How to Know When It’s Time to Change Ad Agencies

  By Marcos M. Sanchez – Managing Partner – Princeton10, LLP

Recent industry surveys suggest that more than half of marketers are considering switching advertising agencies. In the perfect world, a marketing team and its agency (or agencies) provide mutual value in a long, healthy, fruitful relationship. A company’s ad agency can be an important extension of its own marketing team, and ad agency continuity can be valuable especially when marketers hop jobs every few years. However, just like human relationships, client-agency relationships can occasionally dematerialize to the point where both parties need to explore other options. In just the past year, a number of major advertisers have initiated agency reviews – including BMW, McDonald’s, Mars, Dunkin, Microsoft, and Nordstrom.

Before switching agencies, it’s important that both the client and agency take steps to build the health of the partnership or “reboot” when things get bad on either side. But, there are some tangible “lead indicators” that may suggest it’s time for a marketing team to find a new agency.

The Agency Stops Challenging

When an agency is new, its employees are hungry for information about a client’s business and eager to challenge and elevate their client’s marketing mix. However, over time, agencies often begin to do what the client says, rather than provide them what they truly need to drive business goals. An agency’s job is to appropriately challenge a client’s direction, and make a business case for exploring options a marketer may not have considered. Unfortunately, agencies sometimes have strategists who disagree with a marketing team without sufficient knowledge about the market. Then, the agency’s strategists roll their eyes and say the client “doesn’t get it.” After a while, an agency’s account team may decide not to bother, and begin passively to take orders from their client. If a client is challenged too much, of course, it can be irritating, but if the client is challenged too infrequently, she/he may well not be getting the most from the partnership.

Financials and Performance Metrics are “Black Box”

A good advertising agency is transparent about spending and performance. The fact is an agency is only worth what it achieves for its clients. So, when it comes to media investments or any client-agency investment, the client should know what’s spent, what they got for it, and what the agency pockets. I had a client once tell me a story about how he asked Google how much his brand spent on paid search and then asked his agency at the time the same question. The answers were radically different, and the client learned that his digital agency was outsourcing the media to a performance-based vendor who kept more than 30 percent of the media spend.

Agencies, proactively, need to provide regular communication about the fee “burn rate” related to work, so a client knows what activities are “cost drivers” of fees or “out of pockets.” When a client is surprised about a completed project’s cost, or a monthly invoice, then an agency account executive is not being sufficiently transparent and proactive.

Your Team Stops Bringing Innovative Ideas

One of the most frequent reasons clients put their work “out for bid” is because their agency isn’t bringing new ideas. A sign of a healthy client-agency partnership is when the agency’s people continue bringing fresh thinking, even if they can’t be acted upon immediately. The agency model is effective when its employees are staying ahead of the curve and sharing best practices across accounts. Sometimes agency people have worked too long on a specific account, and stop providing the fresh perspective they’ve been hired to provide. And when agencies get apathetic, a client stops improving, and business results, in turn, suffer, thus validating the situation. The proverbial “agency graveyard” is strewn with agencies that failed to adapt to changing market conditions and saw a slow, steady erosion of their business until they no longer existed.  

The Team is Passive on Performance Metrics

An easy way to know that your agency is taking you for granted is when it fails to proactively report on performance. Bi-weekly reports become monthly, and eventually, the agency claims to be “saving fees” by moving to infrequent metric reports. A client needs to know how its brand(s) is/are tracking and have the confidence that its agency is optimizing precious marketing budgets. It’s an agency’s responsibility to report performance whether it’s positive or not. Too many agencies try to make clients feel good about brand performance by comparing it to “industry benchmarks” that don’t apply. If a client is having to demand reports or wait too long, it may be an indicator of bigger problems.

You Don’t Hear from the Agency’s Leaders

Few things are as telling as when an agency’s leaders stop checking in on a client. This tells clients they aren’t important, or the agency is taking them for granted. Perhaps, the account is too small for the agency, or the leaders are busy pitching new clients. This “check-in” is important because the relationship needs an escalation point, where a client feels safe to express concerns about their day-to-day team. That said, a visit from an agency leader needs to be valuable. I’ve seen too many agency leaders scheduling calls with the client, and the client finding them a waste of time. This is especially true if the agency’s leader isn’t up to date with the brand, or even thinking about it.

You Don’t Look Forward to Meetings With the Agency

I encourage clients to ask how they feel when they’re preparing to meet with their agency. Are they excited and looking forward to what could be the best part of the day? Or, are they already prepared for a battle? If client-agency meetings are frustrating or dull, the partnership may be suffering.

Now, none of these signs individually mean it’s time for a change, and open communication can help resolve a partnership before a switch is necessary. After all, there are switching costs to bringing a new agency up to speed, never mind the effort to consider new agencies. Nonetheless, sometimes it’s in the best interest of a client, and an agency, to part ways.