Marketing Briefing: Why marketers are dangling the AOR carrot by asking agencies to ‘test drive’ with project work
This Marketing Briefing covers the latest in marketing for Digiday+ members and is distributed over email every Tuesday at 10 a.m. ET. More from the series →
A few years ago, serial projects were on the rise, with marketers having a hard time making the commitment to the agency-of-record relationship. That led to a gray area where agencies were continually working with brands without the stability of the long-term commitment. A similar gray area trend has been on the rise of late: Marketers are asking agencies to pitch for the potential to become an AOR, but they have to run a project first. Should the project be a success, then the agency can become AOR.
Some agency execs say this new trend is a way for marketers to dangle a carrot to agencies to potentially get more shops interested in pitching on a project RFP. Others say it’s more of a test before you buy approach that’s become more popular over the last six months or so, as budgets have grown tighter with the current economic climate and marketers have had to prove the worth of their spend more and more.
“Project to AOR is new,” said Mekanism co-founder and CEO Jason Harris. “We haven’t seen that before. It’s not really a commitment from a client. You’re not signing onto a project and saying, ‘If we hit these benchmarks then we become AOR.’ It’s more of a handshake agreement that if we both like working together after a project then will convert to AOR. You’re crossing your fingers.”
Laura Stayt, president of integrated shop Zambezi, said she believes the burgeoning trend is one example of that the narrative about the agency-of-record relationship being dead was a flawed one. While there was a focus on project work, this project-to-AOR offering is an example that it’s not as “black and white” as AOR or project, she said.
The economic uncertainty has likely spurred this trend, according to agency execs and pitch consultants who’ve observed it.
“The new black is marketers are needing brand expertise and are open to ‘test driving’ agencies via project work with the ‘option to buy’ at a later date,” said Lisa Colantuono, president of pitch consultancy AAR Partners. “It’s all in line with the shaky economic environment and uncertain times.”
Colantuono continued, “AAR Partners is managing reviews now where there is a house of brands involved but only starting the relationship with two of those brands plus project work on others with the dangling carrot of organic growth over time. As long as agencies are discerning about the brand, company and growth opportunity, project work is a great way to test both sides of the relationship!”
Agency execs say that they’ve experienced the shift from project to AOR as well as done a project with the promise of it becoming an AOR that did not come to fruition. The execs said that when it hasn’t come to fruition, the issue hasn’t been that of the relationship but likely budgetary concerns on the part of the brand.
The lack of commitment from marketers can be difficult for agencies to manage, particularly when it comes to resources like hiring, according to agency execs. The trend is “further evidence that the agency-client relationship is moving to a mostly transactional relationship,” noted Rob Schwartz, chairman at TBWA/Chiat/Day in New York. “Soon AORs will be the exception to the norm. Still, clients get more out of agencies as AORs and find cost efficiencies in longer-term relationships,” Schwartz said.
The cautious climate in which marketers increasingly have to to prove the worth of their department to the rest of the C-suite is likely responsible for this trend, according to agency execs, who explained that marketers are now often asked to prove something works before getting more budget unlocked.
Even as the trend may be due to constraints, some see blue sky possibilities for both brands and agencies.
“Everyone likes to date before they get married — so it’s potentially a positive for both sides to start small and identify if there’s mutual intent,” said Greg Paull, co-founder and principal of search consultancy R3. “Brands are being cautious before overcommitting to a single partner — and likewise, there’s nothing worse for an agency than a toxic client.”
3 Questions with Jodi Allen, Global Chief Marketing Officer at Behr Paint Company
How are you reaching younger generations?
With millennials and Gen Z, there’s a real big opportunity as we think about that next generation of homeowners. Millennials and Gen Z are really important as we look over the next several years, they are going to be, really, the No. 1 group in buying new homes.
From a TV advertising [perspective], connected TV is obviously a huge opportunity to really get in front of them from a streaming standpoint. That definitely is an important part of our strategy. Lots of social channels, Instagram obviously, but obviously TikTok is one that stands out as well. It’s really making sure that we are where they are when they’re looking for inspiration.
There are concerns about TikTok in the government. Does that impact how Behr uses the platform?
TikTok is obviously one that we’ve been really experimenting with, if you will. There’s obviously challenges in security and privacy concerns as we think about a variety of social platforms. So that’s something that we’re definitely monitoring, working very closely with our media partners and making sure that we have a good pulse on that. When I think about our marketing efforts, that’s one channel. But we have a wide variety of channels as we think about how we’re going after not only the Gen Z and millennial consumer, but obviously we have a lot of consumers throughout the various generations.
There’s a lot of DIY content creators now. How are you tapping into that?
We have recently launched [the #behrtodiyfor hashtag] series. That was a fun, new opportunity for us to be able to, in a very relevant way, create content, make it a little more competitive and really engage with millennial and Gen Z audiences. Ultimately, what we’re doing now is taking that content and creating how-to [videos] so that consumers can create that experience, if you will, in their own home. — Kimeko McCoy
By the Numbers
The role of CMO is an ever-changing one, especially as the current economic headwinds have marketing dollars under more scrutiny than before. In the last 12 months, 74% of CMOs said they believe there has been a shift in the role they are expected to play in driving growth, according to a new survey from marketing consulting firm Chief Outsiders. Find a breakdown from the report below:
- 73% of CMOs believe they are viewed more positively by CEOs than in previous years.
- 84% of CMOs believe the economic and business climate of the next 12 months will negatively impact business goals.
- 75% of CMOs believe there has been a permanent shift in how CEOs view CMOs as growth drivers. — Kimeko McCoy
Quote of the Week
“The era of creators as creative directors is here, and it will only continue. This trend is an evolution of the product marketing collaboration model, which positions creators as innovators on behalf of brands. This model will not eliminate the modes of influencer marketing that preceded it. This is a ‘yes, and’ extension of how brands and influencers are working together today.”
— Sadie Schabdach, Dentsu Creative evp of influencer marketing, when asked about brands tapping influencers as creative directors, consultants and more.
What We’ve Covered
- We’re rolling out a special editorial package about social fragmentation this week. Check out the first two posts:
- How social fragmentation is creating more opportunities for advertisers
- Marketers adapt to serve niche communities as culture fragments, strays from universal water cooler moments
- A year on, The Trade Desk’s Open Path is moving toward its goals, but challenges persist
- The latest threat of TikTok bans have caused marketers to raise an eyebrow
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