The relationships between digital agencies and the brand clients they service can be complicated ones, particularly as procurement departments involve themselves more deeply in the pitch process and continue to put pressure on agencies’ prices and profit margins.
Digiday asked two anonymous digital agency leads what frustrates them most about working with brands and how these challenges could be addressed. If you’re an agency executive with a point of view on the issue, please contact me at the email address at the bottom of this story.
Agency A: The thing that bothers me the most about clients is the number that know the agencies they work with are bad but are too afraid to fire them for what boils down to political reasons or because they’re afraid to tell their bosses. To me, it should be straightforward: If you do bad work as an agency, you get fired. But a lot of agencies out there do mediocre work, and the clients feel powerless to do anything about it. It should be a meritocracy, but it isn’t. We should win pitches based on our work, not based on the internal politics of the client or just because there’s already a 30-year relationship in place.
Some of that is down to the agency-of-record situation. AORs might not do such a great job, but clients are often trapped by it. The whole AOR and pitch process perpetuate costs. If it takes six months to select an agency and then three months to ramp up, it’s a massive deal to change, and switching costs are very high. In fact, agencies know that, so AORs might even have a perverse incentive not to put their best talent on new accounts.
The pitch process is a flaw of the whole agency system. The broader theme is that clients make it far too complicated to hire and fire an agency. It’s a long, drawn-out process that ends up being really expensive. I don’t mind doing pitch work, but I think it’d be in everyone’s interests if it was a shorter process and the stakes weren’t as high. Often, it’s not like that; it’s this grand prize that’s “awarded” to an agency, and then they’re locked in, and they don’t want to go through the process again. It’d be beneficial to both sides to arrange a much faster review process, hire an agency quickly and see what they can do and then fire them if they’re not performing.
Procurement doesn’t bother me that much. It’s annoying, but it’s like any other business transaction, really. We go for the most money; they go for the least. It’s a negotiation. But this is one area in which procurement can be an issue: Often, procurement departments have scorecards and scientific systems with which they’ll evaluate agency partners that can discount candidates for the wrong reasons. Often, a head of digital will know they want to work with a particular agency, but they’ll get overridden by procurement based on a scorecard. The head of digital might even have agreed to the principles of the scorecard up front, but it’s often not until they’re half way through the process that they realize it’s not right.
Agency B: The pitch process is frustrating. RFIs, RFPs, pitch presentations inclusive of creative. They’re a waste of time and a completely inaccurate way of evaluating the right agencies. The ask is never clear, and I am doubtful that it’s an effective process for clients or agencies. It’s impossible to know if you are matching the right talent and capabilities to a task when you’re going through a form-filling exercise.
The best approach would be to meet with agencies, pick projects for them to try out, then select a preferred agency roster with a group of agencies that have different expertise and styles and rotate them through the business according to suitability for specific tasks. That approach makes for healthy competition that allows for great relationship building and a variety in solutions.
The blended rate discussion with procurement is another problem. Procurement rates set blended rates based on a benchmark for the whole business. They don’t take into account the project and what’s involved. It’s great to have a desired benchmark, but sometimes it’s given outside of a scope, and it’s ridiculously inaccurate. Getting to the right blended rate that’s competitive is about understanding the project and ensuring the right mix of talent over the course of a project. The current approach devalues thinking and the craft involved in brilliant execution.