Feature

Dismantling decoupling

With big-spending clients such as P&G and COI decoupling, is there ever an argument for taking production away from your agency?

It was less than half-a-century ago that an account executive on Harveys Bristol Cream was famously told to return to the client's office with a clear message from the agency's creative director: "We do the ads, and they make the sherry."

It was symptomatic of a different era, one where agencies held the buying and creative power. Today, the rise of procurement departments has led to a new climate of accountability, fostering competition that is forcing agencies to cut their margins, become more financially transparent and change their working processes.

Nowhere is this more evident than in decoupling, when a company outsources parts of the advertising process rather than allowing the agency to handle the supply chain on its own.

It has become so popular that the IPA recently warned that unless agencies can better justify why they should keep production services in-house, they risk losing them altogether.

Many see this as belated recognition of a lingering distrust between clients and agencies. "Historically, agencies had relationships with third-party suppliers in which considerable sums of money were spent with discounts and volume rebates that rarely ever found their way back to the client," the chief executive of one agency says. "I think that some clients suspected this was going on, but let it go because they knew they were putting pressure on fees and this was a fair retort."

But such generosity won't be seen now. In a new climate where marketing directors are under increasing pressure, clients are reasserting their power in the relationship.

Procter & Gamble and COI are among a growing number of clients already decoupling in a bid to control costs from the centre. P&G is in the process of assembling a global production company roster that its agencies will be able to choose from, a move that many believe is designed to control costs from the centre and help shave as much as 15 per cent off its advertising budget.

So what are the benefits and drawbacks of decoupling? Who stands to win and lose from the arrangement? And what does this mean for the future of creative work? Here, leading industry figures give their views.

TRADE BODY: STEVE DAVIES, CHIEF EXECUTIVE, APA

Even before the recession, there was an oversupply of agencies and production companies, which has created a buyers' market for clients.

Clients: can use it to get the ad agency and production company they want at a price dictated by the market.

It is painful to see agencies and production companies concerned that they can't make a profit that they regard as adequate for their expertise or for the risk/reward ratio. Yet clients undoubtedly benefit from the supply/demand equation.

We have a situation with some companies where the procurement tail seems to wag the marketing department dog. We're increasingly seeing instances where cost and procedures become the objective, rather than marketing goals and value for money.

P&G undertook a hugely expensive worldwide procurement exercise last year. They asked production companies around the world to complete a complex questionnaire stating their best prices for everything against a hypothetical script. Production companies took the view that it was impossible to complete in any meaningful way because there was no creative treatment, which is what would determine what was needed to shoot the commercial and, from there, the cost. It exposed an entirely different mindset among clients: one which does not work with a process of creating bespoke creative services.

PRODUCTION CHIEF: JAMES STUDHOLME, MANAGING DIRECTOR, BLINK

Decoupling is rarely the tantalising prospect for production houses that most people might think.

Agencies tend to have astute client-handling skills and a sophisticated understanding of the vagaries of that relationship. Their strengths may not lie in producing ads or excessive risk-taking, but they provide a critical buffer that provides the right environment for an approved idea to germinate.

If a production company assumes that role, it instantly gets sucked into a vortex of unmediated client concerns. That only detracts from the creative process and takes a production company further from its DNA: the right to choose and give clients a viewpoint that is untainted by external issues.

Similarly, the financial transparency argument is not clear cut. Most agencies negotiate a fixed bid, while the production company underwrites production. If we fail to produce effectively, we go bust and a TV department - rarely a massive overhead in an advertising agency - has to take the hit if the client is not happy with the final product. There is little merit in total transparency. Clients that want to purchase advertising using a cost-plus model (where all invoices are shown and audited) should be allowed to do so if they wish to participate fully in the risk of a production for a perceived lower cost. In general, clients seem to be reluctant to take that risk.

CREATIVE: ANDY FACKRELL, ECD, 180 AMSTERDAM

My big issue is consistency of brand message.

If clients want to decouple on more than just an infrequent basis, they run the risk of a fragmented brand message and varying degrees of consistency.

Not just creatively, or even in terms of execution, but in the whole gambit of agency services from business affairs, legal and ongoing production deals. There is a whole lot of stuff agencies bring to the table that sometimes clients don't realise.

If I think about our Adidas +10 World Cup campaign as an example of a massively integrated and intertwined piece of communication, it was essential that we, as the agency, sat right in the centre of things.

In this case, each piece of content or point of contact was equally as important as the other - be that design, TV, online, a print campaign, or even an event. It wouldn't have worked if a vendor was briefed independently and decoupled from the "mothership".

However, for other types of campaigns with perhaps a shorter shelf-life or a speedier turnaround, it should be a justifiable decision to create them independently - although sometimes the results are uneven. I haven't yet seen great creative results from a vendor who is completely separate from the agency.

ADVERTISER: RICHARD HOLMES, MARKETING DIRECTOR, SPECSAVERS

Agencies make money in quite peculiar ways.

If you look at most timing plans, they are often held up by meetings that need to happen in order to gain approval, or decisions that haven't yet been reached.

We set the business up in Guernsey with its own internal advertising department for reasons of control and cost. Over the past few years we have spent careful time professionalising it.

We benefit by bypassing the endless funnel of creative and production development that often runs up costs and slows the process down. Most of the directors and production companies we use have become familiar with the way we work.

Clients: wanting to pursue this route, while retaining creative integrity, should be clear on certain things. We are ruthless about how we write and respond to briefs. We run the in-house creative department like an advertising agency and work hard to maintain separation between client and agency. I'm careful not to impose my will too strongly because I could easily end up with a bunch of subservient creatives, rather than a separate unit that produces creative work.

CREATIVE: DAVE TROTT, CREATIVE PARTNER, CHICK SMITH TROTT

There seem to be only two reasons for decoupling.

The first is for clients to retain control and work with whoever they want, rather than be beholden to an agency's preferred suppliers. The second is to retain financial and buying autonomy, ensuring costs are controlled from the centre.

To this end, COI has created quite a compelling model on how decoupling can be done effectively. It has its own TV producers that handle all the purchasing, assuring there are no mark-ups on fees. The creative agency goes about its work in the same way but is relieved of the purchasing duties. To date, we have never been denied anything creatively, and there appear to be no issues between client and agency on how money is being spent.

This case of financial decoupling works relatively well. Creative decoupling is more of an issue (unless you're looking for tactical ads or adaptations). For the real image and brand-shifting work, decoupling can be a dopey strategy - not only do you lose all creative continuity but you risk coming out with frightfully bad work. Then again, would the esure ads prove that case? It depends. Creative purists might argue so. But Peter Wood would say that they built his brand.

PRODUCTION CHIEF: SIMON TOALDO, CHIEF EXECUTIVE, HUB +

There are benefits for advertisers who choose to decouple the implementation of their TV campaigns.

For global advertisers, local schedules can be fulfilled quickly and cost-effectively. Moreover, consistency and brand compliance can be enhanced and controlled from the centre. The key, as with press and online, is to identify the appropriate point at which to decouple. In our view, this is when both creative agency and client have approved a master film and the creative process has ended.

From the clean master, we'll produce the versions required to meet local station requirements - routinely translating and recording country-specific voiceovers, changing titles and re-editing films to make allowance for cultural sensitivities. We'll also manage nationalisation issues and legal clearances. Our TV workflows are all digital - our clients enjoy the benefits of sophisticated asset management systems and, through the creation of TV brand centres, ensure that all film assets are centrally archived, accessible and can be deployed (and repurposed) efficiently.

AGENCY PRODUCER: FRANCES ROYLE, HEAD OF TV, BARTLE BOGLE HEGARTY

Clients: have a right to decouple if their agency production department is not delivering value.

We make it a priority to prove to our clients that agency production consistently delivers value and that the producer's role is integral to executing and delivering great, effective ideas.

To do this, we allow producers to be client-facing, so the contribution and value the producer brings to the process is understood and appreciated.

An experienced producer can make the difference between simply getting a job done and producing really great work. That's why we describe our producers as the third member of the creative team.

Not only do producers advise on the best, most efficient production approaches but they also lead the searches for directors, music, post-production techniques, talent, cost-centres, technology, sound and editing while also deciding on the best partners to work with, across the board.

In our experience, clients are constantly seeking value and transparency rather than the decoupling option as they appreciate that the idea and execution go hand-in-hand.

THE IPA'S GUIDELINES ON TACKLING DECOUPLING

- Work out your approach to decoupling, and then price and structure production services accordingly.

- Train your staff in negotiation and handling skills to manage the process, and ensure effective tracking systems are in place to provide cost-comparisons.

- When talking to clients, highlight the value of existing agency and supplier relationships.

- Ensure prices of in-house production facilities are competitive with third-party suppliers.

- Make sure there is visibility around the process, and that your offering provides a clear and compelling alternative to outsourced options.

- Articulate the benefits to clients of keeping work with the originating agency: robust approval processes, creative integrity and more efficient processes.

- If decoupling occurs, identify what the arrangement would look like, where the agency's responsibilities would start and stop, and the financial implications.

- In pitches, articulate your stance on decoupling as early as possible. Make it a subject in credentials and be proactive in raising it at the scoping stage of a brief.

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