Brands and agencies are like partners. That’s what both sides have been telling me for years. It’s a lovely story: two likeminded businesses coming together to create the best possible marketing solutions that will truly engage customers. Everyone works together as one invincible team.
Except, it is just a story, isn’t it? Otherwise, how can we explain several instances recently where brands and agencies do not seem to be working in partnership at all. Instead, the client is so powerful, it appears to want its suppliers to pay for the privilege of working for it.
This trend can be seen in a number of recent news stories. First, GlaxoSmithKline asked its marketing suppliers to agree to rebates for work already undertaken and for future activity, as well as a “sign-on bonus” to be on the roster of preferred suppliers. The company said this was just reducing complexity in its agency relationships by “increasing the levels of business we place with key suppliers”.
This follows a move by Premier Foods this summer to ask for “investment payments” from those companies that “desire to remain a strategic supplier in future”. Although the company strongly denied this was asking agencies to pay to be on its roster, the agencies do not receive equity in the brand in exchange for any investment.
Even this week, property developer Gentoo Group has put out a tender for advertising, design and marketing services, which stipulates that agencies must pay a £100 charge to submit themselves for consideration. While the company says this is to cover the administrative costs of preparing the tender documents, it may well put off smaller agencies.
Some of the major marketing and advertising agencies out there can absorb such costs. It is not unknown that there are costs associated with pitching and appearing on rosters, so the larger agencies will have come across procurement issues before. But small agencies and the people within them are often doing things differently; they are often the companies unafraid to experiment and usher in changes that ultimately affect the entire industry.
This power struggle between brands and their agencies echoes the one between brands and retailers. It has long been standard for brands to pay retailers for running price promotions and marketing their products.
But new payments creeping further into the brand/agency relationship take the relationship even further away from what most marketers tell me they want from their suppliers: real partnership. Marketers tell me that the value of having an agency who acts as an extension of your own business rather than merely a paid supplier is enormous.
There is going to be more financial pressure on brand marketers and their procurement divisions in 2014. And there will be more companies making demands of suppliers that seem too harsh to allow real partnership to thrive. You can argue that roster fees have always held a place in marketing negotiations, but this seems like a further step away from true collaboration.
Let’s hope next year will bring some more positive stories for both client marketers and the agencies who help them reach their customers.