The New Advertiser-Agency Paradigm

One of the lesser noted results listed in the K2 Media Transparency Report's Executive Summary is "evidence of a fundamental disconnect in the advertising industry regarding the basic nature of the advertiser-agency relationship."  K2 found that while advertisers believed their agencies to be "duty bound" to act in the clients' best interest, some agency executives said their obligation was solely defined by their contract. Some agency sources even admitted to conflicts ("sometimes") between the interests of their Holding Company and the interests of their client. Is there any wonder that the Advertiser Perception study also reported that 34% of the respondents were losing trust in their agencies?

One can point to K2's report as the catalyst of this relationship change. While the advertiser community may be slow to admit its impact or even closely examine its findings, one can surely trace the multiple and large scale reviews of late to this industry revelation. In a media agency contract, the issues of cost and transparency should be negotiable elements along with deliverables, processes, audits and any number of other elements unique to each client. Indeed, in one form or another these items have always formed the foundation of virtually every smart, strong advertiser-agency contract. Surely, cost and transparency have a role in the latest flurry of reviews but they are only contributing factors to the overall game changer: Loss of Trust.

Many clients would prefer a root-canal to an agency review. However, like a root-canal, one does what's necessary for good health. In this case, it is the health of the business. Clients pay their agencies to provide a service. Clearly, a mutually beneficial relationship serves in the best interest of both parties, but if there is any imbalance, generally the client triumphs for obvious reasons. As we all know, there are also some clients who don't ask and don't care about agency benefits beyond the fees they receive.

Some agencies have pointed to opt out paragraphs in their client contracts allowing them the flexibility to buy media as principals or limiting client audits to the media agency level. Some client attorneys, unfamiliar with advertising terms or their impact, may have unknowingly agreed to these paragraphs in the past but choose to re-visit them now. The K2 report has served to enlighten advertisers about the need to protect their own interests -- something their agencies learned years ago. And, while the concern is understandable from agencies that have benefited from their clients' former laissez faire attitude, it should also be understandable that their clients are now better informed and more willing to consider alternatives.

Some agencies have defined the parameters of their client relationships solely by the language of the contract. Now that their clients have learned the difference between an agency partner and a business partner, they are taking action to protect their interests. It seems clients have learned that trust without oversight may lead to misuse. Maybe agencies should be concerned.

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