What do clients expect from their direct marketing agency in 2007? You name it.
Direct talked recently with executives at some of the industry's top agencies to get their thoughts on the agency's role in today's marketing environment and what they felt were their clients' top priorities.
“I don't believe there's a uniform client out there anymore,” says Bill Kolb, president and COO of MRM Worldwide. “I don't think you can say that client ‘A type’ is looking for this and client ‘B type’ is looking for this. It varies greatly by client. There are those who are looking for a global footprint to measure efficiency. There are some who like the boutique agency to do maybe a small component of their creative. I don't think one size fits all — for the client or the agency.”
Over the last 10 to 15 years, agencies have had trouble demonstrating their relevance to clients, notes Wendy Lurrie, general manager of Draftfcb New York.
“I think the client environment is as difficult and challenging as it's ever been, perhaps more so,” she says. “Every client we work with and every sector we know is under pressure like they've never seen before, from globalization, from procurement, from regulatory.”
What clients need is a strategic value-added partner. According to Lurrie the problem is that overall, agencies haven't stepped up to the plate.
“I think they've created a lot of distance between themselves and clients over time, she says. “I think the whole industry has jargonized itself and branded processes and created black boxes. They've done all sorts of things that didn't demonstrate relevance to a client that may have had things like distribution problems. Clients are under increasing pressure to perform and deliver accountable results.”
Lurrie says agencies have been “turning themselves into knots over the past couple of years” trying to figure out how to serve clients better. “This is why we've seen bundling and unbundling and aggregating and disaggregating.”
This is leading clients to look for better solutions, she continues. “We've noticed that what used to be a single account is now peeled apart, with creative going to a boutique, strategy to a consultant, and media to a media shop. There's still a real hunger and a need for greater value add.”
Many clients are now looking for DM agencies to build the brand and the business at the same time, says Lawrence Kimmel, G2 Direct and Digital's chairman and CEO. “They realize that those of us who have reams of information about customer behavior and an understanding of profitability can also do effective branding.”
For example, he says, clients agencies have worked with in the pharmaceutical space to build Web sites and online strategy now see that an agency that's studied what its prospects are searching for online can apply that knowledge to other channels.
Creative is still the thing that clients come to agencies for, says Ron Jacobs, president of Jacobs & Clevenger. “But they want it informed by more and better strategies. They want it informed by deeper dives into data. They want it informed by multichannel executions. More and more they're saying, ‘How do you take this direct mail execution and broaden it into e-mail, and what does it do for the Web site?’”
Clients also are relying on agencies today for more leadership than ever before, Jacobs adds. “They want us to be aware of the latest ideas, whether it's something like personalized URLs or a whole new way of approaching strategy that they've never thought of before.”
“I think clients are struggling to make sense of all that's going on,” concurs Company C president Nicholas Nocca. “There have been academic conversations in the last few years about the consumer being in control and shifts in technology. Many clients have sat by the sidelines and tried to make sense of this and now they're ready to act. The budgets are there, and fear is a great motivator.”
The world today is very competitive, so brands are looking to differentiate — and they're looking to their agencies to help drive growth, notes Michelle Bottomley, co-president of Ogilvy New York.
“Some of our most sophisticated direct clients are coming to us more as a business partner in growth, rather than a client looking for a specific DM program or execution,” Bottomley says. “We're being asked to look at existing assets, like brand, digital and direct communications, and [determine] how to bring them together to drive greater growth.”
Mark Taylor, executive vice president and chief marketing technology officer at Wunderman, says that in the last few years he's seen clients relying more on the digital channel.
“In the past they might have gone to a specialist agency for something like search,” he says. “Now they realize that search can't be treated as a separate commodity, but as part of an overall marketing mix. And after all, search is direct response advertising, so it makes sense if they come to us.”
Some clients are placing digital and direct above all else, according to Martin Macdonald, chief creative officer and senior partner at RMG Connect. As an example, Macdonald points to the director of marketing at HSBC, who told his staff and the agency that he wanted to see all future marketing presentations begin with digital or direct media rather than traditional space advertising.
The definition of a direct marketing agency is broadening, says MRM's Kolb. “We may see agencies doing more things with technology, we may see IT/agency hybrids, we may see agencies doing more business consulting, competing in the Accenture space.
“Clients are looking for different things from different agencies, and there's plenty of space for everyone,” he adds. “Things go through a cycle. You have great agencies that help develop great people who go off and create their own agencies. Then there's another consolidation and that spawns another group of great people who go off. It's always been that way, and I don't see that changing.”
Is Bigger Better?
Consolidation's fine — if it works to the client's advantage
The direct marketing agency world has seen more than its fair share of consolidation in recent years. But what does it mean for the industry?
For G2 Direct and Digital (formerly Grey Direct), acquisition by WPP a few years back facilitated access to more tools and new media solutions, says G2 chairman and CEO Lawrence Kimmel.
Martin Macdonald, chief creative officer and senior partner at RMG Connect, which is also part of WPP, notes that clients that work with large affiliated agencies often do so for the convenience of one-stop shopping.
“HSBC, for example, hired WPP for its worldwide business,” Macdonald says. “They don't want to worry about what's happening under each individual banner. We need to sort out the infrastructure — it can't be an issue for the client.”
Indeed, client relationships — and not just the bottom line — should be front of mind when agencies consider combining forces, according to Wendy Lurrie, general manager of Draftfcb New York.
“Clients don't want to be sold to. They want to buy,” she says. “And if all you're doing is consolidating to have a bigger menu of things to offer clients, it doesn't seem like you're sensitive to the realities of their business.”
“If [consolidation] doesn't make sense for the client, it won't work,” agrees Nicholas Nocca, president of Company C. “I think consolidation is helping the industry more than hurting it. [Our parent company] MDC Partners doesn't pair up our agencies [for clients] where it doesn't make sense — the approach is to allow talent to thrive without a real strong imperative.”
But that isn't always the case, he adds. “A lot of the holding company arrangements are driven by accounting efficiencies.”
Still, there are opportunities for smaller agencies to thrive, says Jacobs & Clevenger's president Ron Jacobs, who jokes that he now refers to his business as “privately held” rather than “independent.”
“There's always going to be clients that want something different than what the large groups can provide,” Jacobs says. “They have larger resources, but there's always a price for that. There's the time perspective, because things have to go through an agency process. And there's cost, because every service office of an agency has to pay X number of dollars to the home office, so they're always working toward a number.” And, he adds, smaller agencies typically have more experienced staffs — because of their small size, they can't afford to have a lot of green creatives on board.
But, says Jacobs, there's also a very strong impetus to become affiliated among agencies.
“This is our 25th year, but I can't say whether there will be a 26th, 27th or 28th year of independence. I'm not talking to anybody, but there are a lot of reasons to become part of something else.”
— BNV
The direct marketing agency world has seen more than its fair share of consolidation in recent years. But what does it mean for the industry?
With the plethora of new media available to clients, tracking the ROI of what works and what doesn't is getting very complicated. Or is it?
“In some ways, while measurement is covering a lot more channels, the data to measure ROI is getting much more straightforward,” says Bill Kolb, MRM Worldwide's president and COO. “There's more access to information than there was 10 or 15 years ago, when there was no way to get hard metrics on things that were going on. Now there are detailed Web analytics, and you get the traditional direct mail analytic work and TV metrics that are more quantifiable.”
Tracking the ROI of specific channels has gotten harder, says Jacobs & Clevenger's president Ron Jacobs. “Sophisticated direct marketers are looking at every channel individually. But to be honest, when it comes to a lot of things like social networking there really aren't good measures at this point.”
Marketers need to be able to connect the dots between the data and the analytics and use all of it to make decisions, notes Wendy Lurrie, general manager of Draftfcb New York. “In some ways, it's more difficult — there are lots of new capabilities and media that are completely unproven. What do you do with blogs? How do you measure RSS — and should you? What do we do about community? Is anyone figuring out how to do that in a credible way that's being monetized? Everyone's talking about it but no one knows how to measure it.”
“The greatest thing about the Web is you can get data on everything,” says Mark Taylor, Wunderman's executive vice president and chief marketing technology officer. “And the worst thing about the Web is you can get data on everything. So there's definitely an overload of metrics. Measure the money, not the metrics.”
And where are clients putting that money?
Lawrence Kimmel, chairman and CEO of G2 Direct and Digital, says his agency advocates what he calls “structured spending.” G2 recommends that clients allocate 70% of their marketing dollars to things that have worked before, 20% to things they're sure competitors are doing successfully, and the remaining 10% to experimentation.
All the agency pros interviewed said dollars are shifting into the digital space for a number of reasons, including cost and response rates. Ogilvy New York co-president Michelle Bottomley says her clients are interested in nontraditional communications. But they're also investing heavily in call centers to enhance the customer experience. She notes there's also activity in the direct mail sector, as part of targeted relationship-building programs.
— BNV
