At last week's IPA Members' Lunch, Mark Hunter, the ISBA president and Molson Coors chief executive, gave a speech setting out the key hurdles that need to be overcome to effect a much-needed transformational change of the client/agency relationship. To ensure clients and agencies maximise the opportu-nity for creating great effective communications, Hunter set out the issues that need to be addressed. Is he on to something?
HAMISH PRINGLE, director-general, IPA
Clearly, Mark's issues go to the heart of the client/agency relationship.
Some are old chestnuts that need revisiting - for example, identifying what the client's real business challenges are and ensuring this is communicated to agencies through a re-examination of the nature and quality of client briefing. Some are low-hanging fruit which we're already picking - such as understanding the changing role of consumers through behavioural economics, TouchPoints and our work on social media. While others are nettles that have yet to be grasped, such as developing open sourcing for ideas as a viable financial model.
But what's essential is the recognition that we need agreed outcomes that work to our mutual benefit. Building valuable brand assets is what clients and agencies are in business for, and it's the role of ISBA and the IPA to facilitate and enhance best practice in this essential working relationship.
NICOLA MENDELSOHN, chairman, Karmarama
Hunter's speech does seem to neatly summarise where we are now but may not be where we could end up.
Other areas of "professional services" are finding similar challenges and are similarly looking at how these changes may be addressed. In the case of the legal profession, there are new ways of looking not just at how you reduce the costs of delivering the legal service or different pricing strategies but at how you can take on a different role with the client.
Perhaps it is not beyond the realms of the possible that some far-sighted client may well be looking for an agency to take on such a role today.
The only stumbling block in our world is that many of the success/outcome-based remuneration proposals seem to be designed with reducing the money spent on advertising rather than properly rewarding and incentivising risk, innovation, time investment or excellence.
Hunter has certainly sketched out where today's "conventional wisdom" is. I wonder how many brave souls there are at the moment planning what tomorrow's will be.
STEPHEN WOODFORD, chief executive, DDB London
I think Mark's speech recognised that agencies and clients cannot change without each other. A spirit of mutual self-interest can shape how our businesses adapt to the rapidly changing consumer and media environments.
Genuine integration is the key, in my view, and this means mutual change. For agencies, it means keep on removing barriers that prevent the different creative and media disciplines working together collaboratively (ideally under one roof and above one P&L). For clients, it means reducing rosters and consolidating business, allowing agencies to make great ideas that flourish in more channels and be properly paid for it.
Outcome-based compensation was another theme requiring mutual change. Clients and agencies must devote much more effort to proper evaluation - by that I mean econometric modelling. It's never easy to do, but always worthwhile. Once done, agencies must be prepared to accept much-reduced income if their work fails to deliver. Equally, clients must be prepared to reward success in a similar spirit, with the agency earning significantly more than the time-based fee equivalent. If we follow principles such as these, the effectiveness of our industry could be all the better for it.
DEREK MORRIS, chief operating officer, VivaKi UK
Mark Hunter is right - the industry does need to transform. If not, then the shift in the technology context will leave it for dead. We should be careful not to confuse doing new things with transforming the way we do the old things.
Once again, the media sector seems to have been the most fleet of foot. The engagement with procurement is a daily practice, the best have already developed the means to channel and direct the creativity of the media owners and payment for results is at the heart of our business model.
Yet still we need to do more. The processes and systems that drive the media markets are largely unchanged in 25 years. Compared with the technology in our personal lives, our trading systems are not far short of a quill pen. But change has to have a reward and quality has to be paid for. Mark acknowledges this with his call for positive procurement and for marketing departments to take control of what service levels are agreed. This is recognition that transforming to produce better results is quite different to pursuit of the lowest price.
SALLY COWDRY, UK marketing director, O2
Mark Hunter makes some very valid points but I would argue that, as an industry, we are not at the start of the transformational change he talks about, but well progressed along the journey. And any marketer entrenched in the "old world" model is in trouble.
More marketing "noise" is directed at consumers than ever before, across even more channels. My view is that if you are close to and understand your customers, you can tailor the right messages to them in the right channels, cutting through the noise. And I agree with Mark that you need to involve your customers in the "ideas phase".
When it comes to agency relationships, we are firm believers in the partnership model. If your agencies are not fully embedded into your business, how can they be expected to deliver successful marketing campaigns for you?
- Adapt to the changing role of consumers
Consumers are experiencing information overload, so marketers need to be fleet of foot, and comms should change shape, moulding around the constantly evolving recipients who are after instant gratification.
- Decide who owns the strategic agenda
Someone needs to reclaim accountability for strategic planning. The agency world is equipped to achieve cut-through in thought leadership but it needs to truly connect with the power of the brand.
- Revisit the relevance of old rhetoric
If consumers aren't aware of aboveand below-the-line segmentation, agency structures shouldn't continue this siloed approach. The agency model needs to be able to deliver a more coherent consumer journey, from ad to aisle to usage.
- Open source for ideas
Crowdsourcing for ideas may conflict with the current compensation model but that shouldn't be a reason to ignore its potential to deliver value to advertisers. Agencies need to become ideas portals as well as ideas providers.
- Appreciate the impact of digital
The old pricing models fixed around paid media are at odds with the new model of bought, owned and earned media. Clients need help navigating through this, but agencies should also take accountability, invest in new skills and work together to devise an optimum resource model.
- Entertain outcome-based compensation
Agency remuneration based on hourly rates is out of sync with the outcome-based financial world. If we can resolve the measurability of outcome, it will help transform the agency/client relationship and offer both parties the opportunity for financial gain.
- Take stock of the advertiser/media owner relationship
Agencies are increasingly looking redundant as advertisers take advantage of a direct relationship with media owners. Agencies need to better communicate their "value add" in light of the current landscape.
- Be wary of the increasing pressure on overheads
As budgets get squeezed, procurement departments, whose goals are at odds with marketers and agencies, are gaining ground while headcounts are falling. So, increasingly, advertisers don't have the people or time to act as co-ordinators, paving the way for agencies to step into a project management role.