On Wednesday 8 July figures from brands and industry gathered at the Commercial Conference 2015 to explore how to work together and put long term success on the agenda.
With the average client-agency relationship now down to under three years, the IPA's Commercial Conference addressed the challenge of long-term value in a short-term world.
The way out of this cycle of short-termism - for both agencies and clients - is to focus more on the value created by advertising than on the cost incurred, argued speakers.
The conference looked at the two key areas of effectiveness and talent - maximising the value of what agencies do via the people who do it.
The most insightful parts included:
Les Binet's presentation of learnings from his seminal work, The Long And Short of It , reminded delegates of how to structure a campaign. 40% of the budget on rational sales activation for short-term results and 60% of the budget for long-term brand building.
Amongst his other recommended takeways:
- increase pricing over increasing volume
- target new and existing customers, don't just build loyalty
- the share of the market equates to share of spend
New IPA research, unveiled at the conference, revealed for the first time a cross-industry correlation between investment in talent and business success. AMV BBDO's Andrew Pinkess, who chairs the IPA's Professional Development Group, explained how clients love agencies that invest in staff.
The IPA's findings showed at almost every level, more hours spent on CPD correlates with top line growth at above peer-group average levels.
Qualitative research from Hall & Partners backed this up with findings that clients want more strategic and insightful advice from better-trained staff at agencies.The research also pointed to a theme of "Agencies are from Venus; Clients are from Mars" - clients increasingly demand hard data and facts, while agencies focus on the emotional aspects of the business relationship.
Panel comments from the Chair of ISBA's COMPAG group Deborah Cornwall reminded agencies in the room that client procurement departments demand a fact-based professionalism as the basis of any business conversation.
It was panellist Chris Hirst who best summed up the way out of the short term cycle -increased focus on business development leading to increased professionalism results in a better business relationship and better client retention.
As Event Chair Tim Hayward observed in his opening comments, commercial issues are broader than just finance. The Commercial Conference succeeded in showing the way forward to longer-term value creation by taking a holistic view of the agency business model. With a consideration of not just creativity and talent, but also the view of clients in marketing and procurement.However, the comments that most caught the attention of people on the day came from economist Noreena Hertz. The economics professor advised businesses to build a culture of dissent and diversity to challenge the status quo in a rapidly-changing world. In tune with Tom Knox's IPA President agenda of Here For Good, she cited research data showing companies with at least one woman on their board are 26% more profitable than those without.
Tom Lewis - IPA Finance Director.
At last week’s Commercial Conference, Hall & Partners shared their findings on the current state of the relationship between agencies and clients.
It provided some pretty honest feedback… clients feel agencies don’t get their world, think they just want to sell, don’t understand their business, aren’t commercially aware. Agencies feel clients don’t value them or reward them fairly.
Do we need to panic?
Mild panic or mad panic?
Well, probably a bit of both.
It’s not that what we heard is particularly new but it does bring to light the work still to be done - on both sides. And the only way we can make things better is by sharing our frustrations and agreeing to improve together.
But if we start to move away from the emotive area of ‘relationships’ and focus on what our clients customers are demanding it will put us and them in a much better collaborative space.
As Dominic Collins, CMO at L&G said, “changes in our industry are being driven by changes in customer behaviour. And only by working together to understand that behaviour and work out new solutions will we have different conversations in the boardroom.”
So what can we do? What we do know is agencies have a natural empathy with customers, when trusted really understand brands and consistently attract some of the best brains to our industry. While management consultants compete with us on many levels the draw of a creative, innovative business still brings the best talent to us.
We just need to equip our people to speak the language of the client in the boardroom now and as part of agency DNA. But our people are still our best asset and it is building relationships we do well. Creative, intuitive minds that challenge the status quo, enable us to be respected by clients. But it is probably not enough to keep us at the forefront of their businesses.Technology and innovation are driving the pace of change at a cracking rate, the challenge for both client and agency, is how to change fast enough.
We need to reshape our business model and where the panic sets in is around how quickly we can do that.
Luckily the discussion’s already begun so that can calm any nervous feelings.
Ian Priest’s ADAPT agenda started the debate by bringing together the IPA and ISBA, including Compag, to workshop a way to guide marketing, clients and agency heads to create a win-win on all sides. A set of principles were produced (including setting joint KPI’s) and now we need to start using them. http://www.ipa.co.uk/document/p-is-for-performance
Meanwhile, we have the Marketing Society keen to take the debate forward. We now need to galvanise all sides into action. As Debbie Morrison on her twitter feed said “We need a joint BIG CHANGE agenda to help clients and agencies navigate constant marcomms evolution”. What next for the IPA? Early in August some of our best minds will be gathered together to agree the next steps for action drawing on the learnings from this report and the parallels drawn for future models of agencies from our work with the Future Foundation.
Joyce Kelso - Head of Groups
Last updated 15/07/2015