Villing & Company

More Than a "Fee"ling: The Power of the Client/Agency Relationship

Photo by Paul Bence on Unsplash

The show Mad Men brought the world of ad agencies to the public in a way that hadn’t really been done before. While it may not be a completely realistic picture of ad agencies today, the show does get one thing right. It’s the importance of what ad agencies have always been called upon to deliver – ideas.

That’s where it all starts. A client wants to grow their business, but they need a creative way to communicate that to an audience. The ad agency’s role has historically been that of coming up with ideas in partnership with the client, then turning those ideas into a specific piece of creative. At this point, we must ask the million-dollar question.

What exactly is the value of an idea?

Ad Age recently posed the same question in an article about client/agency relationships. It’s a fascinating read on the current state of affairs and how clients and agencies alike tend to think about that dirty word – fee.

In an ideal world, the client/agency relationship goes far beyond the fee. It is a symbiotic partnership – a relationship – between two organizations with a common goal: moving the client’s business forward. Because, at the end of the day, the client’s success also means success for the agency. Those sparkly, feel-good waters tend to get muddied when the conversation turns to financials, but it doesn’t have to be that way.

Strong relationships are often built through mutually candid conversations. Clients and agencies need to be willing to have those frank discussions upfront so that the relationship can grow. And, really, the discourse on fees doesn’t have to be awkward or adversarial in any way. Both sides need to consider the viewpoint of the other, but sometimes that’s easier said than done.

From the client’s perspective, accountability must be key – and rightfully so. The client wants to know that marketing dollars will be spent well, meaning that they will be able to clearly tie marketing spend to business performance. In today’s data-rich world, that is not an unreasonable ask.

From the agency’s perspective, that type of accountability starts first with the partnership. The client must help outline the goals (often referred to as KPIs or Key Performance Indicators) at the outset so that the agency can focus marketing initiatives on the right targets.

Problems arise when these discussions don’t happen at the beginning of the relationship. The agency doesn’t really know what metrics are most important to the client, so they often start on a marketing initiative focused on an undefined or arbitrary set of numbers. At the end of the campaign, the client isn’t pleased with the outcomes because they were focused on an entirely different evaluation criterion. All of that could have been avoided had the two sides come together on a common set of metrics at the outset.

The client obviously wants the best creative and marketing strategies possible. The agency certainly wants to provide that, as well. But what happens when the client’s ever-shrinking marketing budget keeps the agency from devoting the necessary manpower to the project? The client will see the work as lacking, but the agency will feel that their hands were tied. Again, this is a discussion that should happen at the outset of the relationship. The client and agency should both be clear on scope of work and the staff seniority necessary on the agency side to deliver on that scope of work.

At the end of the day, the client wants ideas and creative executions that will set them apart from competition and produce tangible results. That’s why they came to the agency in the first place. But the client may also have many financial issues to be addressed, and ballooning marketing budgets usually are not high on the list of priorities.

I believe most agencies understand that. The bottom line is that agencies – through their ideas and creative approaches – do provide a valuable service. Just like any service providers, agencies should be paid for that work. I think most clients understand that, as well. Which takes us back to the original question.

What is the value of an idea?

Answer: it depends.

That may sound like a cop-out, but it’s true. It really does depend on the situation. It depends on what the client’s goals are and how many resources must be devoted by the agency to helping the client achieve those goals. It depends on the tactics and situation. And it depends on the size and type of audience the client is trying to reach. Add in staffing concerns, and you quickly realize that there are many factors that go into a project. All must be considered when agreeing on a fee.

That’s why I think it is important to focus on the relationship aspect between clients and agencies. From the beginning, the two must be partners. If either side feels at odds with the other, problems can quickly arise. Again, everything comes down to the common goal that both sides should share – moving the client’s business forward. With that in mind, clients and agencies should begin the relationship with frank discussions on how to make that happen in a way that will be beneficial for both sides. The ultimate goal is for both sides to be happy with the relationship so that they can share continued success in the future.

We may not be in the Mad Men era any more, but ideas will always have value. The client/agency relationships that produce the best ideas that result in effective solutions will set themselves up for success now and into the future.

Filed Under: general, marketing, budget

Villing & Company

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