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Rethinking the agency-of-record model

Rethinking the agency-of-record model Michael Estrin
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This June, Crispin Porter + Bogusky got an early Christmas present from Gap when the clothing retailer went around Laird & Partners, its agency of record since 2002, and selected Crispin to handle its holiday campaign -- a huge deal when you consider that holiday shopping is often make or break for retailers like Gap.


Although the decision to bring in an extra agency -- one that undoubtedly has its hands busy making Microsoft look cool -- is likely the result of internal business decisions, it highlights an increasingly common reality for brands today, namely the need to work with multiple agencies. But that need, which often stems from an increasingly fragmented and highly specialized media world, can put a strain on the traditional brand/agency relationship, and in some cases, it can even cast doubts on whether or not the agency of record is still a viable model.


While having an agency of record remains the norm, the speed and complexity of digital means that marketers are increasingly seeing instances where moving forward without an agency of record was not only possible, but beneficial.


"The idea of an agency of record is still valid, but it depends upon the industry, the client's marketing needs and the product itself," says Jeff Berkwits, a former marketing manager at Upper Deck. "At Upper Deck, we certainly [worked with an agency for] our digital needs for the "World of Warcraft" trading card game. When we launched the product, we hired an agency to 'lead the online charge.' They did an excellent job, but given our budgets, release schedule, and the changing nature of the online space, we felt that on an ongoing basis we could do an equally effective job in-house."


According to Berkwits, that in-house strategy lasted for about two years, with Upper Deck handling the traditional duties of the agency of record. While it meant additional work, Berkwits says the in-house approach allowed Upper Deck to better exploit faster-moving marketing channels, such as social media. However, the in-house strategy eventually came to an end, in part because of "explosive growth in the MMO space and the "World of Warcraft" brand," which eventually led Upper Deck to return to an agency of record to handle the increased workload.


But there are some brands that handle the duties of an agency of record entirely in-house, without exceptions. Smaller and newer brands, many of which advertise exclusively online, often report forgoing the agency of record model altogether, choosing instead to farm out creative projects to a handful of smaller shops, handle media buying in-house, and task specialty agencies with one-off assignments. 


But that has raised doubts at larger brands, many of which have complained that their agencies aren't able to handle the dizzying array of platforms presented by digital. That backlash has made the brand/agency relationship an increasingly murky and uncertain stew, and it raises serious questions about where big, bold ideas are to come from, and more importantly how brand managers can get the most out of that relationship as the notion of the agency of record transforms to meet the challenges of the digital age.


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Who's responsible for the big idea?
While the client will always have final say over what each of its agencies is supposed to do, the so-called "big idea" is increasingly becoming a jump ball, says Gaetan Fraikin, who helms Audacity, a branding agency that has worked with a range of technology clients that includes Samsung, Motorola, Siemens, and Sony, among others.


"For a long time, the privileged relationship between a brand and agency of record expected all brand innovation from the lucky agency," Fraikin explains. "Great results have been achieved, but adverse effects were also often observed [such as] status quo and brand dilution from design by committee. Today's brands should be open to additional independent sources, who are not as dependent on 'pleasing' them by telling them what they want to hear."


But where Fraikin sees a fissure, marketing consultant David Wiggs, president of Hitch, doubts the long-term viability of the agency of record concept.


"I really think agency of record is a thing of the past; although I am taking a client through a search right now who is in the market for a long-term relationship -- that relationship will start with a project," says Wiggs. "It's up to the agency to develop the business through smart, strategic work and in collaboration with the client if there is to be a long-term engagement -- the client certainly has no plans of turning over the marketing budget to start; the agency will have to earn it."


But "earning it" may never mean holding that agency of record status, according to Wiggs. Rather, the present and future model for strong brand/agency relationship is one of long-term partnership without the complacency that often comes with the agency of record title. It may sound like a petty distinction, however, the lack of a formal and familiar title often creates an obvious tension between agencies and brands because job security will never truly be there -- a fact that may hamper creativity.


"Agencies don't do their best work if they're always looking over their shoulder," Wiggs explains. "Client and agency, whenever possible, should enter into a relationship as a long-term proposition."


But no matter what the terms of the brand/agency relationship are, ideas are going to come from all directions, and that means brand managers need to understand how to get the most out of competing firms.


How to take ideas from all corners
According to Wiggs, one absolute must for brand managers working with multiple agencies is honesty. While a long-term relationship is ideal, brand managers who have one-off assignments need to be upfront with agencies when a project won't lead to future business.


But brutal honesty isn't enough, according to Adam Kleinberg, CEO of Traction, who relates a recent insight gleaned from watching two brand representatives express very different, but honest, approaches to their agency relationships.


"There was a panel at ad:tech called 'What brands really want' earlier this year. On it was a digital marketing guy from Vonage," Kleinberg says. "The Vonage guy was actively pitting his agencies, and even publishers, against one another. His attitude was, 'I want the best ideas and I'll buy from whoever brings it to me.' Next to him was Doug Chavez, head of digital marketing at Del Monte. His approach was, ‘I want to see the best ideas. Please call my agency of record so they can determine if it's right for our strategy.' Who do you think is getting more value out of their agency partner? I'd put my money on Doug."

That's a sentiment shared by John Padgett, who worked for Coca-Cola and Universal McCann before becoming VP of media at the Hauser Group.


"Some clients love to watch their agencies battle it out, thinking the best ideas come from that kind of environment," Padgett says. "But more so today, a client who establishes safe environments, limited politics and BS, mutual focus and collaboration, clear roles and responsibilities, opportunities to brainstorm cross-functionally, and incentives to achieve those ends will be successful in getting great work. Finding the common ground for mutual success among all participating agencies is needed and can't be left to the agencies to work through."


Can a brand really fly without an agency of record?
If getting the most of your agencies means harnessing the power of collaboration to bring about an environment where the big idea can come from anyone, it would seem that a brand has two clear choices. On the one hand, it can use one agency (perhaps calling it an agency of record) to lead all other agencies. On the other hand, the brand can choose to forgo the agency of record and instead manage its agency teams directly.


While either approach may lead to a collaborative environment (since the dawn of digital, agencies have come a long way toward working together) brands that opt to go without an agency of record run the risk of forfeiting the strength of a knowledgeable partner capable of thinking about the client's strategic interests, according to Mark Wollney, EVP of Aspen Digital.


"The concept of an agency of record remains vitally important for major advertisers and marketers," Wollney says. "Agencies of record provide continuity, stability, and efficiencies that one-off, ad hoc, or project partners simply can't meet."


But Wollney concedes agencies no longer have the monopoly on good ideas, and marketers are becoming increasingly aware of the fact that strong concepts -- even ones that speak to the brand's core principals -- can and should come from venders that aren't necessarily the agency of record.


Unfortunately, getting that kind of participation from agencies that aren't in the running to own the account, may run headlong into an economic reality, according to Kleinberg.


"The notion of an agency of record that drives the strategy and the brand is more vital now than ever," he says. "But traditional agency revenue models where money is made on production and media commission is waning. As an agency, I can't be a strategic partner tasked with helping my clients make sense of the media landscape and have a vested interest in selling them banner resizes for $2,000 a pop."


And that means that someone ultimately must take responsibility for the brand's strategic vision, whether that entity holds the title of "agency of record" or not. But who that entity is, may just be a matter of style, according to Howard K. Brodwin, managing director at Team Marketing Systems, a consultancy that specializes in brand development.


"I think that's really more of a corporate culture issue than anything else. Large, multi-national brands feel more comfortable having an agency of record to turn to for everything," Brodwin says. "Maybe it's the 'Wal-Mart of marketing' approach -- everything you need is under one roof, it's safe, it's convenient, the prices are good and there's always a familiar face to greet you at the door. But I don't feel it's necessary for all brands."


"Having been on both sides of the table, I think having an in-house team that works with specialty firms can be more effective," he continues. "You need people on the inside who understand what marketing is and how it works, and who live, eat, sleep your brand. These are the nuts-and-bolts people who will move your business forward. They're the CMOs of tomorrow, but today they're trying to prove themselves and (hopefully) trying to learn as much as they can about marketing."


Michael Estrin is a freelance writer.


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Michael Estrin is freelance writer. He contributes regularly to iMedia, Bankrate.com, and California Lawyer Magazine. But you can also find his byline across the Web (and sometimes in print) at Digiday, Fast...

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Comments

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Commenter: Daniel Flamberg

2009, August 25

You make a good point.

But agency work is 90% perspiration and 10% inspiration. AORs provide the 90% by managing the zillions of details, attending countless meetings and hand-holding clients day-to-day, managing assets and measuring results. Some can also come up with big ideas, too!

But the mix of big ideas versus day-to-day execution still favors having an AOR -- one throat to choke.