How falling ad budgets are impacting the agency-brand relationship
As the economic slowdown is forcing brands to have a relook at their advertising spending, the creative and media agencies are in a tight spot.
The clients are seeking more from the agencies. Much more than what could be delivered with the investment that the brand is making.
Because of increasing competition and falling business, agencies are forced to deliver much more than what they are being paid for. And hence, all is not well in the brand-agency partnership where brands are turning out to be more ruthless than ever.
“Brands are absolutely ruthless when it comes to money. They want four times return of what they have spent, that too after cropping the creative idea of a campaign,” said, Santosh Padhi, Chief Creative Officer and Founder, Taproot Dentsu.
"However, we have to handhold our clients and walk together. We are blessed with some of our old clients who have a lot of respect for us; they listen to us. The partnerships have been great, and we understand each other,” added Paddy.
Syed Amjad Ali, President, Mullen Lintas, believes that it is a short term impact which will go back to normal once slowdown phase passes.
“True client-agency partnerships are built on trust, collaboration and cohesiveness, when this relationship grows, it reflects in work and business results. As a result, the agency remuneration also grows. But there are isolated periods like a slowdown, where our revered clients are bound to face sales pressure. During these tough times, they resize their costs, as one of the measurements. It is like when clients grow, you grow with them, and when they face pressure, one should understand and be ready to face it,” he said.
The tough competition is adding to the crisis caused by the slowdown where if one agency does not agree to work on the lesser budget of the client, many other agencies are ready to work for it.
According to Vivek Srivastava, Jt MD of Innocean Worldwide, resources are allocated based on availability. Brands cut campaign budgets when their hands are tight too and it’s important for agencies and marketers to realise that cyclical trends like slowing of economy and demand patterns should be allowed to dent a brand’s strengths and intrinsic appeal terminally.
“In our agency, we see a momentum towards a greater result orientation in our clients’ briefs. They are demanding greater efficiency and outreach. A lot focus on aiding the closure of sales by consumers,” said Srivastava.
Kapil Arora, Co-Chairman and CEO, 82.5 Communications, said, “It is natural for some clients to be more conservative during a period like a slowdown and we respect that reality.”
“However, it is also important to realize that a proposed budget cut is probably just an effect. As partners to our clients, our focus needs to remain on identifying the key problems that they are dealing with in difficult times and proposing new ways and means of tackling them. This often means keeping an open mind and an element of flexibility in our offering. When an agency’s starting point is keeping the brand’s best interest at heart, it shows and more often than not, it pays back as well,” he adds.