Perspectives: client–agency opportunism: how does it happen and what can we do about it?

Abstract

While it is seldom spoken about openly, opportunism always prevails in client–agency relationships and could lead to their demise. This study directs attention to client–agency opportunism by describing how it happens and ends with a discussion on how today’s client–agency dynamics can be improved.     

Client-Agency Relationships

Abstract

The increasing occurrence of client turnover and agency switching among client/agency relationships is of concern to advertising agencies throughout the world. It is proposed that small firms could provide a substantial alternative client base for agencies in order to dampen the impact of uncertainty. This study investigates the perceptions held by owner/managers of small firms toward agencies within New Zealand. We identified two groups of respondents–those who perceived agency contribution to store performance as high and those who perceived it to be low.Significant differences were found between the two group' response ratings on advertising agency services, agency attributes and selection criteria. We conclude by discussing the managerial implications of this study and provide directions for future research in this area     

Standardized Multinational Advertising: The Influencing Factors

Abstract

Advertising for multinational products uses standardization most often in strategy, less often in executions, and least often in language. This study's international sample of advertising agency executives considers creative impact the most important and pressure (from time, client, etc.) the least important reason to use some form of standardized advertising. Despite this, it is views on client pressure which explain most of the variance in views on future use of standardization. That is, those respondents who believe that client pressure is increasing also believe that overall use of standardization will increase. A separate sample of agency executives reinforced some of these findings, particularly the role of the successful, big idea and client pressure in making the decision to standardize. Copy research also plays a role in standardization recommendations, but it is not used as extensively as might be necessary.     

Examining the Longevity of New Agency Accounts: A Comparative Study of U.S. and U.K. Advertising Experiences

Abstract

Since the typical account longevity is short, agencies should anticipate their likelihood of loss, seek to forestall and invest in their client relationships. A model is proposed for examining account lifetimes, which can offer guidance on the likely retention of future accounts. The impact of agency structural characteristics on longevity is also examined, and compared for both U.S. and U.K. markets. Results for both markets indicate that cumulative account dissolution increases at a decreasing rate over time. Greater account longevity is associated with larger agency size (both in terms of agency billings and employees), and agency age but not with stability of billings growth. Evidence suggests that several structural characteristics of agencies reflect the motivation and / or ability to maintain accounts.     

Market Research and Advertising Strategy in Portuguese Agencies: Perspectives of Professionals

SUMMARY

The advertising campaign development process is frequently described in manuals and textbooks. Nevertheless, the empirical perspective gives us a better understanding of the real world. In this study, we tried to understand, to systematize, and to describe the process of research and strategy in advertising agencies. To accomplish this objective we conducted 25 in-depth interviews with advertising agency professionals in Portugal. Cross-analysis of the statements allowed us to identify 5 themes: research done by the client before providing the brief to the agency, client's brief, information gathering done by the agency, brief's discussion inside the agency, and creative brief.     

Advertising Agency Philosophies and Employee Risk Taking

Abstract

On the basis of an exploratory survey of executives from a cross-section of U.S. advertising agencies, this article examines the relationship between agency creative philosophies and agent creative risk taking. The natures of both creative risk and agency philosophy are discussed. Multiple measures of risk taking are applied and the findings suggest that agency executives working in agencies with clear identities are more likely to take risks than are those in agencies without such identities (hybrid philosophies), but not for all measures of risk. The extent to which the size of client plays a role also is assessed. After an assessment of the findings, limitations and suggestions for further research are discussed.     

Pretesting TV Commercials: Methods,Measures, and Changing Agency Roles

Abstract

Research directors with the largest 200 agencies and advertising executives with the largest 200 advertisers were surveyed to examine their views on the current state of TV commercial pretesting. One-hundred and one agency researchers and 89 ad executives returned completed questionnaires (adjusted response rates of 52% and 49.7%), which asked them 23 closed-ended questions about (1) the methods and measures used to pretest TV commercial executions; (2) the perceived role of the agency versus the client in the selection of pretest methods; and (3) perceived changes in the role of the agency research department in TV commercial pretest research. Of those responding, 18 percent of the agency researchers and 19 percent of the advertising executives indicated that their agencies do not pretest TV commercials for assigned brands. Based on the responses of the 83 agency researchers and 72 advertising executives whose agencies pretest commercial executions, the findings suggest that the role of the agency research department has changed over the past 10 years. Most notably, there has been a proliferation in the use of qualitative methods and measures in TV commercial pretest research.     

How to achieve true integration: the impact of integrated marketing communication on the client/agency relationship

ABSTRACT

Reports from the advertising industry suggest that the pressure to create effective integrated campaigns across the ever-increasing mix of paid, owned and earned media is putting an enormous strain on client/agency relationships. This research identifies the main challenges that an Integrated Marketing Communication (IMC) approach places on this relationship and thereby advances the IMC literature by examining the practical challenges of implementation. Six key issues, developed from academic and industry sources, are presented to advertising experts, through a Delphi study, to stimulate debate and identify areas of agreement. The findings are brought together in a model which presents three main areas that need to be addressed, along with specific recommendations. These topics include the need for clients to provide stronger leadership in defining agency roles and responsibilities, more transparent remuneration systems to encourage teamwork across agencies as well as individual input and an increased emphasis on the strategic contribution from agencies.     

Advertiser Expectations of Agency Creative Product

ABSTRACT

The study reports the development and empirical testing of measures of advertiser expectations of agency produced creative product. This “applied creative,” professional, business-to-business service incorporates extensive process elements. Hence, two measurement models are developed: a traditional “unitary” model, and a dualistic model incorporating elements of process and outcome. The study demonstrates firstly that client expectations of this highly intangible, “applied creative” professional service can be empirically modelled, and secondly, that such measurement does exhibit dimensions of both outcome and process. This paves the way for subsequent modelling of consumer satisfaction or quality evaluation processes within this little explored service category.     

Client Perceptions of the Customer Orientation of Advertising Agencies

Abstract

A national random sample of advertisers evaluated the customer orientation of their advertising agencies. The respondents also rated the importance of various agency attributes for agency selection, as well as their level of satisfaction with the performance of their current advertising agencies. Client perceptions of the customer orientation of advertising agencies was found to be significantly related to clients' satisfaction with agency performance. The importance of customer oriented selling behaviors by advertising agencies are discussed.     

Building Relationships Through Personalization

Abstract

As competition intensifies for professional service providers, renewed attention must be given to the retention of clients. While professionals typically provide a customized service, the treatment the client receives from other personnel in the office may not be perceived as personalized. Personalization of the interaction between contact personnel and client can enhance the overall experience for the client and result in increased loyalty to the professional. One often overlooked element that impacts the service encounter is the presence of ‘others’ on the performance of contact personnel. An examination of factors impacting the quality of performance by contact personnel and suggestions for fostering personalization and ultimately client loyalty are presented.     

Participation by U.S. Agencies in International Brand Advertising: An Empirical Study

Abstract

Marry ad agency executives have proclaimed the era of the global advertising agency. They observe that corporations are moving towards placement of their worldwide advertising through a single agency, and they predict that a few large “mega-agencies” will take over a majority of international advertising accounts. Yet, no published studies have examined how many brands are actually handled by the same ad agency worldwide. This paper presents the results of a survey examining the extent to which U.S. companies use the same agency to advertise abroad and in the home market. The study found that of the brands sold abroad, only about one-third are handled by the same agency both at home and abroad. This proportion does not vary significantly with advertising budgets, by product class, or between standardized and non-standardized brands. In addition, no single-agency group or “mega-agency” handles more than eight percent of the sample brands, and no agency handles a majority of its U.S. brands abroad.     

Boundary spanner turnover in professional services: Exploring the outcomes of client retention strategies

Abstract

Studies suggest that the termination of the interpersonal relationship between boundary spanners at buyer and seller firms can have a damaging effect on the inter organisational relationship. Few studies have addressed this issue in detail, but those that do, advise supplier firms to implement strategies such as service teams and boundary spanner rotation to lessen the negative effects of boundary spanner turnover. By creating multiple bonds between the two firms, dispersing client-specific knowledge widely throughout the supplier firm, and preventing the development of a close bond between buyer and seller boundary spanners, individual interpersonal relationships become less important. However, a review of relationship literature on trust, commitment, social bonds, and knowledge suggests the potential for negative outcomes from the implementation of the strategies. Using case studies and one-to-one interviews with design buyers and their agencies, this paper explores the outcomes of the two strategies, and the contexts in which these outcomes occur. Adopting a critical realist approach, findings are presented in the form of context–mechanism–outcome models. Agency size, agency culture, client experience, and boundary-spanner autonomy are amongst the contexts that influence the outcome of strategy implementation.     

Ethical Problems of Advertising Agency Executives

Abstract

A mail survey reports on ethical problems faced by 330 advertising agency executives. The most frequently cited difficult ethical problem is “treating clients fairly.” Creating honest advertisements and representing clients whose products or services are unhealthy OT not needed were also frequently mentioned. Many agency executives reported that such ethical problems affect both their performance and their relationships with co-workers.     

Dual agency in retail chains

Abstract

Retail distribution is often organized into chain stores, where geographically dispersed units operate under a common trademark and operational routines. Franchising is an organizational form chosen by entrepreneurs to manage retail chains. Previous research has maintained that franchising is a solution to “the” agency problem. This article shows how franchising solves one agency problem, shirking, but creates another, free riding, giving rise to dual agency problems. We test which has a stronger effect on performance. Using stochastic frontier estimation, a technique from empirical economics, we show that marketing spending yields less sales for franchised chains relative to owned chains, suggesting that the loss associated with free riding dominates the gain from controlling shirking. Implications for theory and practice are discussed.     

Determinants of Client Expectations for Accounting Services

Abstract

As the market for accounting services becomes more competitive, accounting service providers must strive to continually improve service quality to attract new clients and retain existing clients. Client expectations provide a benchmark that must be met or exceeded for the client to perceive that high quality services have been delivered (Ades 1988; Aquila and Koltin 1992). Based on a review of accounting and service marketing literature, this paper developed a conceptual model that identified potential determinants of client expectations for accounting services. Hypotheses derived from this model were empirically tested using LISREL on survey data from 196 households.

The results of our analysis indicated that client satisfaction with prior services, prior service quality, word-of-mouth communication, and price were significantly related to accounting firm image. Firm image, in turn, was significantly related to client expectations for future accounting services. Importantly, several variables from the service marketing literature were not supported with our sample of accounting service clients. Hence, these results identify the critical determinants of client expectations for accounting services, provide insight into the expectation formulation process for accounting service clients, and offer guidance to accounting service providers who may wish to influence clients' expectations.     

The Effects of Managers’ Moral Philosophy on Project Decision Under Agency Problem Conditions

This study derives an improved model of managers’ decision-making behavior regarding possibly failing projects. Instead of adopting cognitive moral development used by Rutledge and Karim (Accounting, Organization and Society 24, 173–184, 1999) this investigation uses the agency theory framework to consider individual moral philosophy for the improvement of decisions regarding possibly failing projects. This research hypothesizes that a manager with low relativism has a stronger tendency to discontinue a possibly failing project than one with high relativism when agency problem are present or absent. Also, this study suggests that a manager with high idealism has a stronger tendency to discontinue a possibly failing project than one with low idealism. Through experiments this work finds that agency problem is a significant factor on decisions regarding possibly failing projects in all circumstances. This result is consistent with prior literature and shows agency problem universality. Next, the empirical evidence supports the hypothesis that a project manager with low relativism tends to discontinue a possibly failing project more than one with high relativism, showing that individual moral philosophy can partially mitigate the phenomenon of escalating managers’ commitment.     

An Examination of Dividend Policy in the U.S. Restaurant Industry

Abstract

We examine the potential role that agency costs have on dividend payout policy in the restaurant industry. Specifically, we hypothesize that dividends serve to constrain the actions of management. Interest payments also have the same effect, and in a sense, may act as an effective substitute for dividend payments. Furthermore, the larger number of firm owners, the greater the need for dividends to control agency costs. Our findings show significant differences in debt ratios and the number of shareholders between restaurant firms that pay dividends and those that do not.     

William L. Rivers and William T. Slater,Aspen Handbook on the Media,Aspen Institute Program on Communications and Society,Palo Alto,California, 1975, 182 pp.

Abstract

A study of the use of humor in U.S. and U.K. television advertising was developed by surveying ad agency executives in the two countries and then by conducting a content analysis of television commercials. The survey of executives revealed a more accepting attitude toward the use of humor, and a broader view of the potential uses of humor among the British agencies. The content analysis showed a significant increase in the use of humor in the U.S. since the last major benchmark study, but less humor than in the U.K. sample of advertising. An examination of the content analysis data using the Foote, Cone and Belding (FCB) planning matrix revealed a situational use of humor in both countries, with humor most often used with low involvement/ feeling products and least often used with high involvement/feeling and thinking products. For the most part, the views of agency executives reflect the incidence and use of humor in their respective countries.     

Editorial

Abstract

Even though operating within a different electoral system, Great Britain is rapidly following in the footsteps of the United States in the area of political communications. Electoral communications, including advertising, have found a place in the British political process.

This study seeks to find what place and is based largely on personal interviews with politicians, party officials, broadcast and print journalists, academicians and advertising agency executives.

Emphasis is on the marketing and communications efforts of the Conservative Party as the leader in the trend toward American-style campaigning. However, both the Labour Party and SDP/Liberal Alliance are also examined.