The Demise Of Decades-Long Agency-And-Client Relationships

"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Bruno Gralpois, co-founder and principal at Agency Mania Solutions.

As the saying goes, the grass is always greener on the other side of the fence.

When advertisers consider a review of their agency partners, they must really believe that a change will mean much greener grass. It takes faith, courage and, more importantly, conviction to justify the considerable time, resources and effort required to execute an agency review.

If the incumbent agency is unsuccessful at keeping the business – which happens, statistically speaking, two-thirds of the time – there will be a few months of transition, training and risk mitigation, along with occasional duplicative costs, as the new agency ramps up.

The recent three-month-long agency reviews initiated by Campbell Soup Company concluded in March with the appointment of Publicis Groupe as the agency partner for its US retail, Canadian and Asia Pacific creative, digital, technology and consumer promotion business. This is noteworthy because it also marks the end of the relationship between the brand and incumbent BBDO, which dated back to 1954. The Campbell/BBDO relationship was one of the longest client-agency relationships in the industry.

Campbell’s isn’t the only brand breaking away after years of partnership. In the last two years, Southwest Airlines ended its 30-year relationship with its media agency. Manulife (John Hancock) severed its 32-year relationship with its creative agency. Target terminated its 46-year relationship with its media agency, and after 35 years, McDonald’s parted ways with its creative agency.

What motivates advertisers to walk away from these long-standing agency relationships and start over?

In the case of Campbell’s, it was the brand’s desire to “modernize its marketing model and integrate communications across disciplines.” The move also reflects its desire for a more data-driven approach, putting the customer at the core and leveraging analytics and audience insights that power better creative solutions to reach and engage those consumers. The ability to seamlessly and cost-efficiently house all the marketing capabilities it needs with Publicis as an integrated holding company solution was a key driver.

Consolidation is what Campbell’s needed. I see four other potential triggers for reviews of decades-long agency partnerships.

Business changes: When a company decides to make some radical changes to its business, it’s likely to reevaluate all major investments, including agency partnerships, which are often a large part of the marketing budget. It’s the opportunity to start from scratch and reset financial expectations with a new partner.

Too little time and resources: Driving incremental change with an agency partner appears too slow, too costly or shows signs of resistance. Rather than making marginal gains, the advertiser is looking for radical change, the same way it sometimes also makes radical internal organizational or leadership changes.

Not customer-centric enough: Data and analytics are vital to allow customer-centricity and effective decision-making. If the incumbent agency has not challenged its operating model or the status quo, or offered innovative, less-siloed solutions to enable its client to fully embrace a more data-centric approach to marketing, it’s opening the door for another agency to do so.

Too much complacency: Whether it is real or perceived, long-term relationships are at risk of becoming too comfortable. Both parties have built significant equity in their relationship, which is often a blessing and a great asset, especially during challenging times. However, excessive equity can occasionally turn into a curse, as healthy conflicts are suddenly less frequent, people hesitate to push back too hard and bad behavior and decisions are allowed to happen.

There are many other potential reasons for agency reviews and a change of relationship to occur, ranging among sustained agency quality or performance issues, M&A activity, severe and constant talent gaps, senior leadership changes and a sudden loss of chemistry or trust.

The key to a sustained relationship is mutual accountability. When advertisers and agencies commit to fairly and openly evaluating their respective performance and commitments, they can immediately act and course-correct if needed. With the right mindset and a commitment to see it through, they are likely to strengthen the relationship over time.

In other words, the grass is not greener on the other side of the fence; it’s simply greener where you water it.

Follow Bruno Gralpois (@gralpois), Agency Mania Solutions (@agencymania) and AdExchanger (@adexchanger) on Twitter.

 

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