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Too many cooks? Why more clients are playing the field

In the wake of a flurry of recent agency/client retainer relationships coming to an end and big consultancies enhancing their creative chops, Erin McKenzie goes behind the scenes to find out why more clients are playing the field and focusing on projects and what the impact is on brand and customer experience.

By Erin McKenzie | February 27, 2018 | features

Every year, in the build-up to Christmas, many brands take to the screen in a bid to be a part of consumers’ festivities by sharing some joy. But none draw attention to the screen as much as the magical stories told by John Lewis and Adam & Eve/DDB. The ads transport the audience to another world through a different style of storytelling each year such as the animated ‘The Bear and the Hare’, the heartwarming ‘Monty the Penguin’, the sad ‘Man on the Moon’, and the delightful ‘Buster the Boxer’.

John Lewis and Adam & Eve/DDB have been working together since 2009 and when speaking to Campaign, the agency’s founding partner and chief creative officer Ben Priest describes John Lewis’ director of marketing, Craig Inglis, as being in the kitchen with the agency, worrying, suggesting and endlessly questing for the best ideas. As a result, the pair have fostered a great level of trust and an innate understanding of the brand and its customers.

That ongoing relationship is proving successful for both parties but it’s not a one size fits all in kitchens across adland. Some clients have waved goodbye to the traditional monogamous agency model and prefer to have a number of cooks in the kitchen.

In the past year, BNZ has taken Colenso BBDO off retainer, ASB ended its partnership with Saatchi & Saatchi, Frucor and AMP have partnered with Many Minds on a project basis and most recently Kiwibank took Assignment Group off retainer.

Looking through a broader scope beyond the past year and outside of New Zealand, the move is certainly not a new one and yet when Kiwibank's news broke on StopPress, the comment section was quick to fill with questions and opinions.

One commenter was so unconvinced they said: “It’s a good idea if you can make it work. But to be honest it’s very clear that 99 percent of the time the fragmented model doesn’t work.”

Time will tell what the outcome is for Kiwibank but general manager of marketing and communication Regan Savage is confident in the decision. He explains the main goal is for the bank to have more flexibility in who it works with for big creative projects as the nature of these projects has changed.

Nowhere is this clearer than Mind Over Money with Nigel Latta, which saw Kiwibank fully fund a six-part TV series discussing New Zealanders’ behaviour with money.

It was the single biggest investment in content the bank had ever made and yet it had never worked with production company Ruckus before.

As Kiwibank moves into different areas, Savage sees a suite of partners as being necessary to best deliver on that goal.

Not only that, it eliminates the difficulty that can come when relying on a single partner to deliver across all channels. With there being so much change in the media environment
and new technologies in the market right now, agencies that are jack-of-all-trades are often masters of none. Therefore, a specialist agency with a deep understanding of the required channel is often called upon.

But that’s not to say Kiwibank has ruled out working in a monogamous model in the future as Savage sees a cyclical pattern meaning it will one day have a resurgence.

One of the factors driving the change right now is the nature of the skills within traditional advertising agencies. While client marketing teams are filling with data-literate people, the complementary building of resources and skills isn’t happening in all agencies.

Savage says there aren’t enough people with up-to-date skills to populate all the agencies but as time marches on, the universities and graduate programmes will churn out more and more data-literate and technically-minded people to fill the gaps.

It’s here in his defence of straying from the traditional agency model that Savage points out he is not slavishly devoted to data. He describes it as an “and”, not an “or” as Kiwibank is continuing to enhance its creative brand narrative because spamming people with data-driven communications is not going to be as successful as making people feel warmth and empathy towards the brand.

The specialist model enables the bank to work with those necessary to excel at both.

“As a responsible brand owner, my job is to try and determine how to best position ourselves, our budget and our partners to foot it in the digital and data game but also still be able to invest in the brand storytelling end of the spectrum,” Savage says. 

Taking the reins

When news breaks about a lead agency being taken off retainer many are quick to assume something went wrong in the relationship. However, BNZ’s ongoing partnership with Colenso BBDO and Kiwibank’s with Assignment shows the skepticism may be too quick off the mark in some cases.

Kiwibank will continue to work with Assignment should it be the best partner for the job as Savage is proud of the work it has so far produced.

Assignment Group chief executive Peter Biggs shared the pragmatic view when asked
for his thoughts on Kiwibank working with
a number of partners. He told StopPress the agency exists only to service its clients and that it needs to stay in tune with their evolving needs.

“If this is what they want to do, then we will support them and continue to do the best work we can for them,” Biggs said. “We embrace change and go with it, and we just look forward to doing more great work with Kiwibank in the future.”

With the retainer coming to an end after four years, questions have been raised about the status of Kiwibank’s brand guardianship and the answer is that it’s remained unchanged.

Because while it outsources the production and execution of brand strategy to external agencies, Savage explains, it has never outsourced its brand.

He believes it’s critical for a brand that the guardianship and ownership of what it stands for and how that’s articulated resides within the organisation and input into that from external partners shouldn’t be accepted at face value.

He believes in his marketing team’s ability to manage activities because a sense of what Kiwibank’s all about is built into its culture.

“There’s no doubt in my mind that we are the spiritual guardians of the Kiwibank brand,” says Savage. And he isn’t the only one thinking it. The sentiment is evidenced by the trend of communications work being taken in-house by clients. 

At the wheel

If you’re going to do this, you’d better be a bloody good marketer, said DDB’s chief executive Justin Mowday when asked his thoughts on clients taking their agencies off retainer. However, should they be just that, he admires them for taking the reins and says he can see success in both a specialist and lead agency approach.

Because, while it’s important marketers own their marketing activity and take strategic directorship of their brand strategy as much as an agency, there’s real value in long-term and ongoing partnerships.

“There’s a value that comes when you’re intimate with a client’s business and you’re in the trenches with them every day and every week and you know it inside out,” Mowday says. “I think the work is better. I think it makes the work we do better, it’s just better informed.”

He refers to the earlier mentioned John Lewis campaigns as what’s possible when there’s an ongoing relationship, as well as his own agency’s work for Lotto. He says it’s working to make the ‘Imagine’ platform cohesive with the same feel across all the content, which so far has included ‘Pop’s Gift’ and ‘Mum’s Wish’.

And while Mowday acknowledges some brands are choosing to move away from that matching luggage approach, he warns that too many players involved could lead to a disparate result.

“If you have too many cooks in the kitchen, it all might get a bit spoiled.”

Speaking broadly about retainers, Datamine managing director Mike Parsons offered a solution to the problem when responding to BNZ ending its retainer agreement with Colenso BBDO at the end of 2016.

He too sees the downside of a retainer when it’s spent doing work that is not material to a desired, meaningful strategic or tactical outcome. So, in order to maximise retainers, it’s important for organisations to be structured in their approach and have good roadmaps and prioritisation.

“Both parties have a responsibility to ensure the investment is being utilised in a way which delivers a good ROI. I find that happens with a good relationship governance rhythm which includes regular sessions where everyone stands back and assesses how it’s going, with honesty.” 

One and only?

With BNZ, ASB and Kiwibank all on the hunt for the best agencies to partner with for different projects, and ANZ also working with a number of partners, it might not be long until an agency finds itself with multiple banks on its books. But should that raise alarm bells for brands concerned about conflicts of interest? Potentially, because if you’re not paying a retainer you aren’t paying for exclusivity.

“If you move an agency onto projects rather than have that ongoing engagement, then they’re probably no longer exclusive to you,” says Mowday. “It means the agency can go and work with someone else and do a project, maybe a rival or competitor and rightly so.”

It’s a straightforward notion that if a client can pick and choose who it works with then the same goes for the agencies, however, it comes with its own complex issues.

One of those is the concern over how an agency working with competitors will deal with information, objectively promote both brands and offer access to the best talent— especially when considering the lack of talent discussed earlier. 

As president and CEO of Brownstein Group, Marc Brownstein wrote for Advertising Age: “How will clients sleep at night, worried their trade secrets will be shared by agency teams? Who is the favorite son?”

But, on the other hand, he pointed out that by allowing an agency to handle competing brands, clients benefit from the expertise of an agency that has a deeper understanding of the business, its sales channels and customers.

That approach takes trust and respect from both parties and speaking on behalf of local agencies, Mowday sees no reason an agency can’t be professional and mature enough

to work on a project for one client and then complete a project for a competitor without disclosing confidential information or doing anything else to break that trust. Despite his confidence, loose lips sink ships and some local brands have been known to cross the ditch to work with Australian agencies to avoid commercially sensitive information leaking.

Speaking from a client perspective, Savage believes the exclusivity Kiwibank has over an agency when it comes to other banks or financial services is dependent on the scale of its investment.

“It’s a commercial conversation we’d have on a case-by-case basis. But if we’re not paying some form of premium to guarantee that sort of exclusivity it would be unreasonable of us to demand it,” he says. 

A comforting factor 

Turning the table to put the spotlight on agencies, they too could face their own concerns if a client takes them off retainer. There’s no denying the

comfort of being on retainer and the negative subtext surrounding stories of agencies being taken off could leave some in fear of changes— particularly when it’s a major client.

Adland is riddled with stories of agencies cutting staff or losing them to follow clients and most recently in the local market, a number of roles at 99 were affected when Warehouse Stationery took the production of its mailers and catalogues in-house. 

But despite the headlines, losing client work doesn’t always result in negative outcomes.nAs Mowday puts it: it doesn’t depend so much on the retainer as it does the regularity of the contact the client has with the agency.

A past client of DDB took it off retainer but ended up engaging it for enough work afterwards, that the agency’s revenue actually went up. More projects had come in than when DDB was on retainer and Mowday sees it as evidence that “if you’re doing good work, more projects will come”.

“If a retainer model doesn’t fit a client anymore and that’s fine, we’ll move to projects and we’ll keep doing great work and by doing great work more projects will come into the agency.”

This is despite some clients opting to work with agencies on a project-by-project basis to reduce costs in the face of pressure from the C-suite. 

Connecting the CX dots

When speaking to agency folk and marketers, there’s a distinction in the way they see the consortium of agencies approach. Agencies see it as the exception rather than the rule, while clients see it as a definite trend. Both sides are, however, in agreement that clients that are making the move have different motives and when ASB announced earlier this year it was ending its relationship with Saatchi & Saatchi after five years, it gave an increased focus on customer experience as the explanation. Demonstrating that, it soon partnered with With Collective for its digital, direct and data-based marketing requirements while True has been appointed to look after the brand.

General manager of marketing Shane Evans explains the move is the result of an evolution in the bank’s strategy due to the wealth of customer data and information that wasn’t previously available to it, meaning it now has more ways and opportunities to engage with consumers. Not only that, it can make those engagements deeper and personalised so its focus on customer experience is allowing it to make the most of those capabilites.

“The marketing mix has many different parts to it and advertising is one part but actually what is at the centre of the marketing mix is customer experience,” says Evans. “That means we need to think about how we talk to, have a relationship with, and engage customers.”

He maintains advertising is still important for the brand in order to tell people about what it’s doing, but if it can create great experiences for its customers, it believes they will do the marketing for it.

Evans makes a valid argument and the recent rise of the likes of Uber show that putting customer experience front and centre can be a winning strategy.

Uber might not be any more efficient than say, Co-op Taxis, but it delivers an experience that’s far more superior and, as a result, that’s changing expectations around what a taxi company should be. 99 managing director Paul Manning agrees with the notion and has been known to tell clients that today’s winning brands owe their success not just to the quality of the products themselves, but to the superiority of the journeys they create.

However, he does not see a model in which agencies are off retainer being conducive to a great experience, because operating on a sporadic project-by-project basis does not encourage everything to be joined up.

“Personally, I don’t think it’s the right thing to do,” he says.

However, what he does see needing to change is a greater focus on helping clients add value to the experiences they create for customers in the wake of all the industry changes in the past few years.
The technology, media, clients and access to data has changed as well as customers, who expect more than ever from clients. And as a result, clients are expecting more from their agencies.

99 has responded by designing itself to be customer experience-centric, with capabilities built specifically to deliver on customer experience. It sees communications as experiences and with so much technology and data added into the marketing mix to achieve that, Manning sees a consortium of partners as a potential burden.

“It’s not so much about Mad Men anymore, it’s Math Men,” Manning says. “You’ve got all these different people and all these complexities, why add multiple agencies into the mix as well?”

But that’s not the only question agencies need to ask right now. With the fight on for customer data, consultancies are staking their claim with pre-existing in-house data- capabilities so it must be added “why work with an agency at all?” 

Consultancies rising 

But sharing the love with often competing agencies isn’t the only challenge agencies are facing right now. Many believe they have already lost the fight for business strategy, with consultancies well and truly staking their claim on the C-suite. And now those same consultancies (and, in some cases, tech companies) are aiming for the communications, acquiring a range of design, digital and creative agencies.

As Advertising Age put it, “the race is on” for ad agencies to establish strategic and data analytics solutions faster before consultancies become the sole owners of strategy.

When discussing this race, Brian Whipple, a former ad agency executive who is now the senior managing director of Accenture Interactive, said it doesn’t believe brands are built from advertising anymore. Instead, he said: “They are built from an amalgamation of customer experiences, so that is what we are focused on.”

He explained Accenture’s philosophy is that brands are built through hundreds of customer interactions, ranging from e-commerce experiences to how people are treated in physical stores.

It sounds similar to Manning’s belief that winning brands owe their success to the superiority of the journeys they create so it’s no surprise Manning says “yes” when asked if he sees consultancies as a threat to advertising agencies.

However, there is one major difference in their thinking and that’s about the creative. While Whipple thinks the days of messages that push suggestions of how you should feel or think are gone, Manning still considers it a vital part.

“Even if we show up at the right time with the perfect message or the perfect solution, if it doesn’t connect with you on a human level then it will still fail,” he says.

And while consultancies can see the opportunity to offer end-to-end services, Manning doesn’t see them having the culture required to make the same magic that’s created in ad agencies. Simply put, he argues: “Culture eats strategy for breakfast.”

Roger MacDonnell, founding partner of Colenso BBDO and current TRA board member, says it used to be that ad agencies had easy access to the C-suite. But he says that’s shifted due to the many layers of business management that are now in existence. Giving his own example, he says he used to go down to Dunedin regularly and speak with the chief executives of Cadbury and Gregg’s, but that probably wouldn’t be the case today. These days, agencies typically only deal with marketing teams (and marketers, as often pointed out, are still not always around the boardroom table) and he believes agencies are gradually becoming less strategically relevant.

Communications are still vitally important, of course, but they are a product of strategy. And MacDonnell says the strategic clout with clients is increasingly lying with consultancies and research companies that have an understanding of customer behaviour, which he says is changing faster than ever.

As one StopPress commenter said in response to ASB and Saatchi & Saatchi parting ways: “Clients could [not] give a hoot about gratuitous advertising wank work. Well - a couple of lightweights in the marketing department might like it on their LinkedIn profile but in the C-suite where the action happens it is just further evidence that advertising agencies are out of touch.”

So while the debate rages over one agency vs. many, advertising vs. experiences, or creativity vs. consultancies, it’s clear the status quo is changing, brands are looking at what their competitors are doing and everything is up for grabs. 

This interview originally appeared in the 2017 Marketing issue of NZ Marketing. 

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