with the agency specifically because they either:
- Do not have the ability to execute on their own
- Do not have the knowledge to execute on their own
- Do not have the time to execute on their own
In these situations, the agency is being paid to complete work for the client yet the agency is the expert in the room with the ability, time, knowledge, and experience to execute.
If looked at the relationship this the lens of actual project execution, it becomes exceedingly clear that the balance of power in the relationship should be more, well, balanced. In the above very real-world scenario, the client should be looked at as the spark that ignites the fire, not the wood or oxygen that keeps the fire burning brightly. That fuel is the agency.
As such, it is imperative that maybe, as part of a working SOW, the rules of engagement are also agreed upon. Those rules would help to define more strictly define timelines, unreasonable requests, dealing with fires, and setting the roles of who does what and when. In short, as much as the SOW should define the monetary project scope of work, it should also help define a successful partnership.
Lesson: For the agency-client relationship to improve, both sides of the equation need to realize this is a partnership in execution. It isn't, and can not be, a one-sided dominance.
3. Pitch Work Needs to Change
Photo Credit: @agency_insider
The photo above is a perfect encapsulation of what we all know happens during pitch work. A client will put out an RFP not because they need a new agency but because they are looking for free ideas, strategy, creative, and execution.
We have all been in the situation post pitch wherein we find out the RFP coming from the client was rewarded to an agency they already utilize or the ideas presented in pitch decks are internalized and executed.
Here is the rub: when an agency does pitch work, it does it for free. In every pitch RFP I have ever read, there is a specific language within that stipulates "the client is not financially responsible for any time, hours, and/or work developed for the pitch".
This puts the agency in a tough spot because it means having a team of 5 - 10 people working outside their normal working hours for a period of 2 - 4 weeks to get to the starting line of pitching ideas with no direct knowledge of if those ideas will be bought.
Consider the following:
Peter Levitan, former Director of Business Development for Saatchi & Saatchi, wrote a blog for Hubspot in 2015 in which he also estimated the cost per RFP at $15,000, based on 150 hours of labor at $100 per hour. His “conservative estimate” of an average agency cost to pitch (including external and internal meetings, pitch management, strategic planning, writing, creative work, pitch design, travel and expenses, and post-presentation follow-up) is $35,000 per pitch. - Source
and...
Ash Bendelow, managing director of creative agency Brave, in Marketing Week (Nov. 2016) estimated his average cost per pitch in 2016 was between £30,000 ($38,516) and £40,000 ($51,355). - Source
So, the agency takes a pitch. The client has multiple agencies pitch for free ideation, strategy, creative, execution. The agencies who lose the pitch are out anywhere between $30,000 - $55,000. Agency leadership chalks up the loss to "it was a good experience we can build on for the future" all the while knowing no two pitches are identical and there is no promise all of the work that went into the pitch will ever see the light of day.
If you ask me, this process (which is advertising industry standard) is wholly one-sided and needs to be rethought financially and structurally.
Lesson: For the agency-client relationship to improve, pitch RFPs need to be written to ensure the responsibility of finances on both parties involved and the transparency for agencies to understand the true reason for an RFP is not to gain access to free work.
Recap
- Say No & Offer a Better Solution
- Realize This is a Partnership
- Pitch Work Needs to Change to Share Responsibility
For everyone who works in the ad agency world, I believe these agency/client relationship improvements will help strengthen the ad agency, its employees, its client relations, and its overall quality of work.
Pt. 4 focusing on bettering the pitch process will be published shortly.
Thanks for taking a read.
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Have any feedback, thoughts, or ideas on how we can improve the agency model of doing business? I would love to hear them. Feel free to direct message me or shoot me an email.