It's better to repair than replace your agency relationship - here's why

Research reveals that the average total cost of an agency review is around $1

A research report published by ANA/4A’s in the USA titled ‘The Cost of the Pitch’ urges marketers and agencies to reassess their reliance on agency reviews/pitches to solve problems that may be inherent in a relationship.

For marketers, the key costs for an agency pitch, related to hourly costs, staffing changes, disruptions/delays, external consultants, and compensation to the agency is about $400,000.

For agencies, the costs are:

• $204,461 for an agency that is not the incumbent
• $406,092 for the incumbent to participate

One of the key drivers for a client to launch an agency review is cost reduction. There is also a prevailing sense from clients that “a new agency is highly motivated to deliver.”

But against this, marketers should consider the broader impact of calling a pitch. If the incumbent agency is invited to pitch there’s inevitable damage to the relationship. One in four incumbent agencies declined to participate in a pitch to keep their client’s business, and 54% of agency respondents said being put up for review had a major to moderate impact on their decision to resign the account.

“This is still a people business. Clients hire people, not agencies. Having a commitment to developing long-term relationships and aligning the right people who complement their client/agency counter- parts are key to reducing the need for agency reviews”.

The report concludes with three recommendations:

1. Initiate a client/agency relationship management program
2. Consider engaging a client/agency relationship consultant
3. Don’t hesitate to have a hard conversation with an agency

Relationships can be repaired

For the past 20+ years, Aprais has built its business on these three findings, so we couldn’t agree more. Furthermore, based on the extraordinary insights available from our database of more than 26,000 client-agency evaluations we’ve conducted, we can provide clear evidence that effective management of relationships can deliver results.

As the charts below indicate, client and agency evaluation scores improve over successive evaluations.

Analysis of more than 26,000 evaluations in our database shows how relationships improve over time when the Aprais process is applied.

As noted in point 3 above, regular dialogue and willingness to tackle difficult issues is critical on both sides of the relationship. Certainly easier for clients’ as they pay the bills, but equally important for agencies to have these hard conversation with their clients.

Aprais recommends evaluations every six months to encourage dialogue about issues before the fester into major problems affecting the relationship.

Both parties ride the relationship escalator together

Our data also shows a clear correlation of the scores given by a marketer of their agency and the scores and agency gives of their client. As one gets better, the other gets better. The converse is also true.

There is a clear interdependence between marketing teams' performance and their agency's performance.

As mentioned, clients are in the driving seat of relationships, so it is important for them to drive improvements in their performance in the relationship if they hope to see similar improvements from the agency.

Better relationship, better work

It’s all very well talking about improving relationships, but is there tangible value benefit from better client-agency relationships?

We set out to prove this in a joint study using data compiled by WARC deliver better work. We analysed winners of effectiveness awards over a 9-year period discovered that award-winning client and agency teams had better relationships than the average.

Serious about relationships?

Here are four questions marketers should ask if they are serious about managing the relationship with their agency;

1. Do I truly believe that client-agency relationships should be a partnership as opposed to a master-servant relationship?

2. Do I accept that opening up to finding out new things about my organisation could be the best way to ensure that it learns what it needs to do to get the best out of the other party?

3. Do I embrace the statistical robustness of large-scale data and external benchmarking to underpin confident decision-making?

4. Am I committed to acting on the findings and investing the necessary resource in terms of time, people and/or money to ensure meaningful progress is made?