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The concept of partnership is flawed for advertisers and their agencies

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This post is by Darren Woolley, Founder and Global CEO of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

A marketer told me they were looking for an agency to partner with. I had heard this many times and I thought it was just another empty use of the word ‘partner’. Agencies will often say they partner with their clients. So I ask, when their clients make a loss, does the agency offer to pay back the fees to their clients so they make a loss too? Not usually.

In this case the marketer was actually serious. They wanted to appoint an agency who was willing to directly link the agency’s success to the marketer’s success. This has been something we have promoted and championed for many years. Here was a marketer that actually wanted a partnership but this is the exception and not the rule.

Paying for a service

Even under the old media commission system the agency was not a partner of the advertiser. They were an agent. Just like a real estate agent or a travel agent, you do not think of either of these relationships as partnerships. The agent is someone who gets paid based on the amount transacted.

The most common model today is hourly rates or retainers. It is a fee for service. Just like an accountant or a lawyer or a tradesman. And again you do not think of these people as a partner. They may be a trusted adviser or a professional service or a skilled worker, but they are not your partners.

So why is the concept of a partnership so well established between agencies and their advertising clients?

I remember Ian Alwill believed it was because agencies and their clients co-created the advertising in partnership. Partnership reflected the way the agencies and advertisers worked together.

A business relationship

At the core of this relationship is a business relationship. Under the media commission model the financial relationship was secondary. The finances took care of themselves under the commission agreement. With the new model the financial relationship is front and centre.

By way of demonstration, under the old media commission, if an advertiser asked the agency to crawl across broken glass they would get down on their knees and start crawling because they knew they would be well compensated next time the advertiser paid their media bill.

Now under the hourly rates, the agency would work out a quote for the services, time and resources to crawl over the broken glass and wait for approval of their compensation until they did another thing.

It appears that in the past advertisers may have confused a willingness to do what was asked without payment a demonstration of partnership. If this behaviour was supported by language about the partnership like “your success is our success” then it is understandable as to why this would be so.

But the current model reminds advertisers every day that the agency is simply there to provide services for a fee. There is no longer an opportunity for the agency behaviour to be confused with partnership. It is definitely a commercial transaction of fee for service.

Partners or Suppliers?

Back to the marketer who wants to find a partner. In discussions with the agency they were all excited by the idea of a client wanting a partnership. That is until I explained what this actually means. Then the enthusiasm waned.

It appears that agencies too have mistaken what partnership really means. They are happy to have a partnership with their clients as long as it does not cost them anything. But as Louis B. Mayer once said “A principle is only a principle when it costs you money”.

If agencies want to be partners then they need to accept the principles of a partnership, which is they share in the successes and the failures. If marketers want their agencies to be partners then they need to remunerate the agency based on sharing the success with the agency and have the agencies share the burden of failure.

Until then to use the term “partners” is misleading. It infers a depth of relationship that does not exist and has never existed in the commercial relationship between advertisers and their agencies.

 

To find our how TrinityP3 Marketing Management Consultants can help you further with this, click here.

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Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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