When Marketing recently quizzed Jonathan Mildenhall, Coca-Cola’s vice-president of global advertising strategy and creative excellence, on the importance of strong client-agency partnerships, his answer was very telling.
Mildenhall commented: "We see creativity as a competitive advantage. What we want as a company and as a client is to have massive confidence with our advertising-agency partners; confidence that they will develop amazing ideas, and that, in turn, those ideas will perform superbly in the marketplace."
This struck a strong chord with me. At Oystercatchers, over the past 12 months we have noted that 75% of our clients have decided to invest in relationship management, training and coaching rather than pitch their agencies. Marketers, it would seem, are moving from pitch to partnership for commercial success in a rapidly changing world.
The principles of partnership
For years, our industry has been based on pitches to fuel the way it works. Agencies have looked at the pitch and its inherent new business to provide incremental growth, revenue and to make a step-change. Clients often pitch their agencies as soon as they join an organisation, to deliver significant change and show they are adding value rapidly. But this is often a false economy. Precious time is spent moving the goalposts when what really has been missing is a focus on making those partnerships work.
Troy Warfield, commercial director at Avis Budget Europe, favours working on improving what you already have. "The Avis Budget Group has long-established partnerships with businesses, and we place great importance on these," he says. "We therefore have a similar approach to agencies. We look at the culture, people and service, as well as capability and process. We need agencies that understand the business, as well as the brand challenges, and I aim to work with people I admire and respect. Rather than changing the agency roster when I arrived, I worked with the existing team, probably saving significant budget, and concentrated on making the roster work."
It has been a widely held misconception that long-term relationships do little to inspire exciting creative work.
It has been a widely held misconception that long-term relationships do little to inspire exciting creative work or challenge innovation. The new reality is that companies that concentrate on making partnerships work, and agencies that invest time in those partnerships, are generating growth and creating outstanding communications. According to Patrick Jubb, Land Rover’s global marketing and communications director, launching a vehicle is a highly involved and complex task.
"We are challenging the marketplace to work in a 21st-century way, to drive a sustained share of heart and mind, as well as voice," he says. "To truly succeed, we need to work as one team – and our agency partners are a core part of that team. Delivering the committed return on our marketing investment at these key brand moments is critical, and we need to be able to work nimbly and efficiently with people who know and understand our business and brand to get there."
I personally saw the tide turn when a newly appointed chief marketing officer asked us to evaluate his agencies before even stepping into his new role. His thinking was that the teams, both internal and external, were creative and effective brand custodians, and it made better business sense to understand how they could work in partnership, rather than make change simply for change’s sake. And we are watching this trend grow.
The need for evaluation
McDonald’s works with Leo Burnett, Razorfish and OMD as its core marketing agencies. It is no secret that up until six or seven years ago, McDonald’s rarely received awards for creativity, although its agency partnerships were long and strong. Then the business began its transformation and marketing spend increased. The marketing department maintained headcount by focusing on better process, output and clarity of thinking. It also considered that high-performing, motivated agencies were the key to marketing excellence, and now undertakes "optimise evaluations" and structures bonus agreements to better reward this way of working. As a result, creative quality has improved significantly and McDonald’s has landed awards across a raft of creative disciplines and for commercial effectiveness.
Alistair Macrow, McDonald’s marketing vice-president, says: "In a long-term relationship, the small issues that don’t seem significant enough to tackle so often undermine the effectiveness of the partnership and get in the way of consistently creating great work. A two-way formal evaluation process ensures that all issues are surfaced and, importantly, addressed to enhance the way we all work together. The benefit isn’t just in consistently achieving better work, it’s enjoying ourselves as we do."
Seniority of talent, team cohesiveness and cultural DNA
Some interesting insights on business partnerships have emerged from our Optimise studies, Oystercatchers’ proprietary partnership methodology that allows us to evaluate and manage multiple client and agency partnerships. Optimise reviews five skill sets – people, thinking, creative, process and financial – in a predominantly qualitative way. The skill sets are examined across a specific relationship, businesses then sectors.
We have found that a marketing department typically has between 10 and 15 agency relationships, but works with three or four as true partners. Based on its own corporate DNA, the marketing department will have strengths and weaknesses in how it deals with its partners, especially across multiple relationships. Interestingly, the strengths and weaknesses are consistent across all the agencies with which the marketing department works, and that comes from the top down. So there is a behaviour and cultural set that a business will expect from its agencies, and there is a decision-making process that agencies need to understand. Those marketing teams that understand and work at how they handle relationships – and those agencies that identify and work with the cultural DNA of their individual clients – are the ones succeeding.
Pete Markey, RSA Insurance Group’s chief marketing officer, says: "The business has changed. The sense of empowerment that agencies had in the golden days has gone. Agencies must understand that communication is part of a much bigger picture, and understand the business. I look for an agency that understands both the business and the brand challenges."
Face-to-face relationships are paramount to effective partnership evaluation. Most companies point proudly to their key net promoter scores, where emails are sent quarterly and annually, leading to a scoring system capturing all the data. That is about as useful as a chocolate fireguard. In essence, you have a fire hose of data not pointing in any particular direction, with no one taking ownership. The data makes no difference at all.
Communication is crucial. In a world of tweets and texts, email and instant messaging, are we truly communicating any better? Or is modern technology making us too lazy to talk to each other? I have seen an increasing disconnection between partners as digital communication replaces face-to-face time. Recently, I heard of a senior agency executive working for a leading energy provider who had not met anyone on the senior client side for nine months. The client spends £1m a year on agency fees. And this week, a senior marketer called to say that the chief executive of his media agency had left three months before – he is still waiting to hear from the replacement. The client has an annual spend of £25m.
Technology is a massive help to communication, but if it removes regular face-to-face or direct conversations, it erodes a relationship. Highly focused output is essential. It may be helpful to understand a partnership’s potential problem in any one moment of time, but if there is no strategic plan on deliverables, nothing gets done. Ask yourself what your goals are. How are we are going to optimise these segments? Here is the programme we are going to run quarterly or annually, alongside our day-to-day business.
However, that can be done only via face-to-face conversations and by working hard to nurture your partners.
What does all of this mean for marketing in the 21st century? My take is that the key to business success is the ability to maximise marketing effectiveness through understanding and optimising partnerships between companies and their creative, strategic and media agencies. We believe enduring partnerships have a positive impact on the bottom line.