Only 41% of marketing executives rate their current happiness with their ad agency an 8+, on a 1-10 scale, but 62% say they still would likely use their agency again (with 62% rating an 8+ on the 1-10 scale), according to a survey from by Reardon Smith Whittaker (RSW).
These results suggest that willingness to hold on to an agency is most likely driven by a feeling among clients that their agency’s performance isn’t bad enough to justify termination – especially in light of the large amounts of time, effort, and energy involved in changing agencies, RSW said.
The survey, which was undertaken to determine the overall level of satisfaction with agencies and trends in the industry, also found that a key challenge for agencies in maintaining client happiness is keeping the “fire burning bright” – after the initial win. Only half (50%)? of clients say their agency’s performance actually matched up with their expectations when the agency was first hired. These low ratings are a function of a lot of over-promising during the pitch phase or just general waning enthusiasm on the part of the agency and marketer after the “marriage,” RSW reported.
Additional survey findings:
- The overall tenure of agencies has remained flat since 2006.
- Marketers are not afraid to make changes if things aren’t going their way and many seem to enjoy it. A significant number of respondents say they either “look forward to it” or “find it exciting” when looking for a new agency.
- Skepticism about what marketers feel they can expect from agencies appears to be a growing trend, RSW said. Over the past three years, there has been a steady increase in the number of marketing clients who feel uneasy with the agency world.
- Only 18% of clients say they have some kind of pay for performance program in place (as compared with 23% in 2006). However, while this type of model may not be taking hold, marketing clients are shifting to digital mediums where success can more easily be tracked (e.g. click-through rates, acquisition rates for e-campaigns).
- Issues related to “strategy,” “creative,” and “being proactive” were all top areas that marketing clients said were key deficiencies that trigger reviews.
- 61% of clients say three to four is typically the number of agencies they consider when conducting a review.
- There is a decline in the percentage of companies stating that they have an approved list of agencies from which they can choose. Only 18% of marketing clients state that this is a process that their company follows. This compares with 23% stating they had an official roster policy in 2007 and 22% in 2006.
- 24% of marketers said they had a procurement specialist involved in the review process. Though this is not significant growth over last year (21%), this number might increase in light of mounting ecomomic pressures.
The aspects of new business pitches that are most critical to clients in deciding whether to hire an agency are an understanding of the company and the market, and the quality of the creative:
- More clients are seeking specialized services to address their needs. This is consistent with the three year trend – where there is an apparent decrease in the number of “full service agencies” being assigned business among the clients sampled since 2006.
- In terms of types of specialized services, the majority of clients are particularly interested in digital.
About the research: The 2008 Client’s Perspective on Agencies was completed by 184 key marketing decision makers from across the US during November, 2008. This study was commissioned by RSW. The sample came from RSW’s database of decision makers each with marketing budgets estimated to be in excess of $1M per year. Some of the larger companies represented include Citibank, General Mills, Hoovers, Abbott, IBM, Alberto, Bell South, Heinz, Bayer, Dunkin Donuts, GE, Rubbermaid, ESPN and others.
