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Short-term agency-client relationship is the new buzzword

Agencies were earlier watching in agony as clients started gradually shifting from agency on record-based relationships in favour of project-based campaigns. But now, agencies have adapted to the transition and are making most out of it

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Short-term agency-client relationship is the new buzzword

Short-term agency-client relationship is the new buzzword

Agencies were earlier watching in agony as clients started gradually shifting from agency on record-based relationships in favour of project-based campaigns. But now, agencies have adapted to the transition and are making most out of it

Akansha Mihir Mota | Mumbai | December 1, 2016

Client-Agency-Relationship

In 2011, Taproot Dentsu took a project for Airtel and that became a game changer. The agency created an ad campaign which was highly appreciated and worked wonders for the brand: 'Har ek friend zaroori hota hai'. It was then that Airtel moved from its existing AoR, JWT, to Taproot India. Launched in 2009, Taproot Dentsu also did its first project campaign for PepsiCo for ICC World Cup 2011 titled 'Change the Game?', which received tremendous success and impact. Aren't these two apt examples of how projects have done wonders for the brand as well as the agency?

It is a recent phenomenon or should we say a transition in advertising, brands are slowly moving away from the traditional 'Agency On Record' model to a 'Project' model, where the client brings in agencies on need basis to solve specific advertising problems. The, does this movement mean the AOR is dead? Agencies as well as brands have no problem in working on project basis as and when required, suiting their conditions. It's the 'Jack of all Trades' AOR versus the 'Best of Breed' specialist.

Jagdish Acharya Jagdish Acharya

Jagdish Acharya, Founder, Cut the Crap, rightly explains the real situation, “It is like a short-term live-in relationship versus a long-term relationship. In a marriage, you commit a lot more, whereas in a short-term you deliver a lot more.”

Now, some might argue that doing project campaigns each time with a new agency for any given job at any given time is a good thing. After all, why wouldn't a brand want the best work for every campaign? Others might refute this and say that continuous change can be harmful as it doesn't allow forming a deep relationship that fosters trust, which is necessary for risk-taking. This shift has left the agency world spinning--causing it to invest more than ever in new business pitches and trying to bridge the monetary gap that AoR relationships once filled. On the client side, there is a serious struggle to maintain steady performance without a consistent partner at the end.

Agnello Dias Agnello Dias

Agnello Dias, Chairman and Co-Founder, Taproot Dentsu, said, “I think the reason for this trend to grow is that earlier there weren't many activities in terms of different types of campaigns in different mediums. Earlier there were agencies that used to handle campaigns altogether. Now we have so many mediums to advertise on. The industry is so fragmented that branding and strategy planning is also affected and this has been taken care of by specialised groups now.”

The difference between AoR and Project model

Project Retainer
Well-defined scope and services Broad or unclear scope and services
Clear, short-term deliverables Broad range of services
Shorter timeline (typically < six months) Longer timeline (typically six+ months)
One-time needs (once completed, there is no more work to do) Ongoing needs (there is always work to be done)
First-come, first-serve Needs prioritised over projects

When projects make sense

There are various reasons why clients are having trouble committing to long-term contracts– the rise of social media and the subsequent need for constant content development, increased pressure from procurement and sourcing on agency fees and increased emphasis on 'testing before investing' have all played a part. Other reasons for people to work on projects are that there are certain brands that require only seasonal campaigning. Also, there are brands that cannot afford an AoR.

Subhash Kamath Subhash Kamath

Subhash Kamath, CEO and Managing Partner, BBH India, adds two reasons for clients to do projects. He said, “Firstly, the clients call project pitches when they feel that their existing agency may not be able to deliver. In the second case, it happens when it is beyond advertising. It can be for design, activation or digital amplification.”

Rajeev Jain Rajeev Jain

Rajeev Jain, Associate VP, Marketing, DS Group, would like to work in a retainership model as he believes that a brand is built on commitment and strategic framework, but adds, “There are certain demerits of AoR system as client is committed to a fixed financial pay-out in the form of retainer every month, irrespective of agency or the brand performance. The client loses, if certain brands do not merit activities throughout the year due to various reasons. However the payout is still fixed to the agency.”

BK Rao BK Rao

When asked if it a nuisance to form a new relationship with agencies each time for a project, BK Rao, Deputy Marketing Manager, Parle Products, said, “I give lesser weightage to the nuisance. There is a possibility that there is a monotony that might sneak in, but if you are going to a fresh creative partner, there is a likelihood that you may get some new thoughts. So, as long as you are getting a good creative, the headache is tolerable. Working on project basis also keeps the incumbent agency on the toes. Relationship with clients on a project basis is not an emotional one, but functional.”

Another brand expert who didn't want to be quoted feels that agencies take them for granted when they are on a retainer fee. He said, “It's like if you give salary to an employee continuously, he tries to be in his comfort zone and doesn't give his 100 per cent. Just because they are given incentives for their performance every month, they work for it. Similarly on project basis, if somebody is hired, he tries to give his best. The kind of enthusiasm and energy somebody puts in a project is more than AoR. This is the pros of it.”

He further said, “Gone are the days when campaigns used to run for one or two years. Now the campaigns run for one or two months. Therefore, in this case also the AoR doesn't really make sense. Even the clients are also in a haste and they want work to be done overnight. There is a compromise and always a trade-off.”

Nowadays, it is not about the companies and the agencies, but about different segments, like the AoR might not be an expert in everything, but now agencies have different avenues and platforms to their rescue. There are digital, mobile, activation, radio and television and specialised agencies on each one of them. Hiring an agency for a project works is mostly done by small-time players. Because if one doesn't want to invest too much of money, then there is no point giving a retainer fee.

DS Group also hires agencies on project basis when the scope of work is limited and the creative or strategic inputs are not required regularly. Briefing on the benefits of the model, Jain said, “The benefit of this system is that the payout is limited to the scope of work envisaged at the time of hiring an agency. However in this system, the agency's strategic inputs may or may not be from an extended perspective, as in case of a long-term relationship.”

Naresh Gupta Naresh Gupta

Naresh Gupta, CSO and Co-Founder, Bang In the Middle, said, “Largely there is a problem on the client side. They really do not trust the agencies and the ecosystem of the agencies. They actually think they will get a better deal by asking four agencies to come and do idea shopping. The brands that do projects have no consistent tonality that builds because each agency will come and have its own interpretation of the brand.”

Why are agencies shifting?

Firstly, working on project basis is another way of earning revenue for the agencies. Secondly, agencies take project campaigns in the increased competition in the market and hope for becoming an AoR.

Gupta is also of the view that pitching for projects causes no harm to the agency, instead it adds value to the revenue. He explained, “Projects are very interesting for an agency because on a project, the agency's accountability goes down tremendously as I am not concerned if my creative works for the brand or not. I am not concerned about the long-term impact of the piece that I am doing. I am not actually bothered about what the brand is and what the brand positioning is. You get a tight brief, you do that and you are out. Agencies will always pitch in for projects because it is the way of getting some amount of revenue without investing anything in people. Also, working on projects gives you tremendous amount of visibility.” But he also emphasised the fact that if one wants to build an agency on a long-term, then it is not a good way of working.

Acharya charges more for projects because in a project, one has to deliver a lot in a shorter time span. He elaborated, “Retainer means long-term commitment and we respect that. But if it is for a shorter time then it also means a lot of work that should have been done in six months will now be done in three months. It's a quicker money by doing projects.”

When retainers make sense

Retainers are ideal arrangements for getting ongoing support and making continual improvement to your brand and business. A retainer makes the most sense when the services are ongoing, and it isn't clear exactly what will need to be done at any given time. However, retainers are not just limited to marketing. Some clients have a retainer just to be available to bounce ideas off or get advice when they need it.

Virat Tandon Virat Tandon

Virat Tandon, CEO, Mullen Lintas, is of the view that working on project basis adds no value to either clients or the agencies. He said, “By the very definition there is a partnership between the client and the agency. In long-term relationships, you gain knowledge about the brand and trust of the client. You invest a lot in building a brand and you have to work a lot on the strategy and understanding the brand. I would prefer working on AoR as it is a better option than project. If you are building an organisation, relationship, brand and if you take your job seriously as a brand partner, then definitely AoR in the long term is the way to go.”

Acharya also emphasised that the brands that have been changing agencies every year, are open for pitches each time and have no set tonality have hampered themselves. He believes that for a brand to work it is important to have a long-term relationship with the agency. He added, “It's like in long run, a wife proves to be a better companion. People in real life do have extra marital affairs even after knowing that marriage is the real and best option.”

Kamath further said, “Long-term nurturing happens only in AoR, projects take away that from you. If we do too many projects and not strike long-term partnership, it is not a good balance. We need to maintain the balance between projects and AoRs.”

A trade-off always work

It's easy to make the case that the 'best of breed' model is better. If you need content marketing, bring in a great content marketer. If you need a social media solution, bring in a social media expert. If you need advertising, well, you get the idea. This way, as the theory goes, you've always got the best agency for any given job.

But this model also begs some questions. How do clients know what they need? If they have multiple agencies, who corrals them? Who 'owns' the brand idea, let alone come up with it? And who do clients strangle when things go badly?

If clients believe they are capable of coming up with the brand idea and stewarding its execution across multiple agencies, they better be sure. Because without a great, compelling, creatively articulated brand idea that is stewarded religiously, all the agency specialists in the world will have little to work with.

As AOR-relationships evaporate, agency models need to evolve. Those who can, will and win. This isn't a crisis, it's just a marketing challenge. Some foretell an industry implosion and some see it as an explosion of opportunity.

Info@BestMediaInfo.com

Info@BestMediaInfo.com

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