Industry POV

The hard choice between specialised and full service ad agencies

27 Oct 2017

Winter is coming! Old families are preparing their troops and preparing strategies in a quest to secure their territory before it is invaded by new forces.

HBO’s Game of Thrones is the perfect metaphor here to explain how agencies are buckling up for an advertising future where clients are looking at different support levels from agency groups. In such a time, agencies are defending themselves against a march of specialised marketing services providers.

In the good old days, business between clients and agencies was simple and straightforward. Clients hired agencies to create 20-30 second ad spots for television, they created creative stills for magazines and outdoor and sent standard emails to addresses stored in their massive database to everyone. But that seems long ago now as clients' needs and requirements from an agency have changed over time. What we have seen in the industry, a latest ‘trend’ if you may call it, is clients opting to hire multiple specialised agencies to cater their specific needs.

Clients are smarter today and know what they need from an agency and it is up to the latter to be agile and meet the demands placed on it from time to time. Dentsu Webchutney EVP and branch head of Delhi Anil Kumar points out the hard reality that pockets of specialisation have now been created and most agencies do not have similar strengths across services they offer. As clients are anyway outsourcing, and paying for the services, it makes sound business logic for them to hand-pick the best for their business needs.

As far as the client-agency relationship goes, all involved believe that trust is the strongest of the ties that binds. 98 per cent of both clients and agencies believe that a trust-based alliance leads to better work. WATConsult Founder and CEO Rajiv Dingra believes that a client-agency relationship is that of 'partner' and not that a 'vendor-buyer' and when an agency invests in a fruitful partnership with a client then it's not about retention but about growth and exciting work.

It is definitely hard for an agency to lose out on valuable business and clients when they hire specialist outfits and distribute the work among all of them rather than having a full service provider doing the full monty.

But what can or should agencies do in order to retain clients they’ve worked with for so long?

Maybe agencies need to identify and focus on their core strengths, and grow from there, maybe they need to be consistent and relevant. According to Publicis India chief strategy officer and managing partner Sudeep Gohil, great work, fostering good relationships and always being honest are key to retain clients.

“It’s hard to do the right thing sometimes, but just getting the job done to placate a client, is much worse. Honesty and respect build mutually beneficial and fruitful relationships,” he adds.

Lowe Lintas CEO Raj Gupta believes agencies must continue to keep brands relevant and growing in the changing demographics and technology era.

At such times, ad outfits tend to change their strategy, invest more into technology and get people with expertise on board in order to fulfil all requirements by clients. But some agencies also opt to guide the client to someone with expertise in the service required rather than take a punt at the solution themselves at the client’s risk. In some cases, larger agencies that have multiple networks can divert the client within the network to their own specialised sister agencies — a perfect win-win situation for all. Dentsu Aegis Network is one such example.

While Lowe Lintas has a mature set of clients which stay put, once they have bought into the brand idea, WATConsult prefers working with a smaller client who has clarity than a confused large client. Its strategy is to pitch work to brands for the long term and focus on their long term health and avoid taking short cuts to winning business. On the other hand, FCB Ulka constantly hires fresh talent while training existing employees to keep up with changing time and client needs.

Ideally, any agency would not like the changing preferences of clients lead to a situation where they choose to switch between agencies and assign various duties to different agencies. The latter need to ensure that they value the relationship demands and that they continue to do soyear after year. It is only when stagnation and fatigue sets in that a relationship starts turning sour.

While affirming that clients are only trying to do what they think is best for their business, Webchutney's Anil Kumar notes that clients do not owe agencies their allegiance. However, a change of agency is often a harder decision for a client than the for agency as their entire business can be at risk. Therefore the latter also need to be cautious about the clients they pick, taking care of each one's financially viability.

“It may seem to be a good short term solution to boost year-end targets but it will surely kill you in the long run as your resources are diverted to service a low-yield or no-yield customer at the cost of a high-yield one endangering your entire business.”he adds.

Sudeep Gohil is of the opinion that once a relationship is broken and minds have been made up, it is difficult to revert. In such cases, creative/strategic workshops tend to be very successful where all parties attend and work to find a solution in a compressed time period.

FCB Ulka CEO Nitin Karkare stresses that if the current partner (agency) can fulfil the need in a changing dynamic, brands will be comfortable with an existing partner and not look at changing or moving away.

Ownership of problems, trust, collaboration and an open minded approach serve as major contributors for a successful client-agency relationship. If both parties always believe in and understand each other’s motives, a good level of trust can be nurtured. Also a common understanding of the successful goals that are being set out to be achieved is critical.

Agencies need to identify and focus on their core strengths, and grow from there. Just because a couple of media or digital or event managers can be roped in, does not make an outfit an expert all-rounder.

Sure every business unit needs to grow, but that can happen only if they create true specialisations in addition to the verticals they already are good at. Agencies need to grow slow, but grow sustainably!