The “agency of the future” has been written about, debated and discussed on conference panels hundreds of time over the last few years, but what about the “client of the future?”
Last April at the 4A’s annual Accelerate conference, Publicis Groupe CEO Arthur Sadoun brought up the elephant in the room. Everyone talks about the agency of the future, he said, but “nobody is talking about the client of the future.”
Agencies are in a sink-or-swim situation right now. They have to adapt to the changing needs of marketers and consumers; keep up with (or keep an eye on) the encroaching consultancies; figure out how to do more for less without compromising quality and more.
But marketers are in a time of flux, as well.
“There’s a push-pull happening right now in the marketing. Agencies are dealing with it, major brands are dealing with it. We’re seeing a change in the way marketing happens inside of major marketing organizations and the rules that used to apply are becoming more and more out of date,” according to Anomaly Global CEO Jason DeLand.
He added that marketers shouldn’t be reliant on agencies to do their thinking for them. “Modern marketers should and need to understand the media landscape better than anyone else,” he added.
The role of the CMO has changed over the years, with marketing leaders taking ownership of different internal capabilities and being held more accountable for results.
“My simple take on this is that the client of the future will be much more hyper-specific about what they need and therefore isn’t necessarily looking to agencies to be the monolithic problem solver,” said Howard Pyle, SVP of customer experience and design at MetLife.
Clients wouldn’t exist without agencies doing everything for them in the past, he said. Those days are over, with marketers now evaluating their own needs and deciding if they can in-house certain tasks. Going forward, Pyle said clients of the future will end up buying specific capabilities rather than outsourcing tasks.
Marissa Freeman, chief brand officer of HPE, said CMOs today have more of a hand in strategy and execution than ever before.
“There’s pressure to be data-driven, growth-driven and to forge a stronger alliance with sales, but there’s the aged-old tension between sales and marketing,” she said. “But the best CMOs are those that can speak the language of the CFO and CEO and align themselves with sales and create shared goals.”
Profits and losses rule the day, said Freeman, who has an agency background. Her agency experience makes it easier for her to understand her own agencies’ challenges and express her own issues and have the two sides work together to figure out a solution, she said.
When it comes to budgets though, Freeman thinks the dollars are not shrinking, but shifting to different areas, like ad tech and data science. However, it still affects the fees a marketer can pay its agencies. HPE works with its procurement team and outside consultants to figure out fair payment terms, which Freeman calls a “necessary evil.”
Even with dollars being moved around or fees being cut, Freeman said she’s a strong believer in paying for quality. HPE uses an AOR model, with Publicis as its lead agency, but Freeman said she handpicked the talent she wanted for the business. The brand also taps smaller shops, like Giant Spoon, for specific projects.
Complexities of the agency-client relationship
Kim Wijkstrom the CMO of OneMain Financial, said having large agency partners or AORs “may not be outdated, but it’s problematic when you’re all about billable hours and deliverables and it’s not what anyone on the client side wants to pay for.”
Smaller agencies, he believes, are more nimble and can work differently than large shops. Coming from the agency side himself, Wijkstrom said he hopes large shops figure out a model that works, “but on the client side now, I have a different pressure on me in terms of doing things fiscally responsible.”
The decrease in budgets is a way for clients to force less complexity, according to Per Pedersen, global creative chairman at Grey Group. P&G Chief Brand Officer Marc Pritchard has said multiple times that he doesn’t want to pay for the complexity that exists within agencies – he wants to invest in what will creates value for consumers.
“I think that’s what clients will have to do across the board – they shouldn’t accept complexity,” said Pedersen. “The more complex, the longer things take. We need to reduce the time and complexity dramatically, and I think agencies are capable of doing that and they will succeed.”
Earlier this year, Grey announced its move to invest 75 percent of its talent and resources into creativity.
DeLand, however, believes Pritchard’s fee-cutting exercise is the wrong method. “A truly great, valuable idea for a business is worth more than the market is paying for and it’s worth more than hourly billing rates,” he said. Anomaly’s compensation model has never included timesheets.
“If agencies are helping businesses grow, then they should be compensated for that growth,” added DeLand.
Streamlining internal complexities is also something that needs to happen on the marketing side. Pedersen said he often sits in client meetings that have dozens of people from the brand, but only one or two decision makers. “If you can’t share a pizza, then there’s too many people in the room,” he said.
Marketers should limit the number of people making calls on the brand in meetings and cut out the unnecessary extras, added Pederson. “Most CMOs have two or three layers before stuff even gets to them, and in the meantime, 50 or 100 people have been involved in your campaign and a year has gone by and then you end up with one TV commercial – it’s too complex and inefficient,” he said.
What will make a strong agency-client relationship?
A good partnership between a marketer and agency starts with chemistry, according to Arnold CEO Kiran Smith, who joined the agency earlier this year after previously serving as CMO of Brookstone.
Now, and even more so going forward, Smith said trust has to be in place. “It’s no longer going to be a ‘them’ or ‘us’ relationship,” she said, adding that agencies really need to act as extensions of the CMOs internal team and help the marketing chief sell ideas to the CFO and CEO.
Laurent Ezekiel, president of Digitas North America and international, thinks that marketers will hire fewer agency partners in the future, but the ones they bring on will be better consultants and advisors to the brands. The agencies will help clients own and be in control of their own data, which the partners can then use to help enrich work and drive insights, he said.
On the remuneration front, Ezekiel said Digitas has seen a significant shift in its clients executing new and different deals, such as a fee with a bonus or share of sales, which is a trend he expects to see continue in the years to come.
The next wave, according to MetLife’s Pyle, is a “new type of retainer” that includes pre-booking resources or negotiating cost-efficient ways of working with agencies from the beginning. MetLife mainly works with agencies on a project basis right now, but tries to limit the number of shops it uses to maintain brand consistency. Pyle said that MetLife is in a transition as a company and is figuring out its internal capabilities and what it needs in each region around the world from a marketing perspective.
The AOR model, he believes, only works for marketers that are completely done with any brand transformations and can map out the amount of advertising they plan to do over a certain number of years. “You can then pre-negotiate rates and have the same talent on the business,” he said.
What’s expected from clients of the future
Angela Steele, chief strategy officer of Carat USA, told Campaign US that she believes clients of the future will shift in three main areas. First, she thinks clients will become even stronger content creators than they are now. Steele said if you look at haircare brand Ouai (not a Carat client), the brand was able to build its presence by focusing on social media and values. “Brand purpose is going to be more critical than ever, particularly grounding that in content,” she said.
The client of the future will also look much more like a CRM marketer than a mass marketer due to the need for personalization, said Steele. “We have so many more data capabilities now to underpin traditional offerings and we can deliver on mass personalization fueled by A.I.,” she said.
Along similar lines, Steele said the industry will see a rise of brands “needing to be solution providers” for consumers rather than just marketing a product or service.
Pedersen believes that the market will see a number of brands die out in the future – particularly those that don’t know or leverage their heritage. He said he’s seen a number of marketers struggle because they focus on the “shiny objects, like A.I. or chatbots,” and then forget the core of their brand value.
“One of the reasons Apple has such a strong brand is because they consult the brand more than they consult consultancies,” said Pedersen. “Apple knows the DNA of their brand.”
What it comes down to, according to Flock Associates CEO Simon Francis, is that the CMO of the future “will be a transformer.”
CMOs will need to control the brand across the customer experience or work in a system that does so and they will help decide what services and products the company makes, rather than just trying to sell what is already being made.
“She or he will need to have the skill and courage to invent new ways of working, be as familiar with data as ideas,” said Francis. “They will need authority across the business to make the band sing in all parts of organization – internally as well as externally.”