The evaluation process described above provides valuable feedback to both the agency and the client, such as indicating changes that need to be made by the agency and/or the client to improve performance and make the relationship more productive. Many agencies have had very long-lasting relationships with their clients. For example, General Electric has been with the BBDO Worldwide agency for over 80 years. Other well-known companies or brands that have had long-lasting relationships include Marlboro/Leo Burnett (50 years), McDonald's/DDB Needham Worldwide (34 years), and PepsiCo/BBDO (44 years). Exhibit 3-8 shows an ad run by Dr Pepper/Seven Up Inc. celebrating its long-term relationship with the Young & Rubicam agency.
While many successful client-agency relationships go on for a number of years, long-term relationships are becoming less common. A survey conducted a few years ago by the American Association of Advertising Agencies found that the average tenure of client-agency relationships declined from 7.2 years in 1984 to 5.3 years in the late 90s.25 In recent years a number of long-standing client-agency relationships were terminated. Levi Strauss & Co. terminated its 68-year relationship with Foote, Cone & Belding, of San Francisco, in 1998 when it transferred its U.S. jeans account to TBWA/Chiat/Day. However, just three years later the company moved the account to Bartle Bogle Hegarty, the agency that handles its advertising in Europe.26 In 2002 Saturn Corp. ended its long relationship with Hal Riney & Partners, the agency that had been with the automaker since its debut in 1990, and moved to Goodby Silverstein & Partners, San Francisco.27 IMC Perspective 3-3 discusses how Gateway has changed agencies four times in the past 10 years.
There are a number of reasons clients switch agencies. Understanding these potential problems can help the agency avoid them.28 In addition, it is important to understand the process agencies go through in trying to win new clients.
Why Agencies Lose Clients lose clients follow:
Some of the more common reasons agencies
• Poor performance or service. The client becomes dissatisfied with the quality of the advertising and/or the service provided by the agency.
• Poor communication. The client and agency personnel fail to develop or maintain the level of communication necessary to sustain a favorable working relationship.
• Unrealistic demands by the client. The client places demands on the agency that exceed the amount of compensation received and reduce the account's profitability.
• Personality conflicts. People working on the account on the client and agency sides do not have enough rapport to work well together.
• Personnel changes. A change in personnel at either the agency or the advertiser can create problems. New managers may wish to use an agency with which they have established ties. Agency personnel often take accounts with them when they switch agencies or start their own.
• Changes in size of the client or agency. The client may outgrow the agency or decide it needs a larger agency to handle its business. If the agency gets too large, the client may represent too small a percentage of its business to command attention.
• Conflicts of interest. A conflict may develop when an agency merges with another agency or when a client is part of an acquisition or merger. In the United States, an agency cannot handle two accounts that are in direct competition with each other. In some cases, even indirect competition will not be tolerated.
• Changes in the client's corporate and/or marketing strategy. A client may change its marketing strategy and decide that a new agency is needed to carry out the new program. As more companies adapt an integrated marketing communications
© The McGraw-Hill Companies, 2003
Was this article helpful?
You won’t want to miss this. Get Paid Taking Surveys In Your Spare Time. I know what you’re thinking, ‘Oh great, another get rich quick scheme’. WRONG! This is your guide to making money from home by participating in paid surveys on the internet.