CMOs warn agencies be careful what you wish for when small shops chase big business
Small agencies desperate to get on the roster of big brands – or even chase the entire business – should be careful what they wish for, with the end result often an agency culture crushed under the weight of the business, according to Woolworth’s former head of media.
At the Secrets of Agency Excellence (SAGE) conference a panel of leading CMOs warned that while small agencies saw the win of a big account the launch pad to the next level, it often worked the other way as they realised their businesses were not set up to deal with the scale of a big advertiser.
Helen Lecopoulos, former head of media with Woolworths, said too many small agencies looked to the big win to drive their businesses – but big clients also needed to be aware of the negative influence they could have in allowing agencies to bite off more than they can chew.
“Be careful what you ask for,” said Lecopoulos.
“Every small agency is out there trying to get a blue chip client and we’re all cognisant of the fact that one good client comes in the door, others will follow.
“But be really careful about the ones that you ask for because they can destroy your culture, they are not always profitable, and you often are not set up to manage what they need.”
She recounted a recent pitch that involved both small agencies and big agencies with one of the small agencies asking why they could not chase a bigger slice of the business than that which was on offer.
“I said because if we gave you the lot, number one you are not set up to handle it, and number two, we would destroy the reason why we would want to come to you in the first place, which is the fact that you’re small, nimble, you work differently in the market. You give us fresh perspective. So we would kill you as an agency eventually.”
She also highlighted another agency which actively declined more work because it was concerned it could not handle it – a rare occurrence in the industry, she said.
John Broome, who recently stepped down as marketing director ANZ for Kellogg, said another issue was the problems agencies seeking a bigger share of the pie caused for marketers.
He said agencies wanting to build on their relationship with clients should not be asking for a bigger slice of the budget, but should be impressing clients by showing how they could do more with the existing budgets they had.
“The easy place to start is here’s how we do more with the budget, create additional value with what you have got, that is a very good place to start,” said Broome.
“The wrong place to go to is ‘I want a greater share of the budget’, because that just creates an awful problem. Revenues at the expense of another (agency). It just creates hassle.”
Simon Canning
“create additional value with what you have got”…
How the heck do you create additional value with the same amount of dollars without comprising on the quality of the work, hiring unpaid interns or don’t pay overtime??
Question for Broome.
If an agency was to come to you and say we need another $100k to hire a new employee to help with managing your account what would you say?
And what do you mean “It just creates hassle”… this just comes off apathetic towards your agencies who are probably desperate to stay afloat and at the same time deliver award winning campaigns…
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Also – watch out for the commercial arrangements. One big IT company is ruled by its procurement department which imposes standard contracts on everyone. Their killer T&C: no bills will be paid in less than 90 days from invoice date! i.e. You need to be their banker.
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