Coca-Cola and IAG say brands need to invest in their agencies now more than ever

Coca-Cola and IAG say brands need to invest in their agencies now more than ever

Amid the turbulent social and economic factors this year has presented so far, the needs that clients have of their agencies are changing frequently, with marketers at IAG and Coca-Cola saying the client-agency relationship has never been more important.

The economic pressure of the pandemic has already pushed some agencies and brands into retrenchment and pay cut activity, but IAG chief marketing officer Brent Smart tells The Drum he made a conscious effort to continue to pay his agency at least the same rate.

“I was very clear about the fact I had to keep paying my agency,” he says. ”Client businesses are under immense stress and they have had to cut costs in all sorts of places, but agency fees will be one of the last things I’d cut in my marketing budget.”

Retaining agency talent is a priority

This is because Smart believes getting the best talent an agency can offer is one of the key objectives a brand should have in forging a fruitful relationship. By not cutting fees, agencies can retain top talent.

“I want to retain the best talent at my agency. I want to really support my agency. As an industry, we love using the word partnership when we talk about our agencies, but the minute there is a need for us to protect our own bottom line we don’t act like partners. So I was very quick to tell our agencies that we would continue to pay our fees and to support them, because I want to make sure we didn’t lose any of the talent on our business.”

Investing in agency talent isn’t just about the financial investment either, according to Smart, who says that being a good client results in more effort from the agency.

“There’s an enormous discretionary effort that you can get from agencies beyond what you pay for. I can go to an agency, pay them a fee and get a number of hours from the agency staff, and that’s fine. But if you are a client that wants to do great creative work and can inspire agency talent to want to work on your brand, then suddenly you get this incredible discretionary effort from the creative people. You get a whole bunch of hours that you don’t pay for and, for me, that’s not about the vanity of being the favourite client of the agency. It’s a commercial decision. I want the best talent at the agency and I want a big discretionary effort from that talent. That’s how I think about agency relationships”

It is the same for Coca-Cola. While the brand did pause spend for a short time while is assessed its position in the initial stages of coronavirus, it made sure to communicate to its agencies that it was investing in supporting front-line workers, and that agency work resumed as soon as it made sense.

Pratik Thakar, who is Coca-Cola’s head of integrated marketing communications in Southeast Asia, says that once the work resumed there was a realisation it would need to quickly change its marketing communications and that it needed its agencies to do this.

“Our projects then weren’t relevant for that particular time, so we needed to do new work,” he explains. “We ended up creating bigger global campaigns from here in Singapore and that gave the agency more enthusiasm. The agency also had less work overall from different clients, and since we had a much bigger dream in place, it put its best talent and more time on our businesses. We got the best of both worlds.“

Working at the speed of culture

Coming back after a blackout on comms and then changing the entire strategy requires quick thinking from both the client and agency, and Thakar says speed is the most significant thing Coca-Cola has needed from agencies.

“Our work has increased, there is a lot of it, and speed has become a bigger variable,” he explains. “And as speed became a bigger issue, the challenge for agencies became how to do things faster without compromising quality. That also meant some new learnings to us. The speed we work at has changed, and I think it has changed forever.”

For IAG, which one of Australia’s largest insurance brands, the pandemic wasn’t its first challenge. With the country only just starting to heal from major bushfires as Coronavirus hit, speed had already become the norm says Smart.

“I’ve always believed that, as marketers, we need to move at the speed of culture. Down here in Australia, we had some very severe bushfires over the summer, and, as an insurer, that is obviously incredibly relevant to our category. We were running a long term brand campaign that is pretty famous here and features koalas, so as the bushfires hit we had to very quickly work out a new message to go to market with in what was an incredibly traumatic time for Australia. We very quickly sponsored a koala hospital that was helping all the poor koalas ravaged by the bushfires. We got that sponsorship lined up, revised our creative work and got it back to market within five days. That is what speed of culture looks like.”

While some brands and agencies may already be adept at working at the speed of culture, the challenge for the industry is working at speed in a way that doesn’t impact craft. “The tension for us as marketers is that beautiful creative work takes time,“ explains Smart. “You have to craft it.“

This, he explains, means there are two different speeds at which work needs to happen. “There are certain things you need to take your time with – you want to work with the best directors and you want to really craft something and make it really beautiful as these creative works are enduring as they’re going to last a long time and so you should take longer on them. Whereas, there are other times when you have got to respond to what’s going on right now in culture and you don’t have the luxury to craft it as much as you’d like. So in that instance, speed becomes more important than craft. That is a really important tension to manage as marketers.”

Location, location, location?

In order to find the best talent capable of producing craft and creativity at the speed of culture, something has to give. And, for Coca-Cola, that’s been the location of the partners it works with. And as everyone learns how to work better virtually, this could be a change in the client-agency working relationship that sticks long after the pandemic has eased.

Thakar explains: “We have always worked with different agencies in different parts of the world. For the past four or five years, we’ve been going to different parts of the world to look for the best agency for that particular project, irrespective where they are based. That really helped us a lot because we were working with agencies across the world, and while some of them were in a lockdown, others were not.”

As client-side marketers who had high profile careers at agencies, both Thakar and Smart say that experience makes them value their agencies even more so as economic factors pushing for cost savings. The requirements for speed and top external talent will be high on many brand’s lists this year, and agencies that can provide this will thrive.

Smart and Thakar spoke with APAC publisher Charlotte McEleny as part of The Drum’s Can-Do Festival, an online event celebrating the positive energy, innovation and creative thinking that can make the marketing community such a powerful force for good. You can watch the interview in full here.

Sign up to watch forthcoming sessions and see the full Can-Do schedule here.

Join us, it's free.

Become a member to get access to:

  • Exclusive Content
  • Daily and specialised newsletters
  • Research and analysis

Join us, it’s free.

Want to read this article and others just like it? All you need to do is become a member of The Drum. Basic membership is quick, free and you will be able to receive daily news updates.