Rubbing each other up the wrong way?

Growing numbers of marketers are openly questioning the nature of their relationships with agencies. According to research by the Haystack Group, marketers think agencies have a lot to learn when it comes to understanding the commercial realities of clients’ businesses (MW last week).

The research formed part of a Marketing Society debate last week, led by a panel made up of Toyota commercial director Mike Moran, Barclays group marketing operations director Andrew Gillespie, AA sales and marketing director Clare Salmon and Camelot commercial director Phil Smith. Bizarrely, in a debate about the future of client-agency relationships, there were no agency representatives on the panel.

This debate highlights growing concern in the advertising and marketing industries about the course agencies should take in the future, and how advertisers and agencies manage their relationships.

Most of the 400 marketers and ad agency chiefs polled by Brainjuicer on behalf of Haystack agreed that creativity was the greatest strength that agencies brought to advertisers. But many advertisers feel frustrated by agencies’ lack of commercial understanding.

Former Campbell Grocery Products interim marketing director Rob Rees, who is now a consultant for the company, says: “Creativity is agencies’ main asset. They are also good at understanding communication and brand objectives, but they don’t always understand business objectives.”

Jeremy Davies, a former advertising executive at J Walter Thompson and now director of marketing for NTL Home, believes any media spend has to be made accountable: “It’s becoming harder to justify brand activity unless you are able to account accurately for what it does for the business. This is particularly true for NTL. We are a sales-led business and it is imperative that agencies understand the importance and implications of that.”

Grey Worldwide UK chief executive Garry Lace believes ad agencies are becoming increasingly aware that they will have to be more accountable and will have to reshape their business models to match changes to their clients’ businesses: “I see the future of advertising agencies as much more flexible, much less structured and much less departmentalised.”

During his time as chief executive of TBWA/London, Lace introduced various initiatives, including a risk and reward venture – which gave Holsten Pils the chance to pay TBWA on the basis of how many bottles of lager its advertising helped to sell. He says that if advertisers are “honest and single-minded” about what their commercial objectives are in appointing an ad agency, this and similar schemes will become more commonplace. But he warns that, if agencies are prepared to take a risk, clients must be prepared to reward them properly.

Rees believes that advertisers are often too quick to blame agencies when their expectations are not met. He says: “Not enough clients spend time thinking about what they want from agency relationships. A lot of the solid marketing training has disappeared from client companies – things such as how to write a brief and boil things down to a key issue.”

Industry observers believe the success of the new breed of advertising agencies such as Mother and Clemmow Hornby Inge is due to a fresh wave of thinking among advertisers, which have started to look at alternative ways of fulfilling their marketing services needs. Although Coca-Cola, for instance, retains the a large international network – McCann-Erickson – it supplements those services with specialist agencies. Other clients may choose to employ a “virtual agency” bringing together the services of experts in different fields.

Duncan Bird, a partner at Soul, which was founded more than two years ago by media and creative specialists, believes that agencies such as his can cut through a lot of the red tape that comes with many large agencies: “Marketers have so little time, and we can offer them day-to-day access to the top people.” Bird, whose agency works for Coca-Cola and Uniqlo, believes that the industry will mitigate the separation between media and creative specialities as part of the “media neutrality” trend.

Much is made of the move towards so-called media neutrality. Of the marketers polled for Haystack, 57 per cent thought that it was very important, although only 39 per cent of agency chiefs agreed. Many advertisers feel that agencies still see television advertising as the only solution to a marketing brief.

Davies says: “Because of media fragmentation, money is going into places other than the traditional advertising media. That means agencies must become much more media neutral. Creative people aren’t always as aware as they could be of the breadth of media opportunity. The solution to any problem should not focus on a single medium, such as TV, which is often the starting point for agencies.”

The future role of direct marketing (DM) agencies has also been brought into question of late. At the previously mentioned debate, Moran claimed that his company no longer favoured DM, using it solely as a customer retention tool. The Haystack research reflects Moran’s views, showing that marketing directors see DM agencies as less important than advertising, branding and public relations agencies.

Ben Stephens, managing director of DM agency Rapier, says he is not surprised by the findings: “I believe a lot of DM agencies have turned the contribution that they make to sales and acquiring new customers into a belief that they are strategically critical.”

Haystack Group founder Suki Thompson claims marketers are fed up with agencies attempting to foist extra services on their clients. She adds that, as more agencies are swallowed up in global communications groups such as Interpublic and WPP, pressure to persuade clients to buy into a one-stop-shop solution for all of their communications needs is angering some marketing chiefs: “Marketing directors just want advertising agencies for their normal skills. Some big agency groups are trying to get more revenue out of advertisers by adding additional services.”

The research also showed that marketers see their main functions as building the brand and hitting sales targets, while agencies believe marketers’ main function is merely to increase sales.

Rees says agencies must get to grips with the different issues faced by today’s marketing directors: “The more you understand the client’s business, the better chance you have of coming up with credible solutions.”

Agencies and clients may be dedicating their precious time to pondering their future relationships, yet so far this debate – and the research that backs it up – has served only to highlight the widening divide between agencies and their clients. It has yet to throw up any real solutions.

Additional reporting by Gemma Charles