Wednesday, October 18, 2006

Conflict - what conflict?

Consultants routinely have many clients in the same industry, because they have expertise in that vertical.  Ditto for lawyers, accountants, researchers and even models.  But when it comes to advertising agencies, the whole issue of conflict crops up.  Why is that?

On the one hand, clients want domain knowledge and experience.  On the other they don't want you to work for the competition.  Why is that?  Confidentiality reasons did you say?  Are you telling me that advertising agencies know more about their clients' business than management consultants, lawyers, auditors and tax specialists?   Or are we saying that clients don't trust advertising agencies to keep their mouths shut?

The focus on confidentiality is all wrong.  Insiders in each industry routinely know everything important that there is to know about others in their industry, long before the client gets around to briefing their advertising partners.  If there is something they don't know, all they need to do is to invite an employee from their competition for an interview and then give him or her a gentle grilling.  You don't even need to hire the person.

Although people are changing jobs all the time anyway.  Both at client end and the agency end.  So how do you keep things confidential from your own people?

So perhaps it is not confidentiality.  Perhaps clients want their agencies exclusive because they want the best ideas for themselves and not have to share them with others in their industry.  There may be something in this.  However, even this thesis breaks down when you consider that clients are today shopping around for ideas from so many different places.  From their celebrity models, their event agencies, their PR firms and so on.  Most of them are not bound to exclusive contracts like ad agencies are.

In fact there is a lot to learn from model contracts.  There are two kinds of model contracts.  One which prevents the model from appearing in any competing ads, and the other which does not.  The first is a lot more expensive than the second, for the same amount of time.

Perhaps ad agencies need to codify such an arrangement with its clients.  If you want exclusivity, it will cost more.  Then we will know how many clients seriously worry about their agencies leaking information.


Anonymous said...

hi suman, i quite like the idea of the agency contract on the lines of a model contract! I feel this whole 'no competition/ silo space' is because of historical and heritage reasons. Don't think anybody( the client or us) has given it a fresh thought! Nice post...cheers

Anonymous said...

I think it's a case of clients wanting to have their cake and eating the agency's too. If clients can have a panel of agencies, it's time agencies had a right of choice too. Frankly, it's time agencies started thinking more (or at least as much) about themselves, as they do thinking about the welfare of their clients. it's a business after all.

Anonymous said...

Hi Suman, I am in full agreement with you on this subject. I'd like to add another issue that constipates Clients - the idea that competition could be paying Agency more and so the best of resources will be deligated to the competition and not us!! Well... the idea is clear and professionally driven... Agency sets resources basis Client's brand ambitions. The "fatness" of the team depends on Client's willingness to spend on Agency's services to achieve these ambitions. If a Client is tight pocketed then you better be contended with a smaller team. I do not agree with Clients who feel having a smaller team compared to the competition would mean less services or compromised quality. No Agency will ever compromises on the quality untill the brand manager only takes up the burden of art directors and ruin the creative. Sohrab