The Fiscal Cliff and Agency Reviews.

Like all of you, I’ve been following the news about the fiscal cliff negotiations in Washington, DC. Not because I can do anything about it. Not because it is riveting storytelling and drama. Rather, I’ve been following this news because whatever is decided will have a significant impact on me, my family and my industry.

Oddly enough, I kind of feel the same way about the recent spate of media agency reviews. As much as you hear statistics today that the average tenure of a head of marketing is 22 months, you are now hearing that the average tenure of client and agency relationships is shrinking from its historical 10- and 15-year relationships to something closer to those marketing executive tenures.

Virtually every week, you read in the trades that another agency is being put in review and another 10-year-old relationship has been terminated. As a start-up executive, I am by my nature a fan of disruption in industry. However, as someone who depends on a media ecosystem that is well-functioning, rational and willing to take risks, I also am quite cognizant of the downside of all of these reviews and their disruptions of both clients’ and agencies’ ability to conduct business as usual.

What is behind all these reviews? Certainly, many of them are just part of the ordinary course of business, with companies being diligent about getting the most value for their media investments and contractor payments. I am sure that a big part is to reprioritize digital, data and emerging technologies as part of the agencies’ remit. But I think more and more of these reviews are being driven by a desire to cut cost, margins and to get more for less. This is natural; the U.S. economy is still in a bumpy recovery and everybody needs to be thinking about costs. However, might some of these reviews actually be hurting marketers’ interests, instead of advancing them?

With massively fragmenting audiences across content, channels, media, devices and day-parts, marketers need their agencies — media agencies particularly — to help them transition their advertising and marketing activities to a fast-moving, technology- and data-driven future. They need this transformation to happen at the same time they keep all of their existing advertising and marketing programs from skipping a beat and losing sales, momentum or market impact while new approaches are being created.

Basically, marketers need agencies to change the tires on the car at 80 miles an hour. Imagine now that, at the same time, you want the driver and mechanic of that car to simultaneously drive, change tires and, given the review, resell you on all of the car’s features and value. Not easy. Even harder when the best that the driver and mechanic can hope for – if they’re permitted to still operate and transform the vehicle – is a 5% reduction in their pay and an increase in their workload.

In a perfect world, marketers and their agencies would be able to step back, share their visions of the future, recognize that operating and transforming is going to be hard, expensive and risky and that they will adjust their engagements to perfectly align their interests and motivations, hoping (imagine that) that they both do so well at helping each other that they each make massive, extraordinary profits.

I know. That’s not how it works in the procurement-driven world today. However, just as I hope and dream of rational, long-term thinking and action when I read about fiscal cliff negotiations, I hope the same for marketers and their agencies when they think about putting their relationships in review. Maybe I’m naïve. What do you think?

By Dave Morgan
Dave Morgan is the CEO of Simulmedia. Previously, he founded and ran both TACODA and Real Media.
Courtesy of MediaPost.

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