Research reveals the average total cost of an agency review at $1.2 million.
A research report published by ANA/4A’s in the USA titled ‘The Cost of the Pitch’ urges marketers and agencies to reassess their reliance on agency reviews/pitches to solve problems that may be inherent in a relationship. It’s far better to repair, than replace.
The cost of the pitch
For marketers, the key costs for an agency pitch, related to hourly costs, staffing changes, disruptions/delays, external consultants, and compensation to the agency is about $400,000.
For agencies, the costs are; $204,461 for an agency that is not the incumbent and $406,092 for the incumbent to participate.
One of the key drivers for a client to launch an agency review is cost reduction. There is also a prevailing sense from clients that “a new agency is highly motivated to deliver.”
More than just money
But against this, marketers should consider the broader impact of calling a pitch. If the incumbent agency is invited to pitch there’s inevitable damage to the relationship. According to the report, one in four incumbent agencies declined to participate in a pitch to keep their client’s business, and 54 percent of agency respondents said being put up for review had a major to moderate impact on their decision to resign the account.
“This is still a people business. Clients hire people, not agencies. Having a commitment to developing long-term relationships and aligning the right people who complement their client/agency counter- parts are key to reducing the need for agency reviews”.
The cost of the pitch – ANA/4A’s
The report concludes with three recommendations;
- Initiate a client/agency relationship management program
- Consider engaging a client/agency relationship consultant
- Don’t hesitate to have a hard conversation with an agency
Relationships can be repaired
For the past 20+ years, Aprais has built its business on the hypothesis that it’s better, and healthier for all concerned, to repair than to replace team relationships, so we couldn’t agree more with the three conclusions above.
Furthermore, based on the extraordinary insights available from our database of more than 26,000 client-agency evaluations we’ve conducted globally, we have clear evidence that effective management of relationships can deliver results.
As the charts below indicate, evaluation scores of clients and agencies improve over the course of successive evaluations when the Aprais process is applied. Clearly, it’s better to repair team relationships than replace them.
As noted in the conclusions cited above, regular dialogue and willingness to tackle difficult issues is critical on both sides of the relationship. This is certainly easier for clients’ as they pay the bills and tend to be in the drivers’ seat of the relationship, but it’s equally important for agencies to have these hard conversation with their clients.
Aprais recommends evaluations every 6 months to encourage dialogue about issues before they fester into major problems affecting the relationship.
Improve one team, improve both?
Our data also shows a clear correlation of the scores given by a marketer of their agency and the scores and agency gives of their client. As one gets better, the other gets better. The converse is also true.
As mentioned, clients are in the drivers’ seat of relationships, so it is important for them to lead improvements in their ownnperformance in the relationship if they expect to see similar improvements from the agency.
Better team relationships mean better work
It’s all very well talking about improving relationships, but is there tangible value benefit from better client-agency relationships?
We set out to prove this in a joint study using data compiled by WARC deliver better work. We analysed winners of effectiveness awards over a 9-year period discovered that award-winning client and agency teams had better relationships than the average.
Want to repair your team relationship?
Here are four questions marketers should ask if they are serious about managing the relationship with their agency;
- Do I truly believe that client-agency relationships should be a partnership as opposed to a master-servant relationship?
- Do I accept that opening up to finding out new things about my organisation could be the best way to ensure that it learns what it needs to do to get the best out of the other party?
- Do I embrace the statistical robustness of large-scale data and external benchmarking to underpin confident decision-making?
- Am I committed to acting on the findings and investing the necessary resource in terms of time, people and/or money to ensure meaningful progress is made?