What price an ad?
Economic recession and the march of technology mean clients want to see more bang for their buck. This may be straining their relationships with ad agencies, which will have to prove the value of their work
Ad agencies will increasingly have to demonstrate greater return on clients’ investment as the country slips into recession, and price and capability are no longer the only key determinants in the relationship, says Lynn Madeley, CE of Havas Southern Africa.
Madeley believes agencies need to develop a better understanding of how people are consuming information, and adopt structures that enable that understanding.
She suggests that agencies are now under closer scrutiny from clients than ever before and need to trim fat and streamline operations.
"Technology now facilitates many processes, especially with content creation and dissemination. Things can be cheaper and simpler while capabilities are stepped up to put out enhanced quality of work."
Her view is borne out by Gillian Rightford, who runs Adtherapy — a client-agency skills development consultancy. She says the relationship breaks down when there is diminished confidence that the partnership can deliver on expectations. "From a marketer’s perspective these expectations may be the quality of strategic advice, implementation of agreed output, the speed with which it is implemented, or perceived value and return on investment.
"From the agency’s perspective these expectations will be the hope that the partnership will be creatively and financially satisfying. This will manifest in two ways: the agency will realise it can’t produce the quality of work it wants to, which eventually affects its reputation and the quality of staff it can retain and attract."
Madeley believes the future agency model lies in the development of a "brains trust" which brings together different areas of agency expertise into one core team, with supporting teams that project-manage the execution of ideas.
"We put good, expensive people at the top of our technical ‘silos’. We invest in them and acknowledge they will be spending more time than they are used to working on ideas for clients together. We counter that by charging less for less specialised or experienced people.
"Having great thinking in one room may increase pressure to perform, particularly if people come from different businesses."
Rightford says there is one clear sign in a weakening agency/client relationship: "The minute the process feels like walking through mud, when all people dread going to meetings and when value is questioned.
"Often, both sides stay in a bad relationship for too long. Agencies don’t want to lose income, but they will in time because a weak partnership produces weak work. And that’s never sustainable."
One senior fast-moving consumer goods brand manager cautions that price in a margin-squeezed economy is important and agencies need to be realistic with cost.
Madeley counters that clients don’t mind spending money if value can be proved.
"The value may be in a great creative idea because it engenders behaviour change, but you still have to prove it and measure it."