Agency-Client Relationships Research

View on advertising agencies and clients clashes through business

relationshipsor

How to bond angels and daemons?

Mikhail ChernyshevE-MBA, PhD.

Why client-agency relationships?

Working 7 years on the advertising agency side and 2 years on the client side I’ve been dreaming about this…


While most of the time reality was more closer to this…


This agency is pissing me off!

I need to get maximum from the client. I can resolve all the issues just by showing how

important he is to me.


The main questions set for the research are: Why the agency-client relationships are

deteriorating with time and whose fault is it: deaf client or mute agency or both at the same time?

What are the differences and similarities on the relationships view between agencies and clients?

How can the agency be not just a supplier, but a partner to the client?

The basic frame

Relationships: starting point of any relations is an interaction between

two parties

during time, this interaction also builds a real relationship

A C

A CBR

The basic frame

The structural characteristics of any business relationships are described by Hakansson and Snehota in the following way: Duration and continuity: investments and building trust Complexity: extensive and deep contact points to handle uncertainties Reciprocity and symmetry: balance in parties’ resources and roles Informality: trust better than contracts to handle complexity and

uncertainty

While the process characteristics of business relationships are described by: Mutual adaptations: to fit better together technically and administratively Cooperation & conflicts: constructive dissent helps improvements Social interaction: not only technologies and money, but also humans

involved

ARA Model

Source: Håkansson and Snehota

Research layout

Focus Groups Online Panel

Qualitative Stage Quantitative Stage

6 + 6 52 + 46

Main Differences: Advertising importance for Client’s Business

In order to track the significant difference, there was a simple method used of setting thresholds on the level +/-10% for the difference between client and agency values. These thresholds allowed to limit the possible error influences (due to the low sample size) and to extract insignificant

differences (or similarities).

Advertising Importance For Business Performance

0%5%

10%15%20%25%30%35%40%45%50%

-25%-20%-15%-10%-5%0%5%10%15%20%

Client Agency Difference %

Advertising is one of the most important areas for client’s performance

It’s just one of the many tools for my business performance

Main Differences: input information from the client to the agency

Client input information quality and comprehensiveness

0%

10%

20%

30%

40%

50%

60%

Ful

lyag

ree

Som

ewha

tag

ree

Nei

ther

agre

e no

rdi

sagr

ee

Som

ewha

tdi

sagr

ee

Ful

lydi

sagr

ee

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

Client % Agency % Diff.%

We don’t get the full picture from the client, often don’t understanding the context of the brief.

We provide a comprehensive and needed input

Main Differences: fair and honest communication

We don’t receive an honest and fair feedback on our work. Client puts his mistakes on usWe afraid to criticize the client as it may turn him away from us

Most of the time we get and deliver fair and honest communication

Open and fair comments on mutual performance

0%

5%

10%

15%

20%

25%

30%

35%

Ful

lyag

ree

Som

ewha

tag

ree

Nei

ther

agre

e no

rdi

sagr

ee

Som

ewha

tdi

sagr

ee

Ful

lydi

sagr

ee

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%


Main Differences: how agencies and clients adopting to each other

It’s like playing in the one goal, which is just Client’s goal!

We are the net-payers, why do we have to adapt?

Agencies are putting much more effort in adapting internal organization structure, activity links than clients. This is logical due to the fact that the client controls the key resource of the relationships which is money.

Adaptation efforts

0%

10%

20%

30%

40%

50%

60%

Fully a

gree

Somew

hat a

gree

Neithe

r agr

ee n

or d

isagr

ee

Somew

hat d

isagr

ee

Fully d

isagr

ee

-40%-30%-20%-10%0%10%20%30%40%50%


Main Differences: positive relations influence on mutual performance

Without proper relationships, the outcome will be worse

The quality of agency work doesn’t depend on the quality of the relationships

Agencies are putting much more effort in adapting internal organization structure, activity links than clients. This is logical due to the fact that the client controls the key resource of the relationships which is money.

Positive relations importance for business performance

0%

10%20%

30%40%

50%60%

70%

Very i

mporta

nt

Somew

hat im

porta

nt

It do

esn’t

mat

ter

Almos

t not

impo

rtant

Not im

porta

nt a

t all

-40%-30%-20%-10%0%10%20%30%40%50%60%70%


Main Differences: Trust

We are building trustful and open relations with the client

We prefer to secure our relations with written contracts

Verbal agreements vs. written contracts

0%

5%

10%

15%

20%

25%

30%

35%

We

alw

ays

can

ag

ree

verb

ally

In m

ost

case

sve

rba

lly

Bo

th w

ays

eq

ua

lly

Try

to p

ut

as

mu

cho

n p

ap

er

as

In m

ost

case

sp

refe

r to

form

aliz

e

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%


Generally “trust” between agency and clientis driven by agency desire to unformalize the relations.While client prefers to secure itself with the written contracts

Main Similarities

The higher the quality of ad work,The higher the costs

Bonus program for the agency (on top of the basic fee), creates

additional stimulus for better performance

Cost and quality of ad correlation

0%10%20%30%40%50%60%70%80%

Fully a

gree

Somew

hat a

gree

Neithe

r agr

ee n

or d

isagr

ee

Somew

hat d

isagr

ee

Fully d

isagr

ee

-15%

-10%

-5%

0%

5%

10%

15%


Bonus incentive for work as a stimulus for agency performance

0%

10%

20%

30%

40%

50%

60%

70%

80%

Fu

llya

gre

e

So

me

wh

at

ag

ree

Ne

ithe

ra

gre

e n

or

dis

ag

ree

So

me

wh

at

dis

ag

ree

Fu

llyd

isa

gre

e

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%


Main Similarities

Cultural fit importance for successful relationships

0%5%

10%15%20%25%30%35%40%

Very i

mporta

nt

Somew

hat im

porta

nt

It do

esn’t

mat

ter

Almos

t not

impo

rtant

Not im

porta

nt a

t all

-20%-15%-10%-5%0%5%10%15%20%


Cultural fit with the client helps us to deliver better service and understand the clients needs better

For us, having a cultural fit with the agency means talking with them on the same language

Conclusions

Advertising is all about the people. People are playing 2 roles simultaneously – they are actors who have to bond with the client and at the same time they are resources which clients are looking to tie into

Managerial implications

Implications for advertising managers:1. Actors and resources

Client will only start investing into relationship with the agency if he can see that resources that he is getting are meeting or exceeding his expectations. Thus, agency must invest into their people resources, keeping the talents satisfied, motivated and hungry for business.

2. Activity links Agency managers should communicate the importance of the input information

from the client and its influence to the final advertising product (both media and creative part). Without proper briefs and meetings with dedication of the relevant people from the client side, no agency can succeed in delivering effective marketing communication solution.

3. Relationships vs. transactions Building true relationships requires time. Agency can not expect from the client

immediately “fell in love with them” (although miracles happen even between companies, but more as exceptional cases).

Managerial implicationsImplications for marketing managers working on the client side: 1. Investment into the relationship

Marketing managers who are working on the client side need to invest their time and knowledge to deliver to the agency clear, robust and comprehensive input about the problems they are trying to solve with marketing communication and what is the role of advertising for their business performance

2. Adaptation and flexibility Marketing managers of most of the clients take for granted agency efforts, commitments and

trusts and investments which agency does to establish and develop long-lasting business relationship. Despite the fact that it’s the client who is the net payer for the services, it doesn’t mean that money solves the effective relationships issue. The key point for any marketing manager who works on the client side is to understand that any business relationships require both parties needs invest, adapt and be flexible to certain point.

3. Activity links or “how to put yourself in agency shoes” This is easier to say than to do, but it would be a rewarding experience for any of the clients

to “run in the agency shoes”, or speaking business relationships language – to understand how are activities structured and work on the agency side. This would definitely bring a very detailed understanding on the nature agency work and why client need to adapt and adjust its own processes to the agency work. As a result it will bring to the client back the higher quality of agency work.

If this will workthe dreams might come true…

Thank you!

Appendix

Parnership or supplier-buyer relationships

0%

10%

20%

30%

40%

50%

60%

We areopen

partners

We aremore

partners thatsuppler-buyers

We aresomewherein between

We aremore

suppler-buyers thanpartners

We havemore asingle

transactionsupplier-

buyerrelations

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%


Verbal agreements vs. written contracts

0%

5%

10%

15%

20%

25%

30%

35%

We

alw

ays

can

ag

ree

verb

ally

Bo

th w

ays

eq

ua

lly

In m

ost

case

sp

refe

r to

form

aliz

e

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%


Open and fair comments on mutual performance

0%

5%

10%

15%

20%

25%

30%

35%

Fu

llya

gre

e

So

me

wh

at

ag

ree

Ne

ithe

ra

gre

e n

or

dis

ag

ree

So

me

wh

at

dis

ag

ree

Fu

llyd

isa

gre

e

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%


Agency/client regular performance check

0%

10%

20%

30%

40%

50%

60%

Fully a

gree

Somew

hat a

gree

Neithe

r agr

ee n

or d

isagr

ee

Somew

hat d

isagr

ee

Fully d

isagr

ee

-12%-10%-8%-6%-4%-2%0%2%4%6%8%


Client control of the agency or not involved in it

0%

5%

10%

15%

20%

25%

30%

35%

I'm to

tally

invo

lve

d in

the

ag

en

cyw

ork

So

me

time

sI c

on

tro

lth

e s

tatu

so

f th

e w

ork

I do

n't

kno

w h

ow

the

ag

en

cyw

ork

s, I

-10%-8%-6%-4%-2%0%2%4%6%8%10%


Adaptation efforts

0%

10%

20%

30%

40%

50%

60%

Fully a

gree

Somew

hat a

gree

Neithe

r agr

ee n

or d

isagr

ee

Somew

hat d

isagr

ee

Fully d

isagr

ee

-40%-30%-20%-10%0%10%20%30%40%50%


Recources quantity adequacy

0%5%

10%15%20%25%30%35%40%45%

Fully a

gree

Somew

hat a

gree

Neithe

r agr

ee n

or d

isagr

ee

Somew

hat d

isagr

ee

Fully d

isagr

ee

-30%-20%-10%0%10%20%30%40%


The role of the people on the advertising product quality

0%10%20%30%40%50%60%70%80%

Extrem

ely im

porta

nt

Quite

impo

rtant

Somew

hat im

porta

nt

Mos

tly n

ot im

porta

nt

Absolu

tely

not im

porta

nt-70%-60%-50%-40%-30%-20%-10%0%10%20%30%40%


Quality of the agency actors

0%

10%

20%

30%

40%

50%

60%

70%

Very high(talented)

Quite highModerate Quitepoor

Very poor(not

skilled toperform

the tasks)

-30%

-20%

-10%

0%

10%

20%

30%


Positive relations importance for business performance

0%

10%20%

30%40%

50%60%

70%

Very i

mporta

nt

Somew

hat im

porta

nt

It do

esn’

t mat

ter

Almos

t not

impo

rtant

Not im

porta

nt a

t all

-40%-30%-20%-10%0%10%20%30%40%50%60%70%


Cultural fit importance for successful relationships

0%5%

10%15%20%25%30%35%40%

Very i

mporta

nt

Somew

hat im

porta

nt

It do

esn’t

mat

ter

Almos

t not

impo

rtant

Not im

porta

nt a

t all

-20%-15%-10%-5%0%5%10%15%20%


Deadlines vs. Quality

0%10%20%30%40%50%60%70%80%

Deadlinesare moreimportantthan thequality

Deadlinesare

slightlymore

importantthan

quality

Deadlinesand

quality areequally

important

Quality isslightlymore

importantthat

deadlines

Quality ismore

importantthan

deadlines

-25%-20%-15%-10%-5%0%5%10%15%20%25%30%


Cost and quality of ad correlation

0%10%20%30%40%50%60%70%80%

Fully a

gree

Somew

hat a

gree

Neithe

r agr

ee n

or d

isagr

ee

Somew

hat d

isagr

ee

Fully d

isagr

ee

-15%

-10%

-5%

0%

5%

10%

15%


Bonus incentive for work as a stimulus for agency performance

0%

10%

20%

30%

40%

50%

60%

70%

80%

Fu

llya

gre

e

So

me

wh

at

ag

ree

Ne

ithe

ra

gre

e n

or

dis

ag

ree

So

me

wh

at

dis

ag

ree

Fu

llyd

isa

gre

e

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%


Agency-Client Relationships Research

Business

Transcript of Agency-Client Relationships Research