Have You Been A Naughty Client?
In second part of a four-part series examining how brand behaviour impacts on media value, David Indo, co-founder of ID Comms, argues that bad behaviour could be costing advertisers money when it comes to media. So how can we identify the behaviours that destroy value?
Let's get one thing clear from the start: No client is perfect (amen, say all agency staffers).
Even those advertisers that look like well-oiled machines have their faults and limitations. Believe me, I've worked at Coke and Nike and what looks like a machine with finely tuned and well-established processes from the outside doesn't always seem like that when you're on the inside.
The reality is that all clients are dysfunctional in their own way, generally thanks to internal operational pressures and dynamics.
The result can be behaviours that most agencies find less than ideal. To a certain extent that's the nature of agency life. Clients are the clients, they control the budgets, they dictate how you will work together and they will decide how, when and what agencies will get paid (the agency can always say no, remember).
But even if we start from the assumption that no client is perfect and that a baseline of dysfunctional behaviour is to be expected, some behaviours are worse than others.
There is a clear difference between clients that simply operate within a fast moving, dynamic market place and demand much from their agencies, and those that inhibit value generation either through lack of consideration, poor media management or simple bad behaviour.
A client that's failing to maximise media value will generally find that the problems lie in one or more of the following areas: their contract will be out of date, their media management process will be poor and their relationship towards their agency will be transactional rather than partnership based.
“Failure to behave well in media management can erode up to 10% of the media value that a good client might achieve”
If you are a client and can tick any of the following boxes then you need to think about how to improve. If you are an agency and your clients tick any of the following boxes, then perhaps you should have said no...
At ID Comms our experience tells us that good behaviour can add up to 35% in value to a media partnership, through better access to talent, innovation and strategic opportunities. Bad behaviour has the inverse effect, destroying far more value than even the best negotiator can achieve on rates.
The source of most dilution in media value is a contractual agreement that is out of date (anything over three years old is unlikely to be suitable given the pace of change in media and marketing generally). Contracts of this age are likely to have a defined scope of work that's irrelevant and fails to reflect current needs. You can guarantee that the rebate management clauses will be inappropriate to the current media mix and reflect a media spend that was agreed half a decade ago.
Simply re-negotiating agency fees at the beginning of each year without modernising the contractual arrangements that bind client and agency simply puts the focus on 5% of a client's media spend and ignores the 95% of the budget that will make the real difference.
This process is essentially about ensuring the agency is in a position to focus its energy in the areas that will make the greatest difference to the advertiser's business. Failure to do so can diminish 15% or more of the media value that a client working with a properly constructed, relevant and focused contract might achieve.
Bad behaviour on media management includes providing lazy briefs or a failure to provide any briefs at all. It includes a succession of unreasonable demands for turnaround, especially when timelines are concerned and it includes demands for a multitude of media plan changes, most of which are driven by an incomplete original briefing or arbitrary decision making.
Failure to behave well in media management can erode up to 10% of the media value that a good client might achieve.
Finally there is simple bad behaviour, some is which is a matter of courtesy and some of which is a result of poor planning and process management at the client side. This includes a general lack of respect or lack of appreciation for the effort of commitment shown by the agency.
“Every time a client behaves consistently badly, they are leaving media value behind”
Often it manifests itself in a general lack of consideration towards the agency via last-minute briefings, unrealistic deadline setting and, my personal favourite, regular and consistent creep in the agreed scope of work coupled with a failure to acknowledge that there are financial implications to asking the agency to do more work.
Failure to behave well can destroy another 10% of the media value that a good client might achieve.
Most of this isn't rocket science; the guiding principle should be that the more considered, organised and respectful a client is in relation to the management of their media agency relationship, the greater the likely return will be on that marketing investment.
Examples of poor client behaviour:
Less than ideal behaviour is, of course, relative, but here is a list of my current top five examples, all of which are from the last eight months. (Sorry but we have to keep the names confidential so we can persuade them to change.)
1. An entire marketing department that didn't know the basics of the their agency agreement. Despite spending more than £6 million a year, nobody from the marketing director down to brand manager level had any idea how or how much they were actually paying their agency for media planning and buying.
2. A client delivered a media brief for a £1 million plus campaign by text message. Unbelievably, the message actually said "same as last year, budget £1m."
3. A client, keen to find some financial saving at the end of the financial year, falsely and incorrectly marked down the agency in its annual performance evaluation so that they didn't have to pay them their performance-related incentive bonus.
4. A client insisted on 180 day payment terms, not just on the agency fees and out of pocket expenses, but crucially on the media spend as well.
5. A client delivered a significant campaign brief three days before Christmas and demanded a detailed response the first week of January. A note explained that there wouldn't be an opportunity to discuss the brief or handle any questions, as the client was going to be on holiday for two weeks.
The bottom line is that bad behaviour comes at a price. All of the examples above will either disincentivise their agency to invest time and effort in the brief or will simply ensure the client gets the minimum amount of work that the contract allows.
Every time a client behaves consistently badly, they are leaving media value behind.
This article was originally published on MediaTel's NewsLine on 8-Apr-2014