Things are better than they seem
There is a popular misconception in our business, which holds that the average client/agency relationship only lasts between three to four years. We have read it in the trades, on websites, heard it at conferences and have even repeated it ourselves. Now, we find evidence, which implies that the client/agency relationship is much healthier and more sustainable than three years.
Recently we cooperated in the 4A’s compilation of their 2012 agency review activity report. We then collected copies of the 4As tabulations of agency reviews from 2007 – 2012, six years of information. We inspected over 3,200 reviews that were listed. True there are qualifications related to the completeness and absolute accuracy of this data, but while it has flaws (like almost everything in our business) this is one of the best sources of information with a high level of specificity about agency reviews in the US.
It’s Simple Arithmetic
If the three-year turnover assertions were correct, then roughly half of the agencies that were selected during 2007, 2008 and/or 2009, should have been replaced by a different agency (in the same discipline) in less than three years, certainly by the end of 2012. That is not the case. Only 6% of chosen agencies were replaced, nowhere near half. It is mathematically impossible for the average relationship tenure to be only three to four years. Agency relationships are much more sustainable.
Clients and agencies should take comfort in this finding. Conventional wisdom holds that agency relationships were sustained for an average of five to seven-years decades ago. Intuitively we acknowledge that personal relationships between client and agency CEOs may not be as close as they once were (due to the demands of modern business life), so that motivation to work things out may have been minimized. However, we have devised other methods to foster sustainability. Apparently, the efforts to select agencies with more scrutiny, the use of search and compensation consultants, the installation of incentive programs tying client and agency success to one another, and the adoption of two-way relationship monitoring and evaluation tools have had a positive effect.
Perhaps the three-year turnover myth was perpetrated by mistaking the ADDITION of specialized agencies (like digital, social, mobile, branding, integrated services) for replacements of more traditional agencies. Much less is known about these relationships. Though the digital space is theoretically more accountable, incentive programs are rarely installed in these relationships. Perhaps that is because they are new and fewer benchmarks for success have emerged. As far as we know there are also fewer relationship evaluation and monitoring systems in place as well with these newer agencies. As a consequence, these relationships could well be in greater danger than traditional agency relationships.
So while we bear good news that should be shared and even celebrated about current traditional relationships, we are cautious about the future of newer digital and marketing services relationships. We recommend that the same disciplines should be put in place between clients and their specialized agencies.