How Consultants and Lawyers Can Inspire a Reboot in the Advertiser-Agency Relationship

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I have been working in the marketing services market for over 20 years. Most of my career was as an agency leader – I founded iThink in 2002 and, between 2017 and 2020, I was vice president of the McKinsey consultancy, until I returned to entrepreneurship creating Zmes. During this period I saw a deterioration in the agency-advertiser relationship, often reduced to commoditized service provision. When I joined McKinsey on the first project I was designing for a potential client, the way the parties saw the amount to be paid for the consultancy was based on the financial impact of the project. Why is this lost with the agencies, since we all know that a good communication work generates sales and margin for the advertisers? And how to put this relationship in the correct place, that of the added value and not the cost?

It was to try to answer this question that I joined with professionals from the largest advertisers, agencies and vehicles in Working Groups (WGs) organized by the ABA – Brazilian Association of Advertisers – to produce a document whose main objective was to propose better working practices between agencies and advertisers having, as a consequence, a free, ethical and responsible advertising in the Brazilian market.

In this process I had the opportunity to see that some advertisers already have their purchasing areas acting strategically, as a true business partner of the business areas, seeking the best solution and not necessarily the lowest cost. The Working Group aims to make this model widely adopted by the market, regardless of the size of the companies involved.

More than 80 professionals were voluntarily involved to define intelligent solutions, through insights from the employees themselves who are immersed in the project, to suggest actions that promote sustainable relationships between agencies and advertisers.

In this new mindset that has invaded advertising agencies and also the marketing areas of large companies, it is necessary that teams include diversified and multidisciplinary professionals, who connect and really know and experience the client’s business model. And more: being efficient in the execution of each project in order to be charged and remunerated for the solution and the result.

This brings the need to rethink structures. The maturity of this business model – looking at agencies and advertisers as strategic partners and not just as suppliers and customers – has been gaining strength, mainly due to digital advancement, which demands a long-term partnership, with the aim of adding value to the business regardless of the sector. This is the time for market leaders and entities to support and promote solutions that will directly impact labor relations.

From the insights raised in the WG discussion stages, some points were defined as guidelines for best practices:

1 – Compensation model and competition process

It is recommended that agency bids consider different phases of the process:

• RFI: the advertiser typically requests “shelf” information from agencies
(cases, client list, methodologies…) without confidential data or that demand
specific constructions;

• RFP: Advertiser typically selects a restricted number of agencies
(suggestion up to 5), presents its scope of work, includes order of magnitude of budget
media, production and agency compensation and criteria that will be used to
choice of partner. Requests, as a rule, for the list of selected agencies
design a technical proposal (scope, methodology) + commercial with costs
of direct and indirect remuneration that are possible to open
contractually and, depending on the case, with creative exercise;

• Chemistry meetings: based on the RFPs received, the advertiser typically
narrows down the list to 3 finalists, communicates participating agencies and
organizes chemistry meetings to understand FIT and the team similar to the one that will be acting
day to day;
• Advertiser conducts a scope/commercial negotiation round and chooses the
winning agency based on the evaluation criteria presented at the beginning of the
process. All others receive structured feedback on the motivations that
took the choice.

2 – Value and impact based on objectively measurable results:

It seems good practice and highly recommended that agencies and advertisers adopt KPIs
to be considered in different types of marketing & communication briefings. With
In effect, it seems important that the agencies’ deliveries start to be measured in a way
measurable and no longer based on the subjective opinion of marketing directors. Those
KPIs should be part of the project briefing negotiated between the parties. The audit,
in turn, it should be done considering third-party metrics, and surveys of
independent institutes.

Every change creates discomfort and it is necessary to be prepared to deal with it. Promoting the sustainable growth of the advertising ecosystem, praising freedom of negotiation, transparency in relationships and the search for efficiency and quality in the provision of services, where incentives are aligned, will bring huge gains for all involved.