Flurry of Account Reviews Reflect Major Changes for Agency-Client Relations

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By John Wolfe

In 1971, the great Motown singer-songwriter Marvin Gaye released his era-defining anthem “What’s Going On?” The song referred to the explosive events of the era, particularly the Vietnam War and the civil rights movement. Fifty years later, against the backdrop of racial and ethnic reckonings and a global pandemic that has gripped the U.S., it’s not too much of a stretch to ask the same succinct, penetrating question: what’s going on in marketing, advertising, and media as brands and organizations embark on the post-COVID era?

Changes and uncertainty abound. Marketers, agencies, and media outlets are all struggling with how to tackle the issues that have taken on newfound urgency in the past 18 months, including ethnic diversity, consumer privacy, and cultivating talent. These and other challenges are perhaps most vividly represented by the striking number of agency reviews, consolidations, and overall account changes in the past few months.

Since April, marketers representing billions of dollars in ad spending have either changed agencies or put their accounts in review. The list includes such mega brands as Coca-Cola, Unilever, Facebook, The Home Depot, Hershey’s, Walmart, Nestlé, Daimler AG, and Jet Blue. Coca-Cola and Unilever alone account for more than $4 billion in ad spending, according to Business Insider. In late May, pharmaceutical giant Eli Lilly, whose brands include Prozac, kicked off a media review, with at least four major holding companies expected to pitch for the account.

Indeed, nearly one-third of U.S. brands are contemplating changing their ad agency in the next six months, according to a survey released in mid-April from marketing matchmaker firm Setup.

Industry observers say there are several reasons for the tumult, ranging from the impact of the pandemic to the growing demand among brands for diversity to the ever-changing world of online marketing.

“E-commerce, customer experience, diversity, equity and inclusion, and purpose are some of the things that have grown in importance for clients as they grapple with the fallout from the pandemic and racial unrest,” says Matt Kasindorf, SVP of business intelligence and insight at the 4A’s.

Avi Dan, founder and CEO of agency search consultant Avidan Strategies, agrees. “Marketers are seeking a different type of agency today — ones that are more versed in digital content and data, not just TV commercials,” he says. “There’s more emphasis on data and technology, and on a faster conversion to e-commerce and to streaming TV.”

Traditional Agency Reviews Are Done

The proliferation in the number of both client and agency teams working from home instead of the office in the past year has spurred profound changes in the agency-client relationship.

“From a purely operational standpoint, companies are obviously taking a harder look at workplace and talent flexibility given the ability of teams to work remotely online,” says David Beals, president of search consultant JLB + Partners. “Marketers are starting to realize that they can offer greater flexibility to their workforce and can also solicit and hire the right talent for their business, even if that talent works from a different location.”

He adds that companies are also grappling with how to reconfigure their office space as the last year and a half has demonstrated that people are just as productive (if not more so) working from home and interacting with colleagues online than from the office.

In the “new normal” of post-COVID, it’s also expected that the traditional agency review process will go the way of the dinosaur.

“The previous era of large formal reviews, where there were multiple face-to-face meetings with agencies involving lots of time out of the office and travel expense are likely a thing of the past,” Beals says. “We believe there will be a return to some in-person presentations — likely final pitch presentations prior to the agency decision — but a lot of prior ‘meet and greet’ and credentials meetings and interviews will be held online.”

“This is a pivotal moment for clients to chart their own path and establish an essential role in the renewal of people’s lives as they emerge from their homes and into an increasingly open world. If they don’t, they run the risk of irrelevance, from which there is often no return.”
— Suzanne Powers, global president and global chief strategy officer at McCann Worldgroup

Joanne Davis, president of Joanne Davis Consulting, says pitch meetings will also take on new characteristics. “We encourage our clients to have more touchpoints as a surrogate for the inability to meet in person, over a meal,” she says. “We also see a new normal of limiting the number of participants. In the old days, another 10 junior marketers could sit in the back of the conference room to observe and learn, but it’s hard to see anyone’s expression on a video call if the number of attendees results in three dozen postage-stamp size photos.”

Suzanne Powers, global president and global chief strategy officer at McCann Worldgroup, says the pandemic has taught marketers that their brands need to appeal to consumers differently than before the outbreak.

“Another lesson we’ve learned is that every brand is — or has to be — a wellness brand, whether that wellness is physical, emotional, mental, financial, societal, cultural, global, etc.,” Powers says. “This is a pivotal moment for clients to chart their own path and establish an essential role in the renewal of people’s lives as they emerge from their homes and into an increasingly open world. If they don’t, they run the risk of irrelevance, from which there is often no return.”

Brand Expectations Changing Fast

Appealing to consumers’ sense of “wellness” is not the only societal change stemming from the pandemic that will impact agency-client relations. The racial unrest that erupted during 2020, for instance, has also led to changes in the agency-review process.

“This past year’s events will lead marketers to increase and monitor their own internal goals for minority-owned business hiring and their guidelines for their external agency’s contracting of minority-owned businesses,” Beals says. “They will also increase their expectations for their external agencies’ hiring and account staffing to reflect greater diversity.”

The 4A’s Kasindorf says: “It is easy to envision a situation in which a marketer calling a review mandates that BIPOC-owned (Black, Indigenous, and people of color) agencies be identified for consideration before the review gets underway.”

He adds, “We hear more marketers are including agency diversity, equity, and inclusion (DEI) questions in initial RFIs (request for information) and RFPs (request for proposal), and media agencies are being asked to explain their investment strategies and approach related to diversity, equity, and inclusion.”

McCann’s Powers emphasizes that when it comes to improving DEI, agencies and clients must work collaboratively to make significant progress.

“Elevating and improving DEI is a collaborative effort between client and agency partners and both are on equal footing when it comes to implementing change,” she says. “It starts with taking a leadership position and following through with deliberate actions and consistent behaviors that ingrain DEI into every aspect of the business.”

In fact, there has been a flurry of recent moves showing momentum on the DEI front. For example, Hyundai Motor America recently hired Culture Brands as its African-American agency of record, and Popeyes Louisiana Kitchen announced that it will give preference to ad agencies that are committed to improving their diversity.

HP, which has formally tasked its agency and marketing partners to bolster diversity for the last several years, recently announced a series of goals to drive a more diverse, equitable, and inclusive technology industry, encompassing HP’s partners and vendors.

On the agency side, a slew of holding companies, including Dentsu, IPG, and GroupM, has vowed to make a concerted effort to increase their clients’ media investments in minority-owned media companies.

While the current actions regarding diversity, vis-à-vis agency-client relations, are encouraging and progress certainly has been made throughout the years, there’s a lot more work to be done.

“There was a time when perhaps my own name was one of the more ethnically diverse ones in the industry,” says Hasan Ramusevic, CEO of marketing consultancy Hasan + Shumaker. “Women were almost never in the C-suite, people of color were nowhere to be found, and I had gay friends who played it straight just to have a career. While there’s clearly a long way to go, I think it’s important to acknowledge that [the] industry has morphed into a better version of itself over time, and I believe the proactivity has accelerated greatly in just the last two years.”