Over the past few years, relations between ad agencies and clients have been in an even greater state of flux than usual.
The nature of just what an agency is and what it does has many definitions. But the key issue is whether the agency, internal or external, is a strategic partner or just another supplier. Occupied with headcounts and finance, the suits in the C-suites often don’t understand the difference. And that spells trouble and bad work ahead.
I well remember a client lunch many years ago.
The location was a private room in an excellent restaurant in Lille, France. At the head of the table sat the president of La Redoute, France’s dominant mail order catalog company. Alongside were his recently appointed commercial director and some associates. Facing him from the other end was Lester Wunderman, flanked by Jean Larue, the CEO of the Wunderman French company, and myself. The atmosphere was polite, but tense.
La Redoute was our largest French client, by far; and until the arrival of the new commercial director, relations had been excellent and the measurable results of the work above anyone’s expectations. Drunk on his new power, the new commercial director, an ex-underwear buyer for a competitive mail-order company, was threatening to put the La Redoute advertising business up for review and search for new agencies he insisted “would be less expensive.” No doubt, that’s how he bought underwear. Our problem was that if we lost this business, we would essentially have to start the agency over, from scratch.
The arguments in French and English went back and forth over dessert and cheese, and were getting contentious — until Lester Wunderman held up one hand to silence the room and spoke for the first time. La Redoute, he said, was one of his favorite clients, because they had had the courage to invest in an innovative strategic partnership with the agency and great creative work. It had paid off handsomely.
“Now everything seems to have changed” he said. “We are no longer being seen as partners and are being treated no differently than the hundreds of salesmen for suppliers (fournisseurs) of goods, who pitch their products to the company every day.” Then, switching to French, he pronounced emphatically: “Nous ne sommes pas des fournisseurs!” (We are not suppliers). He then thanked the La Redoute president for hosting the lunch, rose and headed for the door.
Before he could reach it, the president had jumped up, taken him by the arm to sit next to him and, full of warmth and Gallic charm, asserted that there was obviously a misunderstanding, which he would personally and immediately put right. Summoning a waiter, an excellent Cognac was rapidly ordered and served.
The lesson was lost on no one.
Creating marketing excellence lives in a different universe than purchasing paperclips or underwear. In today’s fast-changing and highly competitive commercial environment, replete with excellent metrics, cost is only one factor in the multiple equations that measure success or failure. Head counts are no doubt very important, but companies and agencies would do well to chase value — rather than delude themselves into thinking they are saving a few pennies.
How does the CEO or finance chief know whether what they are paying for is worth the price? There is no easy way to tell, until the return on the marketing investment (ROMI) has been determined. The La Redoute president saw in Lester Wunderman’s demeanor and words about not being a fournisseur, that genius, pride, and integrity had a value that was unquantifiable.
Relations between agencies and their clients have always been sensitive, and moving the work inside the client company may superficially solve certain problems — but probably won’t. “Who knows best” is a constant battle, which pits egos and backgrounds against one another in sometimes near-lethal confrontations. Imagine the argument over strategy between a 20-something data maven and a 40-something traditional creative director.
Agency reps who had never heard the word “data,” and whose attitude to “below-the-line” was, at best, dismissive, have been driven by technologies that are profoundly changing the whole concept of advertising, whether they like it or not. Below the line, as evidenced by the absorption of prestigious brand agencies like J. Walter Thompson into direct marketing groups like Wunderman, is more and more where the action is.
Many major companies have tried to solve this problem by building internal agencies with special skills dedicated to their businesses — with varying degrees of success. According to Forbes, ”64% of corporate America have in-house agencies today. Just 10 years ago, that number was 42%.”
The challenge will be if CEOs and finance chiefs can put their macro equations on performance aside and concentrate on building marketing excellence. If they do, they will no doubt see improved ROMIs, whether their marketing is internal or with outside agencies. Or probably better, with both.