We now officially live and work in a not-so-nice economy. Higher inflation and more expensive energy mean that advertisers and their agency partners are finding their businesses under intense pressure, and there is a far higher degree of uncertainty than before.
Advertisers have always wanted their agency partners to perform their day-to-day tasks efficiently. However, they also want them to go beyond these to provide actionable ideas, proactivity, advice and insights from the frontline, all from the perspective of the client's interests, and not those of the agency.
In the current climate, such demands will increase. The issues on which advertisers seek agencies' advice will be more wide-ranging. Existing partner agencies should be the best-placed to respond, having built their knowledge of clients' styles and ambitions through experience, and established a strong position to address these challenges.
The solution used to be to pitch the business, but this has become less of an option. For advertisers, new-business pitching has always been time-consuming, expensive, even disruptive. With growing uncertainty surrounding plans and budgets, it is easy to believe anecdotal evidence that new-business pitches are down in value and volume this year.
So circumstances are moving the industry toward a situation where existing client-agency relations are more important. As advertisers hold the reins of the relationship - the authority and the budget - it could be argued that it is for agencies to take the initiative. Of course this is true, but advertisers also have a role to play.
Companies should be encouraging their agencies to get involved in the wider issues facing their business. They should insist agencies speak their language - money - as well as brand ideas. They should examine their own structures for uncooperative silos of budgets and responsibilities, and see beyond the pigeon-hole into which they have put their agency partners. They may be truly surprised by the skills and experience that exist in their agencies.
Advertisers' search for wider advice represents a great opportunity for agencies. Organic growth - gaining more mandates and revenues from existing clients - has always been a key aim for professional service organisations. It tends to equate to higher margins and improved relationships, and is the ultimate new business 'credential'.
But the efforts of most agencies, indeed most professional service companies, to win more business from their existing clients are often haphazard and fitful. Early enthusiasm for the task can easily fade, and there are many internal barriers to overcome.
One of the most significant barriers is the fact that, in most agencies, new business is better resourced.
However, those organisations that are successful at gaining more mandates from their existing clients seem to share three primary characteristics.
The first is an emphasis on strong leadership. With this in place, organic growth will be a board agenda item, properly resourced and rewarded. Leaders will play an active role, using their experience and contacts, and will be intolerant of those who do not share their ambitions.
The second key characteristic is that more successful organisations are accustomed to working hard to break down silos of structure or thinking. They applaud co-operation, encourage cross-disciplinary forums and find ways of encouraging reciprocity between individuals, departments or agencies.
Finally, such organisations demand that their company thinks on a broad canvas, and does not confine itself to its specific discipline. A constant question will be: 'What are the problems my client faces, and how might we help?' Their culture will require company members to think about and address the wider issues and opportunities facing their clients' business; the 'What keeps them awake at night?' question will inform every aspect of their work.
The business environment looks likely to become even more uncomfortable for both advertisers and agencies, but this is a moment of opportunity where existing relationships between advertisers and agencies become more valuable, when advertisers rightly demand more of their agencies, and agencies are willing and able to provide more and better advice.
The economy may no longer be nice, but this should stimulate the widespread re-evaluation and revitalisation of advertiser-agency relationships.
Essentials: Organic growth
How agencies can offer clients more and better advice
- Provide regular business updates beyond the agency's discipline
- Inspire by introducing fresh perspec-tives to HR and R&D, for example
- Organise at least an annual day to discuss the business
Reward initiative and collaboration
Internal barriers to organic growth
- New business is more glamorous
- Responsibilities are confused
- The urgent displaces the important
- Ego and fear create silo mentalities