Wednesday, July 29, 2009

Sad signs of the times

During a recession, historically businesses look at cutting back on marketing first. This results in agencies struggling, laying off thousands of jobs as well as being late arrivals to the recovery party. Now, cut backs are not the only recessionary strain on agencies these days.

Many marketers are now telling agencies they cannot pay them the same fees they always have- cutting what they pay by up to 30 percent in some cases. Furthermore, some are asking that fees be reduced retroactive to 2008; paying less for work that has already been completed. Maurice Levy, CEO for Publicis Groupe was quoted in the WSJ last week "they want more for less" and David Sable COO of Wunderman said "There is no one in the industry whose clients have not said 'We are under pressure, so you have to cut fees.'"

Furthermore, major clients are trimming costs by stearing clear of retainer relationships and setting up a fee scale based on the ad's performance.

This concept is completely ridiculous when you compare it to most other industries, which is exactly what Scofield Editorial of Indianapolis did (and the entire point of this blog post) when it made this youtube video-Vendor Client Relationship- for it's clients.

Why should the agency have to cut its employees to save the jobs for their clients? A good client agency relationship should work like this- the client wants to see it's agency be profitable as well, because the more profitable an account in an agency, the better the talent that will work on an account.

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