How agencies can build stronger client relationships and win more new business.
If want to know what irks CMOs the most about ad agencies the recently released Gerson Lehrman Group, GLG Councils Report —“Closing the CMO / Agency Gap: How Agencies Can Win Business and Build Stronger Client Relationships,” provides some excellent insight.
This report is based on a survey of more than 80 senior marketing executives. It analyzes the disconnect between client expectations and the performance of marketing services agencies.
This study was designed to help agencies better understand how marketing executives view their agency relationships and how they make decisions on engaging an agency.
The relationship between agencies and their corporate clients is more important now than ever before and needs fixing. As Founder of The CMO Club, I constantly hear from CMOs in the club about their challenges and concerns, particularly regarding the gaps in their agency relationships.
Right now, there is a considerable gap between the service CMOs receive from marketing services agencies, and the service they expect and need from them. Pete Krainik, Founder of The CMO Club and Member of the GLG Councils
What about their current ad agency irks CMOs the most?
More than half (51%) of the respondents reported that agencies did not have sufficient industry knowledge and clients felt their agencies had not conducted sufficient research.
Research on a prospective client’s market and business strategy is critical:
- 79% of respondents said they decided against hiring an agency because of issues related to the agency’s understanding of their business, market, or how they could add value to that business.
- 91% of respondents listed the above three factors as the most important components for making a decision about engaging a particular agency.
CMOs want agencies that do their homework:
- 49% of respondents expected a marketing agency to invest at least 20 hours of research into their industry, business strategy, and product prior to a pitch.
- 88% of respondents stated that agency understanding of their industries and business was either “critically important” or “very important.”
- 52% of respondents reported the most frustrating aspect of their agency relationships was a “lack of industry or street knowledge” or “not sufficient diligence in campaign” development.
- When asked what frustrated them most about their experiences with agencies, they report, “agencies not willing to do their homework – proposing cookie-cutter solutions,” and that agencies need to have a “good understanding of the technology and positioning.”
Agencies get passed over by marketing executives for three primary reasons:
- Marketing executives strongly indicated they were either not convinced of the value of what the agencies were offering (34%)
- They were concerned the vendors did not have sufficient market insight (26%).
- The third ranked reason agencies were not chosen, “not understanding needs” (19%).
Gap between client expectations and agency services
Clients are dissatisfied with the level of business and market knowledge that agencies possess, both during the pitch process and throughout the relationship. A significant gap exists between what marketing executives expect and what agencies offer. The gap is caused primarily by inadequate research on client strategy and market.
Developing and demonstrating this knowledge is key for agencies that want to secure new business and maintain a strong existing relationship with their clients.
Click Here – to download the full report
Additional articles that may be of interest:
- How Well Do You Really Know Your Advertising Agency?
- IBM Study: The 4 key challenges that CMOs everywhere are confronting
- 5 questions every CMO should ask a prospective ad agency
- Ad Agencies Should Be Pricing On Purpose for New Business
- Ad Agency Compensation: The biggest frustration of CMOs
- Study: The Top Five Causes of Friction in Client and Ad Agency Relationships
photo credit: xopherlance via photopin cc
The whole Client – Agency system is not healthy. The CMO position has the shortest tenure of all C level positions. Averaging less than a year at Fortune 500 Companies. So doesn’t that say the CMO often does not know their brand or market? Should they know that best? And since the CFO holds the budget strings the inability to give proper metrics hurts Advertising/Marketing. I have a Finance Degree. I cut to the numbers fast. I can tell what is fluff and BS and what is giving proven ROI. I know many activities are hard to quantify yet are important in marketing. But when every other segment of a business can show metrics to the CFO and the CMO can’t its a hard sell. And when Agencies have no incentive to save money (thus reducing their billings) you can see the problem.
Would a Media Buying Agency tell Pepsi they can spend 15% less on paid media knowing the sales will not decline if that was factual? Would a creative agency a massive account pending be honest and tell the future client their product is a dog. It can sell but don’t think its a diamond when it isn’t.
This creates a lot of tension and distrust.
Insightful comments Howie. Thanks for sharing.
Michael, I believe that I get more good industry info consistently from you and your blog than most of my resources. Another great post.
While working for a large media company years ago in sales, my manager told me that she did not want me calling on anyone in my territory until I had walked the floors of their factories, looked at their retailers and found out the smallest of facts about their business. It is good to be reminded how important industry information is to our clients. I have customers now that I need to do more of that for.
Very much appreciated Chuck. Thank you for the additional insight. I’ll use the story of your sales manager. That advice was very smart.
Excellent topic and insights Michael. In my opinion the #1 skill every ad or marketing agency must possess is the ability to ask good, insightful questions. The findings will drive strategic marketing decisions critical to the clients business. But in all fairness, it takes two to tango. I submit the flipside is the #1 issue with CMOs and their staff including the sales team is failure to completely share their insights, research and confidence with their prospective or current agency. This stems in part from a vendor based perception of the relationship instead of a strategic partnership. This is compounded by the #2 issue, unrealistic client budgets. The digital age has created an illusion that since everything is online, free and accessible, marketing budgets can shrink too. Wrong. They may need to shift to smarter messaging and media. Done well it is more measurable and effective. Sadly the greater likelihood is that if an agency needs research funded, better bury it in the creative budget because theres a good chance the CMO or someone on the staff is trying to score points by how much they squash “frivolous” costs. And if it’s a pitch (which is a questionable agency practice if you follow Blair Enns) only participate if the client answers a comprehensive battery of questions.
What is getting in the way a lot of the time? Simple ego and arrogance. In my observations the successful CMOs and their staff who park that elsewhere are better able to focus on the character as well as capability and performance of the agency they choose. A proper match leads to multiple fold ROI over what they would get if they did not.