Agency loyalty

There was a time when the buying, planning and creative for any client would remain with the same agency for decades. Now agencies have to regularly re-pitch for business.

  • E-Mail
By  Tim Addington Published  May 22, 2005

|~|Rao,-Ravi-----OMD-----Gener.jpg|~|“While we have witnessed some changes coming from the locally owned businesses, multinationals do also switch agencies when they feel they are not getting the level of service, or there is a better deal to be had with another agency,” says Ravi Rao, general manger at OMD. |~|Loyalty in the Middle East’s advertising industry can be a fickle mistress. In the past, the same client would employ creative and media buying agencies for years, helping them build brands and overseeing long-term campaigns. But these days appear to have gone. With ad budgets being squeezed, and growing demands for a higher return on investment for every dollar spent, the region’s marketing directors are rethinking their creative partnerships, and in some cases looking for cheaper alternatives. Financial considerations are not the only cause of discontent. Years of working with the same client, on the same account, can lead to lethargy and a dearth of innovative ideas, strategies and creative execution. “Large locally owned family businesses have a history of changing their advertising agency frequently,” says Vatche Keverian, chief executive officer for JWT’s Gulf operations. “The worst possible scenario is that they change annually,” he adds. And it is not just locally owned enterprises that are prone to switching creative teams. In recent months Gillette has moved six of its product lines in the Middle East from Memac-Ogilvy to Leo Burnett. Media agency Starcom also recently lost Kellogg’s and United Sugar Company in Saudi Arabia to OMD. “While we have witnessed some changes coming from the locally owned businesses, multinationals do also switch agencies when they feel they are not getting the level of service, or there is a better deal to be had with another agency,” says Ravi Rao, general manger at OMD. Figures from JWT show that over a quarter (28%) of its clients stay with the ad agency for just two years or less, while only 13.1% would remain with it for between 10 and 19 years. But ad and media executives are quick to point out that while there is undoubtedly some client churn, many remain happy and stay with an agency for years. They also argue that changing agency representation often can be detrimental to a brand and hamper its development by creating mixed messages for consumers. “Local companies are realising that the relationship between a client and an agency is a partnership. The Middle East market is maturing and I would say the frequency of change has dropped dramatically in the last ten years. There is an old saying ‘before you change your agency, change your agency’. Try to affect change,” says Vatche. Zeina Mouhawej, marketing manager from Masafi Mineral Water Co, says that a long and close working relationship with an agency is highly beneficial for a brand. Masafi, which spends 9% of its turnover on advertising, has been with Team Young & Rubicam and media agency Mediaedge:cia since 1999. “We don’t have any intention to change our agency. We believe the relationship with an ad agency is like a marriage. The more you are with the person or the agency, the more you get to know them and they understand the brand. This is very healthy,” Mouhawej says. For many international companies based in the Middle East, the decision on which agency represents them creatively is often taken out of their hands. Instead, it is dictated by head offices that negotiate an all encompassing agreement with a globally recognised network that can provide media buying, public relations and event management services. Aside from securing favourable rates, multinationals are assured that the “corporate message” is the same in Riyadh, Tokyo, Johannesburg, Rio de Janeiro and New York. The level of investment and time spent building these relationships in this international network also fosters agency loyalty. ||**|||~|Keverian,-Vatche-----JWT---.jpg|~|“Large locally owned family businesses have a history of changing their advertising agency frequently,” says Vatche Keverian, chief executive officer for JWT’s Gulf operations. |~|Microsoft Middle East uses Wunderman, part of The Holding Group, as its local creative agency, but instead of generating original work for Microsoft here, its existing international campaigns are localised. “With advertising, multinationals tend to stick to one worldwide agency,” says Bahaa Issa, corporate communications manager, Microsoft Middle East. “This means the same identity, concept and design is implemented internationally. What I do here is localise. Rather than using a Chinese face on an advert, for example, we would use an Arab face, and translate the text into Arabic. It means you have different executions across the world, but there is a common look and feel to the campaign,” he explains. Many agency executives claim the alignment with an international network has helped to stabilise the market and create long lasting working relationships. “In the past your advertisers were the family businesses. They were dealers of all the big brands and the big brands were the main advertisers in this region,” says Ramzi Raad, chairman and chief executive officer, TBWA/Raad. “Advertising agencies were local with affiliations in some cases with the global network. However, the scene started to change a few years back and today you rarely find a truly independent agency. The name of the game is global alignment. And from our experience, these international clients will stay with an agency here for many years,” he adds. Any marketing director will claim that advertising, whether it be creating the ad or buying newspaper space or TV and radio spots, is an expensive undertaking. And during cost-cutting drives, unwelcome attention is focused on how much an agency charges for its creative, planning and buying services. “Cost is definitely an element to consider, but sometimes the cost can be justified if you receive excellent creative services,” says Mouhawej. “Marketers should look for the best rates available, but at the same time not compromise on quality.” Keverian adds: “The rule of thumb is better talent will give you better results, that’s why better talent costs more, and that’s why better agencies cost more.” Rao claims clients that are serious about getting their message across to consumers rarely spend time arguing over costs. “I think a large number of big clients who are keen on media don’t look at cost as the primary reasons to change their agency,” he says. “It is a factor for change, but is not, nor should it be, the primary reason for change.” When a client and ad agency work together for many years, there are also concerns that lethargy and boredem can set in, stifling creativity. “Sometimes, if you have an agency that has been working on your account for a certain period of time, they can run out of innovative and creative ideas,” says Issa. “You need a fresh mind, a mind that is not polluted with the brand itself.” ||**|||~|Raad,-Ramzi-----TBWA-RAAD--.jpg|~|“Advertising agencies were local with affiliations in some cases with the global network. However, the scene started to change a few years back and today you rarely find a truly independent agency,” says Ramzi Raad, chairman and chief executive officer, TBWA/Raad. |~|However, it is a charge that the industry rebukes. “Our business relies heavily on creative thinking, and yes you are at risk of repeating yourself or slowing down and sitting on your laurels,” says Raad. “This is where change will become necessary. It is only agencies that keep rejuvenating themselves and keep challenging themselves that survive. If you don’t change, the market will change you.” But advertising agencies are keen to stress the positives of clients remaining loyal. Building brand equity, a deep understanding of the product and its target audience are regularly touted as justification for continued cooperation by agency heads. “You need time to understand consumer behaviour in relation to the brand. Brands have to be nurtured, and to nurture something you have got to give it time,” says Nirmal Diwadkar, chief operating officer, Lowe & Partners Middle East and North Africa. “There are occasions when clients do switch agency overnight, but as I look at them, I don’t think they have built themselves much brand equity. As the market matures, clients will realise that they need to give their agency at least two or three years.” An emerging tactic being employed by many advertisers is regularly putting their creative and media buying accounts out to tender. The intention may not be to appoint a new agency, but rather to see what other ideas are out there, keep their existing team on its toes, and bring down fees. “There are certain types of companies that will have a pitch every year or two. There are pitches that always happen and you normally know which accounts they will be. They help to tighten the agency, otherwise there is a tendency to relax. Pitches help an agency become much sharper and give better delivery to the client,” says Rao. “The tender culture is more prevalent in the Middle East region, probably because the market is not mature enough. It is still a young industry and there are many local organisations that are not advertising-savvy themselves, or lack experience in true brand-building,” adds Diwadkar. But, according to Raad, while there are benefits for both clients and agencies to regularly review their relationships, some unscrupulous advertisers take advantage of the tendering process. “This system is professionally used, but at the same time, in this part of the world, it is also abused. International clients normally have a set pattern, where they will call a review every two or three years. It is at this point an agency will have to capitalise on its experience to retain the business. It is a challenging game, but an interesting one,” he says. “The same system is abused when we start looking at local advertisers, from Saudi Arabia in particular. We have seen a trend of clients calling for a review, they look at the ideas and then these ideas get stolen. This is a sad reality,’ Raad continues. However, Keverian suggests that self-assured agencies, which are confident about their creativity, should not fear the tendering process. “Certain clients, in particular government clients, will normally restrict a creative contract for two years. But if you have built a good relationship with a client, and have a good track record, then even if there is a review that agency should be in a position to win the business again,” he says. “If a relationship is not working, then both clients and agencies agree the best course of action is to sever the relationship quickly, in the best interests of the brand. “If a company is investing in the wrong agency, then they should leave quickly,” says Mouhawej. “There is no point in trying to maintain a relationship if its has broken down or is irreversibly damaged.” This sentiment is echoed by Rao. “There may eventually come a point when it is time to call it a day, whether that be from the client or agency’s perspective. It does happen from time to time, and the best way to deal with it is to accept it, move on and learn any lessons that need to be learnt,” he says.||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code