Client-agency relations are stable: Lévy

28 October 2009

PARIS: There has not been a "dramatic change" in the way advertisers work with their agencies, even though the recession has led many marketers' to attempt to cut costs, according to Maurice Lévy, ceo of Publicis Groupe, the marketing services conglomerate.

Coca-Cola and Procter & Gamble are among the companies which have moved their agencies onto value-based remuneration systems, and the latter of these firms has even compiled a list of preferred production houses for its creative partners to use.

Unilever, Bayer and General Motors are also currently reviewing major portions of their advertising accounts, which analysts suggest could be indicative of a recovery in the market, or of the need to reduce expenditure in this area.

Zappo's, the online shoe retailer, assessed applications for more than 100 shops in a controversial pitch process earlier this year, while JWT recently withdrew from the race for global creative chores for UPS, claiming the terms offered would "compromise our financial credibility."

Russell Wohlwerth, principal at Ark Advisors, the US consultants, has also warned that agencies may start to "push back" against the role of procurement departments, which are seen as contributing to the creeping commodisation of their work.

However, Lévy, who has been one of the more optimistic commentators on the prospects of the advertising market in recent times, suggested "there is not really a dramatic change in the way clients are working with agencies."

"The trend in cutting fees is something that has existed for ever. I have barely seen an advertiser coming and saying, 'You have done a great job, I want to raise your fees,'" he added.

"What I have seen is very often clients saying 'OK, we have a bonus system, you have outperformed and we are giving you the full bonus.' So I don't see a major change in the behavior of the clients."

Given the pressures of the current climate, however, Lévy suggested that many advertisers are placing a heightened emphasis on increasing their overall share of category sales.

"Clients are, in this uncertain period, very focused on their market share gain and profitability and obviously they want partners who can help them gaining market share," he said.

"If we win more than our fair share for the business, it is because we are providing the clients with solutions which they hardly find elsewhere."

Data sourced from Wall Street Journal, Ad Age, Euro Business Media; additional content by Warc staff