All good relationships thrive on trust and openness. This is very definitely the case when it comes to the relationships that advertisers have with agency and tech partners. And it’s especially true of the relationships between brands and media agencies of record who help them plan and buy media.
In recent years, the media and marketing ecosystem has become increasingly complex. As more and more players have entered the market and as the number of links in the transactional chain have increased, it has become much harder to manage media trading and understand the role of each party. Although many of the new players in the ecosystem may have sought to improve targeting and efficiency, this has often come at the expense of advertisers.
As a result, many brands are now looking to reset their agency relationships, and they are being helped on this journey by colleagues in legal, finance, and particularly procurement.
The role of procurement in working with marketers to establish better service, value, and ROI from agency partners is nothing new. It started at least twenty years ago, and was accelerated by both the 2016 report and recommendations from the U.S. Association of National Advertisers (ANA) on transparency in media trading and the 2017 ANA report on Production Transparency. Historically, many marketers resisted the first attempts by procurement to play a role in brand-agency negotiations.
But with increased industry and media debate about the significant consequences of a lack of transparency in this critical partnership, procurement has now become marketing’s natural ally in seeking and securing more favourable trading terms and revised contracts.
Indeed, in a poll taken at the ProcureCon event focused on marketing in Austin, Texas, in November 2019, more than half of those surveyed argued that trust and transparency around media trading would improve only if there was better and more regular dialogue between advertisers and their agency partners. If media agencies are upfront with their clients about their partner relationships, media planning, and media trading techniques – and if they are fundamentally just more open with their clients – this is likely to reduce uncertainty and doubt in the industry at large.
It is our repeated experience that the key to enhancing brand-agency relationships is to treat them as genuine and balanced partnerships of equals. When this isn’t the case – and when punitive terms are dictated by brands to agencies – this can lead to agencies refusing even to participate in a pitch process and to focus on those clients where fairer terms persist. Several recent, high-profile advertiser pitches have requested payment terms of 120 -150 days and beyond, demonstrating that clients are trying to impose their standard business terms on an industry that works on fundamentally different terms. If this continues, agencies may well think that advertisers are using pitches and their scale as unfair leverage leading the agency to alternative non-transparent avenues of revenue generation.
The media and marketing ecosystem is evolving at such a rate that it is only through partnership that brands can make the right decisions for their own, specific circumstances, and that agency and tech partners can help to deliver what brands need. And the foundation stone of any good partnership is open and honest, two-way dialogue. To be trusted, both partners need to be open – in their objectives and their motives, spoken and unspoken. And this is particularly true if the contract between partners is to be lasting, binding, and mutually beneficial on both sides, delivering against marketing and business objectives leading to a long-term fruitful relationship for all parties involved.
Fiona Foy is MD of FirmDecisions North America.