The agency relationship is broken. MRM's Marc Fleishhacker discusses how it can be fixed -- or whether to scrap it altogether.

"You might want to fire your agency and not hire a new one." 

One might imagine these would be fightin' words in a roomful of marketers, particularly in the eyes of the agency folks. But in fact, these words came from the lips of an agency leader. To a roomful of brand marketers. And he meant them.

"I think this is a very critical time in our industry," said Marc Fleishhacker, EVP and GM of MRM New York, during his keynote address at the iMedia Brand Summit in Miami, Fla. "I do believe the agency relationship is broken."

So what's the first step in getting things back on track? First, get your head out of the sand, Fleishhacker said. Recognize that there's a problem, and understand why.

Consider these stats:

• 46 percent of clients have been engaged with their agencies for two years or less.
• The average CMO tenure is 28.4 months.
• Agency attrition averages 20 percent per year.

Given the volatility in the agency relationship -- where change is a constant -- much emphasis is placed on the procurement process. But the procurement process is bizarre, Fleishhacker noted. Brands call up agencies they don't know and ask them to fill out strange and extensive questionnaires. "RFPs land on my desk like leaves in the autumn, and I'm not sure how they help our clients choose us as an agency," Fleishhacker said.

And when brands do finally make that choice, they make it based on the team of agency representatives who were scraped together to pitch the brand -- people who had to neglect their existing clients to scurry for the new business. Can brands reasonably believe that this team of already-swamped individuals will actually be the people working on their brand day to day? Unlikely.

Likewise, in an environment where cost pressure is the new black, brands need to consider what hiring an agency really means. "If I pay somebody $100,000 a year to come work in our agency, I'm going to charge you $250,000-$350,000 a year for that person," said Fleishhacker, citing what he said is the standard markup. "I have to. I have to cover the overhead."

So if brands are going to pay 2.5 to 3.5 times the value of something they could conceivably bring in house, there better be a damn good reason, Fleishhacker said. And in some cases, those reasons are getting harder to come by.

"I think we need an intervention," Fleishhacker said. "We're trying to figure out what the future model is going to be and how it's going to work."

And that's where the choice comes in. Do brands need to fire their agencies and not get new ones? Possibly, Fleishhacker said. But before they do, they need to consider whether they're prepared to do three things:

1. You have to hire the talent.
2. You have to fix your environment to make it one where marketers can thrive.
3. You have to adjust your company culture accordingly. 

None of the above is an easy task. So what's the alternative?

"We have to stop this 'kick every supplier around' approach," Fleishhacker said." You need to find a way to actually get these people to do great work. Otherwise, these people will begrudgingly work." In other words, he said, treat your agencies as partners.

"Let's change the way we're working," Fleishhacker concluded. "I'm making a plea on behalf of the advertisers of America to try to fix this relationship."

Lori Luechtefeld is editor of iMedia Connection.