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Home » Why ad agencies lose accounts and how to avoid it

Why ad agencies lose accounts and how to avoid it

by | Nov 13, 2022

Capitol Communicator ad agencies neglect their peopleBy Ron Owens

This is “must reading” for ad agency management executives, creative, media and agency support staff.

Having worked in the advertising industry for over fifty-years including…forty-years with ad agencies, four years as a worldwide advertising and public relations director for a Fortune 500 company and six years as a marketing consultant, as I see it, ad agencies lose accounts for one of three reasons:

  • Performance-related reasons.
  • People-related reasons.
  • A combination of the two.

As a consultant, to determine which of these three reasons accounts for the most of the agency firings, teaming with an associate and conducting extensive research with agencies, client companies, and industry associations dating back over the past five years, we found absolutely no pattern in the performance area. Agencies were fired just as often when sales were up as when they were going down; just as when the creative work was good (by our standard) as when it was fair or poor.

Therefore, we concluded that people-related reasons play a major role in a client’s decision to fire its agency. We cannot tell you whether those people-related reasons were the primary factor in 35% of the cases or 65%. But whatever the figure, it is significant. Therefore, it is the people-related reasons that I’m going to deal with in this article. People problems are often immediately actionable. This is not true with performance problems.

Having set the guidelines, in my judgment, advertising agencies lose accounts for the following people-related reasons:

  1. They are arrogant. They don’t listen. They insist that it’s right because “I say it’s right.” They make life miserable for decent people at the lower and middle echelons of their client companies. And sooner or later, they get nailed.
  2. They are not sufficiently responsive. They procrastinate. They quarrel. They hope, in time, it will “go away!” How can the agency research department be “too busy” to review a client-sponsored research project? Yet it happens.
  3. They frequently change personnel. Clients want and seek continuity. It is time-consuming and costly to brief new people. Furthermore, it is worrisome and smacks of instability. It can even imply there is something “undesirable” about their account. Many good clients recognize that some shifting about is necessary to train people properly and reward performance. It is when the shifting becomes excessive or coincides with a piece of new business that they become concerned.
  4. They are pre-occupied with new business pursuit. I have seen an agency president accept a new business call during a client meeting. Rude, stupid, indiscreet. Clients expect fidelity. Just like wives or husbands, sweethearts or “significant others.”
  5. They confuse advertising success with sales success. Sometimes advertising is asked to carry a heavy load. Other times the product is so right, so timely, that it can’t miss. It almost sells itself. Most clients today are extremely sophisticated marketers. They precisely know the extent to which each element in the marketing mix is contributing to the overall result. They resent it when the agency appears to claim the “lion’s share.” My advice to agencies is to be realistic about advertising’s contribution. Toot your own horn only when the load is heavy – and then very softly.
  6. They neglect their basic constituency. By this I mean the men and women with whom they do business daily. Instead, they focus their attention on the upper echelons of the client company. They assume that if this base is covered, the troops will fall in line. Not true. Without grass roots support, you will eventually lose. It’s true in politics. And it’s true in agency-client relationships.
  7. They are insensitive. A client will forgive a bad commercial. But a client will not forgive you for being rude. A client will also forgive a research error. But a client will not forgive you for being patronizing. If late, a media plan can be forgiven. But the client will not forgive you for making him or her feel small, or unimportant. Or any one of the thoughtless “hurts” that each of us at times commit.
  8. They are greedy. I am not here to tell you what your profits should be or what salary you should earn. However, I do ask you to think about two fundamental concepts:

The first is value. This, I believe, is a function of quality (or value received) and price.     Clients today are very knowledgeable about agency costs. They know exactly what it is costing you to service their account, department by department. And many feel that they are paying a high price for these services. It does not look to them like good value. And they resent this. Just as you resent it when you feel you have been overcharged at restaurants, automotive repair shops or whatever.

The second concept is what’s appropriate. Perhaps a creative group head is worth 50%        more than the marketing director of a client company. But I doubt it. And I know for certain that the marketing director doesn’t think so. There are a few agency heads who have a great feel for what was becoming in the way of agency salaries and agency profits. Some ad agencies seem to have lost sight of this. Money, salary, profits are very emotional issues. They can sometimes obscure an objective assessment of your performance.

  1. They do not use their client’s product. I can hear you groaning on this one. “It’s 2022, agencies don’t make dumb mistakes like that anymore.” Unfortunately, you’re wrong. They do. And some of them quite openly. Would you believe an agency president who drove his Mercedes while visiting his automotive client who produces and sells BMWs? It happened. I can only conclude that such people are either very rich or very stupid. Or how about the agency that served Coca Cola at a buffet lunch for its Pepsi Cola client? Nothing will drive a client up the wall faster than to find that his or her agency is using a competitive product. I urge you to check your homes, check your agency kitchen, your restroom and your garage.
  2. They are intractable. It is inconceivable to me that a test market can be delayed because the agency refuses to execute the creative strategy. Yet it happens. Every agency worth its salt should forcefully present and forcefully defend its position. Good clients respect this. But there comes a point when the debate must end. It’s time to get on with it.
  3. They abuse the right to appeal. By and large, disagreements must be resolved at the daily working level. Frequent appeals to a higher court, i.e., upper echelons of the client company, indicates a weakness in the basic fabric of the agency-client relationship. What usually happens in this case is that the agency wins the battles – but loses the war.
  4. They are not the right people. This can run very deep, including “I can’t stand that guy!” Many clients are reluctant to address this subject directly, especially if it involves one of your top people. It’s too personal. To demonstrate the importance of the account, the agency promised that it would be supervised by the president himself. It was the wrong strategy. The client wanted someone else. Intervening into this matter required an objective assessment of personal relationships on management’s part and the matter was straightened out. I have learned in my years in the advertising business that the primary qualities clients search for in their agency partners are trust, respect, a sense of sharing a common mission and, hopefully, a little fun along the way. Isn’t that what you want?
  5. They are not good stewards. A good steward cares deeply about all parts of a client’s business. Sales. Product. Promotions. Packaging. The works. If sales were always rising and every piece of advertising a colossal hit, life would be wonderful. However, that’s not the real world. The facts are that even bright people can’t always be bright. There are times when you simply don’t have an idea, or the right idea re: the situation. It can also take time to solve a creative problem that’s been brought about by a change in the competitive climate or any number of unforeseen market factors. There’s no way to predict whether this will take a day, a week, a month or even three months. It is during this period of moving from old to new creative work that the account managers who have built strong relationships earn their keep. It is the good steward who guides the agency through the inevitable bumpy periods. Good stewardship is essential to stable account relationships.
  6. They refuse to listen. Too many agency people are on “send” only. (This is also true of marketing consultants.) If they would only listen, they would find the client is trying to tell them what the problems are. Companies don’t decide to fire agencies overnight. Disenchantment is a long time coming. If you listen carefully, you will get the message. It may not be loud and clear, but it’s always there.
  7. They over-promise. Each of us should be strong advocates for our area of expertise. That’s the way the system works. However, there are a few marketing problems that are simply not amenable to advertising solutions – even great advertising. When this happens, the agency should be realistic about advertising’s ability to contribute, level with client and use their fine creative talents to look for solutions in other areas.
  8. They are spread too thin. This is a tremendous problem exacerbated by the COVID and the present economic environment. It used to be that you could manage the affairs of an agency with one or two crack management supervisors (depending on agency size). This is no longer true. Almost without exception, we find that major client dissatisfaction can occur without agency management ever being aware. In my judgment, a totally new kind of agency management structure may be called for, if the agency is going to continue to be successful.

I do not expect you will find these reasons quoted in the trade press or periodicals. It is less controversial and, I believe, far kinder to attribute agency dismissal to “policy disagreement,” that elusive “chemistry” factor or “We need a new creative approach.” But I must tell you, these are the reasons…most of the time.

There are some things the agency can do to pinpoint and defuse many of these people-related reasons. I have a few suggestions.

  1. They should develop their antenna. Many account losses could be headed off by an early assessment of the danger signs. In this regard, there is one cardinal principle: no news is bad news. When the client stops communicating, when he or she finds excuses for not seeing you, that’s the time to worry.
  2. They should make it a point to attend “routine meetings,” sometimes unannounced. This is the only way to get a feel for how things are really Everyone’s on their best behavior on such occasions.
  3. They should take great care in filling account assignments. “Who’s available,” or “Who deserves a crack at it,” should be minor considerations. The fit of an individual with the job is the key ingredient. The right person can make a staggering difference in the success or failure of the client-agency relationship.
  4. They should be alert for the slightest sign or arrogance or disdain. It is extremely difficult, perhaps impossible, for an agency to work for a client that it does not respect. As a result, they put mediocre people on the business which serves to compound the problem. If you are correct in your judgment, you should resign the account, because sooner or later, you will lose it. However, there’s a good chance you may be wrong…that the problem is more complicated than you realize, that you haven’t taken the time to really understand the client’s business, and that if you did, both the client’s decisions and objectives would seem sounder, on-target, and more attainable.

I believe this is worth some careful thought. In this regard, there’s one sure tip-off. If you hear your people talking in derogatory terms about your client, i.e., “They don’t know what they’re doing,” “He’s got his head up his butt,” etc., etc., you’re heading for trouble. Don’t make the mistake of assuming your feelings don’t show. One way or the other, you tip your hand. I’m astounded at how many agency people don’t realize this. It’s such a simple fact of life.

  1. They should request that their client conduct an annual agency evaluation. It should be a serious and thoughtful process. All pertinent areas should be covered. A format should be developed which allows for both objective and subjective judgment. Agency and client should participate in the input. Both should agree to the criteria. And both should be judged.

As a long-time marketing consultant, I have observed that companies that make good use of the agency review process tend to have excellent relationships with their agencies, and that agency turn-over is at an absolute minimum.

  1. This final suggestion is one which I believe is somewhat unique. I recommend that agencies and clients should at times consider using a “marriage counselor.” When people problems are acute, they soon permeate all areas of the client-agency relationship, and everything turns sour. Suddenly, the copy’s no good, media plans seem uninspired, there’s never enough research, costs are too high, the client is unreasonable, and positions harden all the time.

I have often felt that if a knowledgeable and objective third party could be brought in at this point, many client-agency marriages could be saved. You could say, “Look, you guys have been together for a long time. You’ve done a lot of good work together. It’s in nether of your interest that the relationship be dissolved. Let’s take a piece of paper, put down the problems and see what can be done about them.” You could also probe for those sensitive people problems that are so difficult to discuss face-to-face.

I don’t believe that it matters whether it is the agency or the client that recommends the marriage counselor. Whichever partner feels like the injured party. The important thing is to do it.

My intent / objective in writing this article has been to give you some insight into the people reasons why clients elect to seek a new agency. I have also suggested specific measures that agencies might institute to improve their people relationship – or at the very least to ensure that there were no surprises.

As a marketing consultant, I am extremely close to my clients and share many of their private thoughts. No client looks forward to changing ad agencies. Simply put, jobs are affected. Lives are affected. Work is affected. It is difficult, time-consuming, and painful.

There comes a time, however, when it is the correct thing to do. If you were to ask me at this time, I would tell you that, based on my experience, it is the time when goodwill is gone. I believe that without goodwill, you cannot salvage a marriage – of any kind.

Ron Owens is President, Ron Owens & Associates, a marketing consultancy which specializes in market development, branding, diversity & inclusion. He is a co-founder & former principal, LMO Advertising; a Past President, Ad Club of Metropolitan Washington, DC; former Governor, 4A’s, Mid-Atlantic Region; Lt Gov, AAF; VP, Bozell Worldwide; VP, TMP Worldwide; Director, Advertising & PR, Pitney Bowes, Inc, a Fortune 500 Company; Committee Chair, ANA; & Vice Chair, Better Business Bureau. A frequent guest lecturer at many regional universities, Ron can be reached via Ronowens22@yahoo.com

Pexels photo by Anna Shvets

About the Author

Capitol Communicator and sponsors host various guest postings on relevant topics of interest to the advertising, marketing, public relations and media professional community that Capitol Communicator serves.

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