Ad Agency Business: Is anyone putting client interest first?

I was thinking about the $ 35 billion merger deal between Omnicom and Publicis earlier this year as well as the roll up of a bunch of agencies by WPP including G2, Ogivly and JWT’s former “activation” operations into Geometry Global .

Maurice Levy and John Wren.

I fully understand why the big holding companies are doing this – to drive down back office costs by eliminating operations and management redundancies. In theory this should improve profitability and enhance shareholder value.

But which larger agencies / holding companies are committed to putting their clients’ interests first? Is anyone really thinking about the needs of the nice people who pay?

I went looking for a new financial adviser a while back and ended up selecting a person with the Chartered Financial Analyst credential or CFA. This is an elite group of global investment professionals whose code of ethics is grounded in their commitment to putting their clients’ interest first. I like the fact that my hard-earned money is being well managed by competent investment professionals, who will not do things like “churn” my account by making unnecessary trades.

However it does not appear that the same commitment to client interests is being followed in the ad agency business. I recall when I was a senior manager in several of the largest holding companies I spent lots of time arguing about money. In the morning I would discuss blended hourly rates and compensation reduction with client procurement departments. In the afternoon I would field calls from my agency CFO and President about growing my top-line revenue and improving my unit’s operating margins.

I got funny looks from both sets of people when I made the statement “So as the agency of record are we leading the charge for growing our clients’ business with our marketing and advertising programs?”

One holding company executive pulled me aside and said “Look – we all know we’ll lose this business within two years when the client CMO leaves and the new CMO holds an agency review, so why bother worrying about their business?”

Bill Duggan EVP of the Association of National Advertisers advised: Clients of Publicis and Omnicom should directly ask their agencies "What's in this for me?" and "How will this impact my business?

I've always viewed the most mutually beneficial agency-client relationships as being focused on building the client’s business. This usually produced long- term profitable growth for the client, a few Effie awards, and seldom resulted in arguments about compensation. The Agency simply delivered tangible value and it was rewarded accordingly.