I'm writing in response to your October 2001 "Smooth Waters" column written by Andy Birol on advertising agency/client relationships.
You seem to imply that the relationship is necessarily adversarial and that agency and client interests are inherently contradictory. My experience at local, national and international agencies, as well as time spent as a client, all demonstrate the opposite. As counterpoints to your arguments:
- You talk about a compensation structure in which agencies make money not on their ideas, but on "revenue-generating production services." In fact, that mode of compensation is outdated and inaccurate.
Most agencies are compensated at least partly on a fee basis, not on production and media commissions. This provides the correct incentives to both agency and client -- agencies are compensated for their expertise in idea and strategy generation and clients receive "media neutral," unbiased production and media recommendations.
- By virtue of the above compensation structure, there is not a short-term financial incentive for agencies to engage in plots to "control" and "invade the world of business strategy" to "reap the profits" of executing tactics. Nor is there a long-term incentive.
Agencies thrive as our clients thrive, period. Therefore, to recommend strategies which benefit the agency at the expense of the client is the fastest way for both to go out of business. Not only would that be unethical, but also stupid.
- Finally, you state that small- or mid-sized clients are "not too profitable" for agencies, unless we can convince them to run a large program (implicitly, too large for what they need). Again, this thought is based on an archaic view of compensation and partnership.
Our smaller clients often find us invaluable extensions of their marketing departments. Not only do we bring strategy, ideas and passion to growing their business, but we have great depth and breadth of marketing resources -- sometimes more than they do.
Our small clients often grow to become large clients. Again, as they thrive, so do we.
I encourage you to talk to us, talk to other agencies, and most important, talk to clients. I feel confident you'll gain a different perspective.
VP, Marketing Strategy