New research shows that clients all over the world are growing increasingly dissatisfied with the value they get from their advertising agencies. Why has been anyone’s guess, until WARC published this article, based on the latest 2016 SoDA Research Report.
In short? Agencies are missing the mark because of poor account management, understaffing and an inexperienced team. Interestingly - or maybe unsurprisingly - agencies have other explanations for why these relationships are being terminated.
From what we’ve seen, there’s also an underlying issue that means clients and agencies are often not pulling in the same direction.
Miscommunication and growing dissatisfaction
The survey is made up of 629 senior decision makers in advertisers and agencies (30% of whom controlled budgets in excess of $50m), and shows that the single biggest reason for dissatisfaction from clients was pricing or value (37%). However, the report found that 56% of agencies believed that a change in management was the reason the relationship was terminated – up from 33% in 2015.
According to the report, other areas of client dissatisfaction included:
1. Unhappy with creative (24%)
2. Mismatched agency size/ability (24%)
3. Unhappy with project management/account management (22%)
4. Unhappy with strategy (21%)
5. Understaffed/under-experienced (21%)
“Miscommunication is usually a root cause of any bad relationship; even at the end. It’s no different with clients and agencies. Clients continue to leave for a myriad of reasons, but agencies continue to blame it on management changes.” (Source: WARC article - Understaffed agencies frustrate clients. June 2016. Survey from the global society of digital marketing innovators -2016 SoDA Report).
Under-experienced and understaffed
Worth noting is that clients are increasingly leaving because they see their agencies as understaffed or under-experienced. These figures grew significantly from 2015 when only 6% of clients gave these reasons for terminating a relationship. Clients feel their ad teams are being spread too thin. They expect staff to be knowledgeable in all areas of digital and would like to work with specialists in specific areas, rather than staff trying to do everything well - impossible in the digital landscape.
"We expect inexperience to be an increasingly prevalent causal factor in agency-client relationships going south, as the percentage of agencies who indicated they are not providing any training to their staff almost tripled in 2016, growing from 5% to 14%”.
Another clear indicator that the client/agency relationship "has hit a roadblock", is the proportion of agencies reporting relationship improvements had fallen from 70% to 53% over the past year. The WARC attributes this to an increasingly competitive landscape, with clients working across multiple agencies and under pressure – not just to produce successful campaigns, but to also "out-innovate" their rivals.
Award winning ulterior motives
This struggle all comes down to a financial squeeze, with a shifting media landscape impacting on profit margins. But rather than try to work more effectively and efficiently, or to differentiate with specialist in-house skills, we see ad agencies fall back on an old favourite – awards shows.
No other industry awards itself quite as much as the advertising industry. And why wouldn’t it? Pay packets of individual creative teams increase with every win, while the agencies themselves use their golds as ways to attract new clients. Award-winning work is effective work, so the theory goes.
But what should be a useful means to an end can become the sole focus of a creative department. The focus shifts. Agencies stop making useful work for clients that also wins awards, and start making award-winning work to attract clients. It’s a small, but important distinction, in which agencies and creatives will commit talent and skill to winning awards, not to solving client business problems.
With that split focus and obsession with winning awards, agencies de-prioritise the client's brand and business objectives and instead look for ideas most likely to win gold, rather than win market share for their clients.
So what can clients do to combat this issue? They need to question their agencies’ motives. Is entering an award really of benefit to their brand? Another option is to look for agencies who focus on effectiveness awards, who promote themselves on service, not awards, and who have specialists in their field.
Why we are different
The Selective does things a little differently to your standard agency. We’re all specialists and seniors and our creative teams focus their full attention on finding the best solution to meet client needs, not one that is most likely going to win them an award.
Although some clients do require the full service that a traditional agency can provide, The Selective’s clients can use our experts as and when they need them. This removes inefficiencies, reducing costs and gives clients complete control. We can also dovetail into other projects to offer an extra pair of hands.
This isn’t really trying to blow our own trumpet – it’s more that The Selective was set up entirely to combat these issues we were seeing in the market. It’s those issues that the 2016 SoDA Research Report highlights: that the market is shifting, and that to keep their doors open, agencies need to change how they work, and refocus on one key truth. That growing their client’s businesses is the only way to grow their own.
If you're thinking about managing things differently in your business, get in touch with Emma Clarke at The Selective.