Confronting the client-agent trust deficit head on

Both sides know it’s an issue. Both sides are uncomfortable. And both sides in Australia seem relatively reluctant to address it.

One thing I learnt quickly in my early 20s was that whilst overdue bills were not a pleasant thing to face up to, ignoring them didn’t make them go away.

In fact, ignoring them made them significantly worse in most cases.

Right now, it feels like the advertising industry is in the same position when it comes to trust between agency and client. Both sides know it’s an issue. Both sides are uncomfortable. And both sides in Australia seem relatively reluctant to address it.

Martin Cass of Assembly last week put in the public domain a viewpoint that has been shared privately for the past few years – “there is an enormous lack of trust.”

My colleague, Russel Howcroft, said the same at the iMedia Agency Leaders Symposium a few weeks back, urging agency leaders to re-establish this trust bond so agencies and advertisers could get back to generating meaningful financial growth for the brands they serve.

In the US they have already tackled the trust issues head on. It started in 2015. The so-called Mediapalooza was dressed up as procurement departments looking for cost savings in a sluggish economy. The reality was different – Mediapalooza was the repercussion of some agent-client trust relationships that became untenable and in many cases, litigious.

If you believe Cass, it’s happening again. He says “[Mediapalooza] was a sideshow compared to what’s going on at the moment.”

So what do you do? Continue the ‘nothing to see here’ approach or do you confront the issue and look to create a positive change?

My feeling is the issue needs to be confronted head on by all parties to resolve. In fact, any time the trust issue is raised the main counter-argument you get back is ‘it’s all well and good to identify the issues but where’s the focus on the way forward?’

In a client meeting last week, the 2012 approach of Channel 4 to educate their viewers about what they would and wouldn’t do with their data was raised.

If you’re not familiar with it (I wasn’t) here’s a video featuring network talent Alan Carr, and here’s the longer form copy around the way the network used data.

Channel 4 did the opposite of what everyone else does with their data policies – it intentionally made them clear and looked to inform the consumer rather than confuse them. It set up from the start clear guidelines between the network and its viewers

The Alan Carr video is the antithesis to most long and full of legalese privacy policies, and spells out simply what they collect, why and what the user can do to wrestle back some control, or opt out.

Agency-client agreements are similar to convoluted data and privacy policies. They are confusing and full of double speak and terms and references that appear foreign even to the most experienced practitioner. The worst part is most of these agreements, their clauses and their requirements are completely unknown and foreign to the parties responsible in upholding them – marketing departments and agency client service teams.

Could a big part of re-establishing trust making it clear to both parties the rules of engagement and moving them out of contracts into pieces of information understood by those bound by them?

I believe so, and suggest a big first step could be agencies and advertisers approaching it in the below manner:

Clearly outline what is and isn’t included within the scope of the agreement – services, resource, output, processes – and look to refine and improve collectively at regular intervals.

Monitor resource utilised and ensure both sides are aware of contracted resource – ensure both sides understand resource is finite and ensure resource is deployed in a way to generate the best return for the advertiser.

Clearly disclose any instances where a ‘related entity’ (ie. company owned by same company as the agency) is being used and clearly outline requirements for performance and rationale for selection.

Clearly disclose any agency as principal events (via related entities or through agency) so all parties are aware that in that instance the agency is recommending a related entity so the client understands what this means.

Roll up all services in the master media agreement – related or via legitimate unrelated third party. Addendums are troublesome as they become a piece of information filed away and not clearly understood. Any agreement for a related entity or third party should be subject to the same terms as the MMA.

Benchmark success not on buying rates. The fact most clients in Australia audit on TV buying position is dated. Cost pools are flawed at best and irrelevant at worst but are used to determine whether an agency is ‘performing’ or not performing. An agencies value is much more than just ‘rates’ and pushing this path only makes the agency and its staff feel demoralised. How about benchmarking on efficiency gains? Or results?

Pay invoices on time. It may seem like a small thing but the advertiser who always pays late is sowing the seeds of a relationship not built on mutual respect.

Pay more attention to contracts and keeping these up to date. A contract over a three to four year period may be the legal framework for $100-$300m of media investment, plus fees, and should be treated with the importance a level of investment of this scale requires in terms of governance. Most boards in Australia would be staggered around the lack of prudence around media agreements. There would be hundreds of master media agreements in Australia that haven’t seen an update in four plus years – staggering when you consider the speed of change in the media world.

Establish a code of conduct between client and agency partner that is understood at all levels of the agency and client marketing organisation. Something that covers how the client briefs the agency, sharing of results and data to improve, clearly outlines the key objectives of the client, clearly outlines turnaround times, clearly outlines respectful use of agency resource, clearly outlines measures for performance appraisal and payment of invoices.

Then, on the agency side, to always act in the best interests of the advertiser, to consider all media options (not just partners), to disclose any client related events where there is an incremental material or financial benefit to the agency/a related entity/ holding company to use a certain provider, to return all rebates or inventory bonuses to client received via agency or related entity, allow advertisers to access relevant digital platforms (trading desk, ad server) and establish agreed reporting guidelines.

It is hard to establish trust when there is confusion and ambiguity around how each party to an agreement is expected to behave. Taking heed of the above should result in enhanced clarity, and provide a framework of future expectations for trust to be rebuilt.

Ben Shepherd is director at PwC’s CMO Advisory.


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