Dentsu’s Narayan Devanathan on why clients ought to think of ad agencies as “communication retailers”
One of the things that get my goat about how the advertising industry is treated is this whole notion around conflict of interest.
If a client’s agency goes even within sniffing distance of another brand in the same or adjacent category, the said agency is immediately put under threat of being fired or of a pitch being called. And as fellow agencies, we don’t help our own cause and tend to feed off each other’s fear and insecurity.
It’s almost like, according to clients, the default mode is that we’re untrustworthy and will definitely leak confidential information and share one brand’s strategy with another. Of course, alongside all this they want the agency to have copious amounts of relevant and recent category experience.
The two solutions the ad industry has come up with to work around this hurdle are to set up second and third agencies, or to quietly do it without calling too much attention to themselves.
The other parallel – that I myself have drawn sometimes and heard others do too – as a wishful alternative that is offered is with the consulting industry. There, having multiple clients within the same industry category is seen as desirable. It’s called a Practice. And clients flock to consultants precisely for that reason.
And yet, when it comes to applying the same logic to ad agencies, we seem to get the short end of the stick.
So, instead of whipping out the “What about the consultancy business?” argument again, I’d like to draw clients’ attention to another part of their business/marketing ecosystem — the retailers.
This crucial last mile is, regardless of category, for the most part, populated by retailers who are almost always multi-brand outlets (MBOs). From the neighbourhood kirana store to more urban modern trade outlets, department stores, and more contemporarily, online marketplaces, they are all MBOs.
They not only stock multiple brands in the same category, but it’s the main reason consumers shop with them. They offer choice and a one-stop-shop solution that consumers are seeking.
But go back to the first part of the previous paragraph.
They stock multiple brands in the same category.
To paraphrase it back to the context of clients and ad agencies, that ought to be textbook conflict of interest. But nobody sees it like that.
Instead, it’s just accepted as a reality of how the market operates.
Currently, the common aspects to the consumer-retailer and client-ad agency relationship is this: in both cases, the consumer/client has the power of choice at their disposal. The client can choose whichever agency they want to go with from the multiple choices at hand.
But here’s the crucial difference. The retailer also has the option of profiting from offering multiple choices within the same category.
Or, to put it another way, in the last mile, a retailer’s salesmanship is available for Brand A, B, C or Z equally. In fact, the onus is on the brand to enlist the retailer’s energy and effort best towards their cause over another brand’s. But they can’t insist on exclusivity—because the market norm is one of multiplicity. The retailer simultaneously “works on” multiple brands at all times.
The only exception is when brands go down the route of exclusive or single brand outlets (EBO / SBO)—in which case their associated costs are higher. But that’s a conscious choice they make and the premium associated with that is also an accepted norm.
Let’s come back now to ad agencies—creators of brand pull in the first mile, if you will. Why can’t the same rules apply to us?
The power of choice — to choose from a myriad of ad agencies (think of us as “communication retailers”)—still rests with clients. But ad agencies should also lay claim to the power of choice — to offer their “salesmanship” to multiple brands simultaneously. And if a client wishes to exercise exclusivity over an agency’s services, then paying a premium for it should be as much of an accepted norm as it is in the case of the retailers. No?