Client Relationships: Harmless Flirting

We bring you a series of afaqs! articles from the past. The first in this series is a piece on how marketers have begun looking for creative solutions outside of what their on-record agencies have to offer.

Earlier this week, Flipkart announced its decision to bring Lowe Lintas Bengaluru on board. Interestingly, this doesn't mean the boat currently occupied by Happy Creative Services, Flipkart's on-record agency since 2010, will be unceremoniously rocked. It merely means the e-commerce brand now has not one but two agencies to work with. We learn that both agencies will work on this account for a monthly retainer fee each. Keeping this present context in mind, we take a fresh look at a story around the subject that was first published on afaqs.com on April 16, 2013.

Recently, when the creative head of a Mumbai-based agency called to discuss his new campaign for a leading commercial bank, my first question was, "Who lost the account?" The answer was interesting: "It's just a one-off project. The incumbent agency stays on board." As I wrapped my head around this information, it became clear that this was part of a growing trend.

While assigning specialist services like digital or events to 'experts' outside of one's mainline creative agency is common practice, brands have started looking for a part of the principal creative solution too, from 'other' agencies. Typically, this is how it works: for the Agency-on-Record (or AoR) it's business as usual and the monthly retainer fee stays unchanged. The 'other agency' is assigned a portion of the creative duties on a project basis, something observers liken to the brand indulging in a one-night stand every now and then, while keeping its marriage intact.

Some recent examples include Airtel and Pepsi, both JWT accounts that work with Taproot on a project basis, Nestlé, a JWT account that assigned its recent 100-year anniversary campaign to Mudra, Star Network, an Ogilvy account that assigned the creative duties of Star Plus to Contract Advertising and Star World to Salt Brand Solutions, and Axis Bank, a Lowe Lintas account that works with Utopeia on a project-to-project basis for experiential solutions. And this list is far from exhaustive.

So, what has led to this flirting? There is more than one reason.

New rules: no rules

Firstly, the unwritten rules of the game have changed. A few years back, it was considered somewhat objectionable if a creative agency approached a brand that already had a fulltime partner on board. The term used for this kind of propositioning was 'straight pitch'. This is not the case anymore.

Nowadays, agencies freely approach 'married' brands with a try-us-out attitude. "As an industry, we're becoming more and more French," offers Ramanuj Shastry, co-founder, Infectious, according to whom this holds true at both ends - the agency and the brand. Though, historically, agency-brand contracts have never been binding for the marketer, it was an unwritten rule that they wouldn't stray from their AoR. That has changed.

"Till now, our clients were perfect gentlemen. Now, the game has turned rowdy. The whole dilemma of 'How do I go over my agency's head and approach someone else?' has disappeared. Of course, they're civil enough to ask their AoR to pitch," smiles Shastry, insisting that it is not considered 'cheating' anymore. It is a rather well planned affair now. Also, brands that are dissatisfied with their globally aligned AoR no longer hesitate before choosing to work with other agencies on a project basis till the formal permissions and paperwork, to go in for a review, get approved.

Too much temptation?

Secondly, it could well be a case of supply creating its own demand. The sheer availability of so many eager-to-please creative boutiques renders today's marketer spoilt for choice. The argument that work done by boutiques comes sans the baggage of hierarchies, time-consuming approval processes and departmental procedures - all typical of a large networked agency - further strengthens their case.

Says Emmanuel Upputuru, founder, ITSA, "Startups are not besotted by legacy systems. Projects mean you do meaningful work and get out. Marketers are also becoming more 'solution driven' than 'relationship driven'." In fact, many marketers admit that the kind of attention their brands get from senior-most resources at boutiques is hard to find in a large agency. Clearly, it's open season for startups - the blissful 'other woman'.

While it's true that this trend is fuelled by the advent of boutique agencies - and Taproot may well seem like the opposition leader - it is not restricted to these hot-shops. Brands do assign temporary projects to big agencies too. Consider Coke, for instance. The cola giant, that has had a longstanding relationship (which continues till date) with McCann Erickson, assigned last year's summer campaign to Lowe Lintas, an equally large agency, as a one-time project.

Parle Products too has a unique model that involves large agencies. Four agencies - Ogilvy, Grey, Everest Brand Solutions and Thoughtshop Advertising - comprise the company's creative roster. Ahead of every advertising campaign for any of the group's brands (Parle G, Parle Wafers, Parle Monaco), all four agencies present their thoughts. The best one walks away with the mandate for that particular campaign and earns a commission for its work.

Explaining the advantage of such a model, Pravin Kulkarnii, general manager, marketing, Parle Products, says, "The motivation on part of the agencies to win the business is high, so I always get great ideas. I also get a fresh perspective each time on any given brand. It also keeps the agencies on their toes and complacency at bay."

Doesn't this 'internal pitch' system show lack of loyalty to one agency? "Yes," admits Kulkarnii, "I'm not denying that people may feel commitment to one agency is missing, but the pros outweigh the cons of this model," he argues, insisting that a polygamous model like this brings an opportunity for agencies to fulfill their aspirations to work on a particular brand. All they have to do is pitch when the next campaign comes around instead of waiting for years before the account moves.

Regional solutions

A third reason for this practice is the need for a specific regional perspective that a local boutique is deemed better placed to provide than the brand's mainline agency. Consider the case of Nutrela. Ogilvy is the creative custodian of the entire portfolio, except the edible oil brands that are managed by smaller agencies. Utopeia Mumbai handles the creative mandate for its refined sunflower oil that targets southern markets while Kachhi Ghani mustard oil, targeted at eastern markets, is handled by Hammer Delhi.

"If I have to do a very specific activity in Tamil Nadu, my big agency will have the wherewithal to work on it but a boutique agency, born and bred with the insights of the local consumers, will bring more value to it," explains Sandipan Ghosh, associate vice president, marketing, consumer brands division, Ruchi Soya, the parent company of Nutrela. According to him, most companies' diverse portfolios make it "impossible for a single agency to address every sub-brand's specific need."

It's all about the money

A fourth reason is economics. Deliberately keeping certain brands out of the mainline agency's scope of work is often a hardcore business decision. Explains Nutrela's Ghosh, "Edible oil is a commodity that by nature calls for cyclical communication. I don't want to keep a mainline agency and pay them a retainer fee for working on a brand that requires seasonal communication only. Instead, whenever required, assigning the campaign to a boutique agency as a project is a more efficient system."

Speaking of economics, even service brands like telecom, banking and insurance that communicate perennially, are coming up with innovative ways to divide the creative mandate between their AoR and other agencies. Consider life and general insurance player, Future Generali, that has Ogilvy on board for its mainline creative duties including major campaigns across TV, outdoor, radio and online. Water Brand Consulting handles what the brand calls "the smaller creative jobs" including collaterals, point of sale material, corporate brochures, audio-visual sales films, sales kits/tools and adaptation of creative ideas on-ground. Interestingly, both agencies are on a retainer fee. How does this work?

"Frankly, if I include everything in Ogilvy's scope of work, the retainer fee would be very high. Also, this system gives me the independence to give my mainline agency a 'vacation' for a few months when my budget is tight. When funds flow in, I can always resume the association with them. If not, I can assign a project to them for one high impact ATL campaign," shares a senior marketer at Future Generali. In the meanwhile, the brand's other agency, that's on a more affordable retainer fee, continues to ensure all the other creative work doesn't stop despite budget constraints.

Similarly, life insurance player, Aegon Religare, also has Ogilvy as its creative AoR and has assigned a portion of the duties to Water on a retainer basis. Apparently, the tables have started turning. Assigning intermittent projects to larger agencies and keeping boutiques on a more affordable retainer, is a byproduct of this trend.

Goliath's nightmare

While the marketer gets the best of both worlds and the hot-shop owner enjoys his time under the sun, this trend leaves many a large agency head seething. While one may argue that most of the leading multinational agencies may be too big to be affected by this trend, there is some cause for concern. As the head of a leading networked agency puts it, "Soon, all the 'dal-chawal' creative work will come to us large agencies because logistically we're big enough to handle all the 'household maintenance work' for a big brand, while smaller agencies are walking away with the sexy campaigns, awards and glory." Earlier it was the other way around; thematic campaigns were the big agency's forte while one-off, product-based, tactical campaigns were given to smaller agencies as projects.

There are other concerns. Some feel the brand stands to appear disjointed if more than one pool of creative talent works on its creative duties over time, as the creative language and tone tends to differ from agency to agency. Others are worried about the way this trend is positioning the industry at large. "Agencies used to be 'partners' for marketers. Now, we're becoming mere suppliers," voices the creative head of a Mumbai-based agency. Moreover, set-ups like the one Parle Products has in place pose another frightening question: Are mainline brands going the public sector way with such empanelment models creeping in?

Further, while marketers are increasingly straying, agencies are still expected to uphold exclusivity. Nikhil Rangnekar, CEO, media and analytics, Spatial Access, reasons, "To be fair, if an advertiser can work with two creative agencies, then, even the agency should be allowed to work with conflicting brands within a given category."

The day that happens in a buyer's market like this one, the marriage will truly be an open one.

(Based on additional interviews with Priti Nair, co-founder, Curry-Nation, Vandana Sethi, founder director, Water Brand Consulting and Mahesh Chauhan, co-founder, Salt Brand Solutions)

To download the PDF version of the article, click here.