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get more from agencies

Feel as though your agency is on another planet? Or perhaps the client is always on the warpath? Heres how to avoid an expensive parting of ways Clients are from Mars and agencies from Venus: that is how recent research from matchmaker AAR characterises the often turbulent relationship that develops when marketers outsource to consultancies. It certainly isnt the first time someone has compared the client-agency relationship to that of star-crossed lovers, prone to misunderstandings and cultural differences. As AAR chief executive Kerry Glazer points out, the relationship is one that all too often ends, prematurely, in tears. Clients, she says, are inclined to dump agencies after two or three years, knowing others will line up at its door once the account comes up for review. And this is despite the fact the relationship is usually far from broken. I dont think we would review nearly as often as we do if the market wasnt so over-supplied with very good agencies, Glazer says. What the Mars-Venus gap in perception means is that while clients generally attribute the breakdown of a relationship to agency output failure, agencies generally put it down to a difficult or demanding client. Should this matter to clients? Yes, says Glazer. Agencies are not the only ones losing out as a result of these premature break-ups. In a break-up scenario, clients lose the expertise the agency has accrued in the time spent working on the account, and face the time and expense of holding a review. Nuts and bolts The first step a client should take in building better relationships is to look at its own processes, as well as those of the client, Glazer argues. To expand on the point, Martin Nieri, chief executive of direct marketing agency Clark McKay and Walpole (CMW), points to Magic and Logic, a report by the Institute of Practitioners in Advertising (IPA) and other bodies, which looks at procurement and at relationships between clients and agents. It suggests that agencies think that about 80 per cent of a relationship is about magic: the creative side, says Nieri. Whereas the client will think 80 per cent is about logic: the nuts and bolts. I think there needs to be more of a balanced perception of whats required. For Nieri, getting the logical side right means paying attention to detail at the beginning of the relationship. In our experience, relationships dont break down over strategic differences or big creative issues. They break down over details, he says. For example, a client may complain that theyre getting status reports in late. If those things are laid out in a service agreement, each side knows what is expected of them and this is much less likely to happen. Glazer adds: There is always a lot of talk about how agencies are going to get paid, but not much about factors such as who will do the briefing, who holds decision making power, who signs off the brief, and how progress will be reported. However, given that 90 per cent of work presented at a pitch never sees the light of day, it makes sense to go with an agency when the personal chemistry feels right, concedes Glazer. A personal touch Finding the right chemistry means clients need to ensure that the people presenting the pitch are the same ones who will work on the account not just Related articles
How to... Get Creative with Agencies Barclays

"Clients hoping to see new faces when they switch providers may be in for a shock"

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managing directors and directors lending their gloss to the pitch. Another frequent bugbear for clients is when treasured staff working on an account leave the agency or are promoted. It can be time consuming and stressful to bring a replacement up to scratch. You have to recognise that there will be changes to an account team. You need to agree on how you will deal with those, says Glazer. That could mean holding three-month reviews of new personnel, or specifying what kind of an induction process a new member of the account team will undergo. Robert Prevezer, executive chairman of The Communications Agency, believes the surest way for a client to find the right people is to choose the right sized agency. One should look for an agency whose principal staff will be actively involved in your business, because those principals are not leaving and should be able to contribute hugely, based on age and experience, he says. Clients sometimes opt for the perceived security of a huge agency without understanding that they are unlikely to get the principals of the agency involved in the account. Prevezer also believes that clients should take a longer-term view and quiz agencies on their strategic vision for the future of the brand. He cites his companys 16-year relationship with Disney as proof that clients do not need to repeatedly switch agency in search of freshness of approach. Dont get TUPED In many cases, freshness in the form of new faces and a clean slate is precisely what the client is looking for. However, recently introduced employment laws mean that clients hoping to see new faces when they switch providers may be in for a nasty shock. Under the 2006 TUPE (transfer of undertakings) regulations (see The Marketer, February, Legal eagle, p17), a company changing agency may be obliged to employ the staff of their previous contractor, says Anna Montes, associate at law firm Osborne Clarke. Already clients are finding themselves saddled with unwanted employees because of TUPE. While it is not possible to opt out, there are cases where the regulations do not apply, such as where the contracted activities will be carried out in connection with a single short-term event or task: organising a conference, for example. For TUPE to apply, there must be an organised grouping of employees (though this can mean one person) whose principal purpose is working on behalf of the client. In order to minimise TUPEs impact, Montes recommends that any agreement should specify whether the client or agency will bear any costs incurred as a result of these regulations. Montes suggests that contract terms in general should always be negotiated up front rather than once the work is underway. Issues that often need clarification include copyright. Clients may be accustomed to owning the copyright, but when they commission work from an agency, the agency will own copyright by default unless otherwise specified in the contract. Fortunately most agencies are prepared to forfeit copyright in agreements. An open book Of equal, if not greater importance, is the question of audit rights. Alison Sanderson, partner at client audit specialist Firm Decisions ASJP, says that many clients do not understand the workings of an advertising agency and can

"Ensure the people presenting the pitch are the same ones who will work on the account"

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lose track of their real advertising spend. Typically, an agency provides a budget estimate for third-party services but then saves money by obtaining the services more cheaply. Often the agency is providing the higher estimate in good faith, to ensure that the clients budget can meet the cost. What frequently happens next, however, is that the client fails to reclaim the difference between what was estimated and what was spent. In 99 out of 100 audits, we find that clients have left money behind, says Sanderson. More far-sighted clients might have an agreement in place allowing them to withhold a percentage of the agency fee until a reconciliation process has taken place to identify any such shortfall. But even then clients often do not take advantage of such contractual terms, says Sanderson. Another nefarious practice that auditing can help to uncover is the short-changing of clients via what is known as a rebate or volume override. This is where a media buyer approaches a TV network or magazine publisher and offers to buy in bulk. In return the buyer receives either a cash rebate, goods or services but fails to pass on the savings to the client. What makes the practice so controversial is that it provides the potential for a conflict of interest, by tempting the buyer to place adverts with an eye on receiving a rebate rather than with outlets that would best suit the client. The word on the street While such practices are a concern for all clients, many smaller businesses dont have the resources to appoint matchmakers or auditors and simply want to find the right agency in the first place. Often word of mouth is the best option. Such was the case for Go-Electrical, a medium-sized electrical retailer specialising in premium brands in the Yorkshire Dales. When the arrival of the internet led the companys sales to plummet overnight, Go-Electrical made the decision to move into e-commerce. The daunting task of finding a combined web design and marketing agency that would understand the business was made much simpler when an IT provider recommended Leeds-based Kilo 75, says Go-Electrical managing director John Garnett. Garnett was impressed by the agencys long-term approach and its understanding of factors such as the need to strategically tailor marketing to seasonal events such as Valentines Day. Since appointing Kilo 75, Garnetts turnover has increased fivefold, bringing the company back to pre-internet margins. The two companies have formed so strong a bond that, Garnett says, Kilo 75 co-director Monica Tailor is now like another member of his team. Our strengths are in our products, so having a good marketing partner is absolutely vital for me, he says.

Dos and donts

Do ensure that the team you meet during the pitch process consists of the same people that will be working on your account. Do ensure you get a guide to fees and budget estimates early on in the pitch process. Discussing these matters later puts the client at a disadvantage in negotiations. It may also emerge that the most sought-after agency is too expensive. Do draft legal agreements before work starts, covering issues such as copyright, audit rights and whether TUPE agreements apply Do select an agency with specialist expertise. Check that its expertise is up to date and still present within the company. An agency may, for example, have gained its reputation because of the skills of a particular member of staff who has now left. Don't hold pitches with a shortlist of more than four agencies. Pitching is expensive and time consuming for agencies and they are less likely to make an effort to respond to the brief if they think there is little

Case study: Building a relationship

A sound understanding of the business proposition is what counts for SMEs when it comes to hiring agencies Henry Mayes, marketer at 30-strong building services outfit Maleon, has found that mid-sized agencies often provide a better service on a smaller account. Mayes has been the first to use agencies at Maleon since his appointment as business development manager two and a half years ago, contracting agencies to handle the companys collateral needs, web design and direct marketing.

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After the account for collateral was awarded to a company that had come to Maleons attention by word of mouth, it was the search for a web design agency that proved most instructive. Around a dozen agencies were initially considered and Mayes narrowed it down to a pitch of four. The results, says Mayes, who stresses the importance of quizzing agencies to check they have understood the client business proposition, varied hugely. Surprisingly the big London agencys pitch was one of the worst. They werent really interested in what we were doing and didnt listen to the brief, he says. Maleon is largely concerned with building design and the provision of services such as water and heating to buildings. So Mayes staff need to liaise with architects, planners and developers, and the companys marketing needs are very different to those of an FMCG business. Any agency has to make a bit more of an effort to understand what we do and what our USP is, says Mayes. It became apparent that Maleon would get better service from a mid-tier agency that valued the business the contract would bring. Were a smallish project for a large agency, but for a smaller or mid-tier agency we have some hitting power and we tend to get a much better service, says Mayes, who hired mid-tier agencies Lighthouse and Radical Cat for web design and telemarketing respectively.

chance of winning. Don't hold a pitch for its own sake if you already have a clear favourite. Don't choose a large agency just because of its name. A smaller agency that values your business will often give you more attention.

Andy Allen is a freelance writer for titles including People Management and Supply Management

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