The World Federation of Advertisers (WFA) seems to be doing its best to improve client/agency relationships – strange that the ultimate service business always finds this a problem – and its latest research with Decideware shows that some progress is being in terms of being straight with each other. Whatever next?
Client-Agency Performance Evaluations 2022 finds that 68% of agencies are now comfortable telling their clients the majority of the time what needs changing at their end, compared to just 45% two years ago.
Agencies also reported a slight uptick in qualitative performance being evaluated (56% compared to 54% in 2020), again at least a majority of the time. While this was not a significant increase, holding steady might be viewed as a win and the vast majority of agencies now receive some level of performance feedback.
The findings are based on more than 90 respondents from 82 multinational organisations (49 clients and 33 agencies), with advertiser respondents responsible for more than $69 billion in global ad spend.
But the current mix of KPIs (key performance indicators) is causing dissatisfaction among both clients and agencies. While the top KPI for clients – client satisfaction (there’s a turn-up) – aligns with agency desires, advertisers also say that the lack of “measurable or objective” KPIs is their No. 1 concern. Agencies say the wrong things are often being measured.
The result is that agencies do not always find it appropriate to be paid based on their performance. Mirroring the previous study in 2020, less than half of agencies think their compensation should be linked to the results of their evaluation.
Broken down by agency type, clients seem to be prioritizing media, full service and creative agencies for the most regular evaluation. In at least three out of four cases, media agencies receive compensation based on the results of evaluations as KPIs tend to be more objective and measurable.
Digital (35%) and production (44%) partners indicated they are most likely not to get any opportunity to receive structured feedback. Overall, almost one in three agencies surveyed said they still didn’t have any opportunity to evaluate their clients, with a further quarter having to do it in an unstructured way.
Nevertheless, rising agency satisfaction with improved client processes is illustrated by the drop to 13% (from 38% in 2020) in agencies agreeing that “no matter the feedback, client is king and won’t change.”
WFA director of global marketing sourcing services Laura Forcetti says: “Advertisers need to work harder to become the client of choice by actively nurturing agency relationships. Doing this means starting ‘at home’ and looking at their own performance before blaming their partners.
“This report highlights the No. 1 challenge faced by agencies is ‘conflicting needs/expectations across siloed client organisations.’ Clients must get their houses in order and performance reviews provide agencies with an opportunity to help them on that journey.”