Posts Tagged 'marketing budget cuts'

Can an ad agency recommend budget cuts to a client?

The names of the not-so-innocent have been disguised in this post.  So if you recognize your company in here, it’s probably more because of the truth of the situation than that it’s your agency.

I was have a coffee (actually I was drinking seltzer and he was drinking coffee) with the former head of branding and advertising at a technology company.  We were indulging in some nostalgia.  I asked about the advertising agency that they had used.  From my perspective the company and the agency had a very close relationship.  My friend turned very serious.  A shadow came over his face.  

He then went into a story about the  long-standing relationship he had with one of those large ad agencies that is part of one of those larger holding companies.  In restructuring the way the company went to market, he led a project to redesign their entire communications to be more effective and save money.  A by-product is that there was no budget for the large ad agency.  It was not because the ad agency had done poorly — in fact the advertising was quite brilliant.  But the customers had moved on, had changed their habits.  In short, customers were no longer using the traditional media.

After delivering the news to the large ad agency, he never heard from them again.  Not a call.  Not an email.  More than a year went by.  Nothing.  

My friend said that the ad agency was only friendly when there was a big budget.  And they almost always came in with a recommendation for more media spending.  “They have all of these self-serving studies showing how increasing advertising in a downturn has long term benefits,” he said.  

Why don’t ad agencies come to clients with ways to shave off 10%, 20% of costs?  

In today’s economic pancake, companies are looking for ways to cut costs without losing the effectiveness of their marketing.  A really brilliant advertising agency would bring to that client a plan or method for cutting budgets by 20% to 30%.

My friend is skeptical.  What agency would recommend that they should have lower revenue?  The interests of clients and their agencies are not always aligned.

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