Brands’ relationship with their digital agencies ‘hits a roadblock’ as agencies ‘fail to keep pace’

The relationship between clients and their digital agency partners is deteriorating as a skillset gap and confusion over clients’ priorities harm the dynamic.

Agency relationships

The report, conducted by Forrester Research for digital society SoDA, which has a stake in the results as it represents the digital marketing industry, found that the percentage of agencies reporting relationship improvements fell to 53% this year, from 70% a year ago.

Even agencies that are experimenting with new types of relationships such as alternative compensation models or embedded resources were not particularly bullish. Just 55% of those agencies thought the dynamic was improving, compared to 52% among more traditional counterparts.

The findings come amid growing disloyalty among clients, with the numbers working with three or more digital shops increasing by 42%. Some four in six work with three or more digital agencies, up from just one in four in last year’s survey.

soda client agency dynamic

“The client/agency dynamic has hit a roadblock. This is likely due to an increasingly competitive landscape, where clients work across multiple agencies and are feeling more and more pressure to not only produce successful marketing campaigns but to also ‘out-innovate’ their competitors in areas that are still relatively new like digital products and experiences, as well as marketing creativity and strategy,” says the report.

There is also a growing imbalance between the skills that clients think bring the most value and those that agencies value. In last year’s survey, clients and agencies aligned on five of seven skillsets, while this time around there is agreement on only four out of nine.

Both agree that strategic leadership and marketing creativity are the most important skills. But beyond the top two, agencies are prioritising expertise in emerging trends and project management while clients believe customer-focused strategy and analytics should be higher up the agenda.

Read more: Mark Ritson – Tactics without strategy is dumbing down our discipline

The research points to the idea that agencies are losing sight of the customer amid the proliferation of media channels and new tech. Marketers have previously been accused of doing the same by putting tactics over strategy but the findings suggest that is now reversing.

“This is an opportunity for agencies to start focusing more on the customer rather than technology or channel when coming up with ideas.”

With the client/agency dynamic seemingly deteriorating, the report also took a look at the reasons why brands end relationships and why agencies think they do. Agencies, it seems, are still fixated on the idea that it is management changes that result in them being fired. Some 56% of agencies cited it as the main reason, up from 33% in last year’s report, when it was also the top reason.

Yet for brands pricing and value (a new option in this year’s survey) was the main reason, cited by 37% of clients. Management change was cited, but only as the seventh most important reason and behind issues including strategy, creative and project management.

Marketers are coming under increasing pressure to justify agency fees and prove ROI. Indeed, Procter & Gamble has continuously cut back on what it dubs “non-working agency fees” as it looks to make its marketing spend more effective.

“Agencies who turn a blind eye to why their clients are really leaving will fail to address key improvement areas,” says the report. “Clients continue to leave for a myriad of reasons, but agencies continue to blame it on management changes.”