By Erik Huberman
The president of the global beverage group at PepsiCo, Brad Jakeman, put it best, “Marriages are breaking down, and clients are sleeping around.”
Jakeman was succinctly articulating the agency-of-record model’s demise.
Gone are the days of retainers and long-term contracts.
Today, clients shop around on a project-by-project basis.
And with how desperate agencies are getting, it’s no wonder.
Most seem like they want to get married before the first date.
The idea is to lock brands in for long periods of time to mitigate their risks of getting fired and, of course, as soon as they get a client to commit, the pressure to do great work diminishes.
Rather than stalking down a long-term relationship, show how much you believe in your product and embrace the flexibility month-to-month contracts offer.
Believe it or not, they actually benefit both you and your clients.
According to one study, 52 percent of marketing executives say a significant majority of the work they assign to agencies is now project-based.
With more than $30 billion in media business having gone up for review last year, it’s clear that clients are trusting agencies less and less.
Executives concerned with a lack of transparency around contracts and terms are bound to value agencies less than they did in the past.
Consequently, with increasing media costs, agency overhead can seem like a superfluous budget line item.
For these reasons and more, Unilever recently announced plans to cut agency and production costs by 20 percent.
Ram Krishnan, chief marketing officer of Frito-Lay North America, believes companies no longer need creative agency “brand custodians,” thanks to the direct line of communication offered by social media.
Best Buy has ditched the agency-of-record model by moving more work in-house and hiring agencies only on projects.
Moreover, MillerCoors also recently fired its agency, just three years after the shop opened for the sole purpose of servicing Coors products and brands.
Agency Reality: A Culture of Execution
When agencies are constantly forced to prove their value like this, that drive transcends into corporate culture, creating a “get it done and communicate it well” mentality.
Employees understand that with projects, they can’t stop at hypothesizing; they must actually follow through.
This mindset and a commitment to high-quality work help boost your reputation, which can help you land new clients.
In addition, projects offer a nice two-way buffer.
Clients can give 11th-hour feedback without destroying approvals schedules, and agencies can quickly pivot strategy based on new information.
Make the Move: Month-to-Month
Going month-to-month is the best way to safeguard your business from contract disputes and diversify your client base.
Contracts are really worst-case scenario documents, so it’s important to start with a clear, written agreement outlining who’s responsible for what.
If you have to go to the contract and revert, there will be bad blood on both sides.
On many occasions, clients have screwed up other aspects of their businesses and tried to recoup the money by blaming agencies or avoiding payment.
Without a contract, they could just walk away so protect yourself, but be reasonable.
Just like in human relationships, the more one person pulls back, the clingier the other gets.
Don’t be the clingy one.
Assert your independence by taking pride in your work and embracing the changing landscape of agency-client relationships.
As Jakeman pointed out, clients are playing the field and your agency should be, too.
image credit: shutterstock