The response to the two statements: 'My agency's work has a positive effect on my company's bottom line' and 'My agency delivers value for money', reveals a fundamental problem in the client/agency relationship.
On one hand, clients highly value the contribution of advertising agencies, with 72% saying they help boost corporate profitability. As a result, it might be reasonable to assume that clients feel advertising agencies are good value for money. But only 45% of clients agree, producing one of the lowest scores in the whole survey. So what's going on? Hamish Pringle, director-general of the IPA, is exasperated. "This is a big issue for all agencies. Clients have too narrow a view of our value compared with other professional services, like accountants and law firms, and they urgently need to reappraise our position in that wider context. I suspect the problem is that marketing itself is undervalued in most client organisations."
Relationship Audits' Evans reads a different meaning into the figures.
"Clients understand that advertising has an impact on their bottom line - they can clearly see advertising itself has value, he says. "Their problem with value for money is to do with the agencies themselves. Many clients still think agencies are profligate, spending every last penny of the budget and never trying to cut costs."
There are signs that agencies are mending their ways. These results are more positive than in 1999 and 1996, when ISBA asked its members the same question. In 1999, 36% of clients thought agencies delivered value for money. In 1996, the figure was just 20%.
"There's bound to be a high level of disagreement on this, but it's clear that clients' perceptions on value for money are gradually improving, says ISBA's Morrison. "I'd argue that this is because the industry has got better at understanding and measuring advertising effectiveness. The trend toward payment by results obviously also helps to demonstrate value better."
The ISBA surveys provide interesting insight on how agencies are performing on other key performance indicators. The question of whether agencies 'Make a significant contribution to the standing of my brand/service' generated 73% agreement in 1996, 78% in 1999 and 82% in this latest survey, showing a steady improvement in agency performance.
Agency service is improving too, with 65% of clients agreeing it's excellent this year, compared with 50% in 1999 and just 40% in 1996.
AGENCY SERVICE PERFORMANCE
Clients are mostly confident that their agencies understand their business, their goals and wider competitive environment.
"The best advertising solutions are conceived from a broad understanding of the client's business objectives, says Andrew Marsden, category director, Britvic Soft Drinks.
But according to Relationship Audits' Evans, agencies could be performing better against this crucially important metric. With 30% of clients disagreeing or staying neutral, the response is not convincingly positive.
"There is a sense that ad agencies are losing their place at the top strategic table and are in danger of being seen as an executional resource only, argues Evans. "Too many agencies still say 'Advertising's the answer, now what's the question?' and as long as they do that, they'll slip down the services food chain."
The question of teamwork also throws up some interesting points for debate.
With 37% disagreeing or neutral on whether agencies works well in a team - with the client or other agencies - this is an issue that elicits one of the most negative responses in the survey. "There's nothing that bugs a client more than turf wars between agencies, says Evans. "They just want them to work together and get on with it."
Another common client gripe is that they can never get account teams on the phone and that senior agency management turn up to the pitch, but are never seen again. But the survey shows that agencies are addressing the problem, with 85% of clients saying senior agency management is accessible and maintains regular contact. A similar number, 84%, say they can easily get junior account staff to respond quickly.
But clients remain unimpressed with their agencies' investment in training, with only 48% agreeing that their agency is committed to the continuous development of staff. Only 5% say they strongly agree with the statement.
Despite some green shoots of recovery, the advertising recession is still with us, and client/agency relationships continue to face stiff tests.
During the 1999-2000 boom, losing a client was bad, but new business was never far away. Now, there's no room for complacency - it's time for agencies to hang on to what they've got. Strong relationships have never been more important.
Which is why Marketing teamed up with the Incorporated Society of British Advertisers (ISBA), the Institute of Practitioners in Advertising (IPA) and Relationship Audits & Management, which conducted the survey, to poll industry opinion on the state of client/agency relationships. Questionnaires were sent to clients and agencies. These asked them to evaluate each other's performance, assessing all aspects of the partnership, from delivering value for money through creativity, to the ease with which people can be reached on the phone.
This week Marketing presents results from clients evaluating their lead above-the-line agency, while next week's Marketing will present results from agencies evaluating their highest-spending client.
"This survey is an important reminder to all sides of the industry of how useful it is to get clients and agencies talking about relationship issues, says Debbie Morrison, director of membership services at ISBA.
The need for such dialogue was highlighted two weeks ago at the ISBA conference when Carol Fisher, chief executive of COI Communications, the UK's biggest advertiser, accused ad agencies of failing to embrace the full range of marketing disciplines.
The clash between Fisher and Bruce Haines, IPA president, followed Haines' call for better collaboration between advertisers and their agencies if marketers wanted to see outstanding creative work. As a result, the two are planning to meet to try to mend what is now being termed a 'rift' between agencies and clients.
Conversely, the survey results, from 60 clients, 37% of which spend more than £10m per year with their lead agency, are mostly positive.
It seems agencies are reacting to hard times by sharpening up their performance, with 85% of clients saying their agency's overall performance is either excellent, very good or good in most areas. But there remain specific areas where agencies still fall short of client expectations.
What single thing do you think would improve your relationship with your lead above-the-line agency?
This question sparked a variety of client responses, with only one respondent from the total 60 saying they would change nothing.
Some answers were blunt in the extreme. One clearly disgruntled client spat: "Sack them - they're only there for their percentage.
Many demanded more involvement in the client business, with comments such as: "They need to spend more time understanding our challenges and goals" and "They need to take more notice of the client's view with regard to creative work". Others clearly disagree, making comments such as: "They need to realise they are not the marketing department; they are a supplier to it."
And, contrary to COI's Fisher's comments urging multi-discipline work, one client said: "They should concentrate on the task in hand rather than selling other services they offer."
But a lot of the responses focused on improving creativity and taking more note of the client's wider business objectives. Separately from the survey, Nestle Rowntree director of marketing Andrew Harrison and Britvic Soft Drinks category director Andrew Marsden give their views on these issues.
ANDREW HARRISON, DIRECTOR OF MARKETING, NESTLE ROWNTREE
Looking at agencies in general, creativity is the area that is most in need of improvement.
There needs to be a shared belief in the creative product and the creative process. We need them to focus more on the creative output and less on the mechanics of how they get there. There's often too much discussion about fees and hours and not enough about the creative product.
Agencies and clients need to spend more time and attention at the very start of the creative process. Most frustration and disappointment comes from not doing the hard work up front. The two sides should work collectively and understand what they want to achieve, taking more time and being more diligent at the briefing stage.
Great brands don't exist without great advertising and I think client/agency relationships are getting better as both sides recognise the importance of this central dynamic.
ANDREW MARSDEN, CATEGORY DIRECTOR, BRITVIC SOFT DRINKS
I want to see agencies improve their awareness of the business context in which clients operate. They need to understand this before they start the creative process. Too many agencies come up with an advertising solution without contextualising it against the client's business objectives.
Having said that, agencies are getting a lot better. They've come under a huge amount of pressure recently and much more is expected of them in terms of adding value and delivering more integrated solutions.
On the whole, agencies are rising to the challenge and the improvements are showing through.
When the boom of 2000 was in full swing, advertising agencies were at their worst. They took the easy money and neglected their bread and butter business.
But now, the change in the climate has forced them to have a more professional, well-rounded and pragmatic approach to business. Hard lessons have been learned.
CREATIVITY If your football team were rated highly on the players' fashion sense, but not for the number of goals they score, you wouldn't be impressed.
Similarly, ad agencies should be judged on their creativity - it is, after all, what they're hired for. Overall, the marks given to agencies in this area are good, but not overwhelmingly so.
On the question of whether creatives accurately interpret briefs, 64% of clients agree, but 36% are either neutral or not in agreement. On whether creatives produce fresh ideas and original approaches, there is 66% agreement and 34% neutral or disagreeing. This is worse than ISBA's 1999 survey, when 75% of clients agreed.
"What else do clients buy from agencies if not fresh ideas?
asks ISBA's Morrison. "Creativity is an agency's key skill and if it is not delivering it, clients will walk away."
Carey Evans, partner at Relationship Audits, suspects the lukewarm response is linked to value for money and, by association, the current economic gloom. "Clients are more conscious than ever of how much they are paying for creative ideas and, in return, they expect something wonderful."
Other factors are at play. Agencies complain that uncertain economic times make clients risk averse. Going for safer options makes the agency look like it's being less creative.
If creatives are not delivering, then it's not because they haven't paid attention. Some 73% of clients agree that creatives listen to concerns and co-operate fully. They're also generally seen to be highly competent at producing execution against concepts, with 73% in agreement. But 27% of clients either don't agree or are neutral, which is higher than many agencies would like.
AGENCY EVALUATION
While on overall ratings, 73% of respondents think their agency is very good or good in most areas, 15% say their agency is average, or weak in many areas.
Given some of these harsh judgements made by clients about their agencies, it's interesting to note the surprisingly low number that take the opportunity to formally evaluate their performance - just 66%.
It raises questions about how many problems with agencies could be avoided if such a framework were in place. And for all the talk about the importance of payment by results, more than 40% of those that do formally evaluate their agency do not link this evaluation to agency payment.
Problems arise when clients treat agencies as suppliers rather than full partners, with agencies reluctant to work on a purely supplier basis and demanding more input if they are to truly understand the client business and deliver results.
Indeed, just 31% of respondents say they see their agency as a full partner, with 14% saying they see it as a supplier and 55% saying the relationship lies between the two.
Relationship Audits' Evans recommends not only an agency evaluation system as standard, but a 360-degree analysis that assesses the client's performance too.
"A lot of agencies have serious complaints about a client, but never voice them for fear of losing the business, says Evans.
"Having a way of bringing those things to the surface can really help take the heat out of a bad situation. It's said that a client gets the advertising it deserves, and very often that's true."
JAMES CURTIS Marketing
