Every three years or so, advertisers decide to put all their media and marketing into a single agency network. Three years later, once they’ve seen their performance in the different marketing channels eroded, they head once more for the specialists.
It has been going on since the 80s, and it would be nice to see the cycle broken...
We are in such a cycle right now. A test case might be Lloyds/HBoS. Driven by a need to hammer down costs as hard as possible and a large company integration to manage, it reviewed its agency relationships. Now Lloyds is in the process of firing all its specialist agencies having handed its entire media budget to Mediage:CIA or, essentially, the WPP group.
I expect that, in about three years’ time, the company will be repitching its business and probably handing it out to specialists who will almost certainly deliver better results, though at a higher cost.
The trend sparks new debate about whether it is best to stick with specialist agencies or, given the increasing desire for integrated strategy (and scale efficiencies), hand the whole shebang to a single supplier.
For what it’s worth, my view is that the age-old economic principle of division of labour is rather crucial here. By their very nature, specialists will be able to deliver much better results in their chosen discipline. It is all they do every day and the entire business is built around doing that thing well. The price of such excellence is, firstly, price, but also the lesser promise of integrated strategy and execution. If we take price first then, clearly, it is a simple matter of doing the sums. As long as the results are better enough to outweigh the extra costs then job done. Integration is more complicated.
My view is that specialists should indeed be the chosen path, but that clients must ensure that those silos are connected top and bottom, in planning and in performance measurement. It is surely the role of the client, supported by their technology and partners, to accept the challenge that integrating the work of separate specialists demands. By taking the lead on the business’ marketing goals and the strategy to deliver on them, the client marketer can manage a variety of agencies into working together, to encourage them to be team players, to share in the advertisers’ goals and be rewarded both for their own work and the performance of the ‘team’.
That’s the top. At the bottom is the unified reporting that is required to measure the performance of all. Technology can help enormously here. There are various ways of joining all online channels to be reported in the same way and place, but there are also tools for joining that to offline measurement, WPP (yes, WPP) has quite a cool one called the Kantar Group run by the former founder of Dynamic Logic Nick Nyhan.
I expect all this to be a key theme of Econsultancy’s own Jump event later in the year – that is that integration is possible, whatever mix of specialists and networks you use, as long as strategy and reporting are unified. It would certainly be nice to break the long-running and not necessarily productive cycle of pitch reviews.