Exploring the Use of Advertising Agency Review Consultants

Fred K. Beard1,
University of Oklahoma

Advertisers and their advertising agency counterparts often agree that both sides may benefit from the use of agency review consultants. Managing the search for an advertising agency is argued to be a frequently time-consuming, expensive, frustrating, and complex task (Miller, 1990; Petrecca, 1997; Stevenson, 1985; Wells, 1994a). Moreover, it seems likely that if there is a good match between client and agency initially, the prospects for a successful, long-term relationship can be improved (Wackman, Salmon, and Salmon, 1987).

Yet continuing controversy over the role of review consultants led the American Association of Advertising Agencies (AAAA) to release guidelines addressing the potential for problems involving bias, conflict of interest, and allegedly unethical review consultant practices (Petrecca, 1997). The guidelines were later updated when the organization recommended that consultants use a standardized AAAA questionnaire to solicit information from agencies and that agencies not pay a fee in order to be included in reviews (Petrecca, 1997).

A recent secondary analysis addressed some of these issues by examining relationships between consultant use and review characteristics and outcomes (Beard and Kim, 2001). Comparisons of agency contender pools and the characteristics of winning agencies (for example, size, recent success, and geographic location) between client- and consultant-managed reviews revealed little evidence of systematic bias. Other results contradict the criticism that consultants attempt to boost their own fees by encouraging clients to split their accounts between creative and media.

While it is encouraging to find there are no obvious differences in initial agency selection, Beard and Kim (in press) argue that an even more important issue is whether the use of review consultants produces more successful client-ad agency relationships. Certainly, the notions of ‘matchmaking’ and ‘marriage counseling,’ metaphors that some consultants favor when describing their services (Leisse, 1994; Wells, 1994a), imply that the resulting relationships will be more successful than if clients manage their own searches. However, the contemporary trade literature on the topic suggests that negative consequences could be just as likely to result as positive consequences from consultant participation. Their participation could be viewed as use by the agency to shift personal or organizational blame for advertising failures, to rationalize relationship terminations, or to drive agency compensation to below profitable levels. On the plus side, it can be viewed as bringing an expertise or objectivity they professedly have to the review process.

Despite the important role review consultants play in the advertising industry, the consequences and characteristics of their use have received only limited attention. The purpose of the present study, a national survey of advertising executives and managers, is to address this gap in the literature. Thus the study (1) compares users and nonusers of review consultants on the basis of the perceived quality of their relationships with their advertising agencies; (2) examines descriptively the reasons for review consultant use; and (3) assesses the extent to which consultants directly influence the outcomes of reviews.

BACKGROUND

Most review consultants are former executives of large corporate advertising departments or major advertising agencies (‘The Controversial Ad Consultants,’ 1977; Stevenson, 1985). The use of review consultants has become prevalent, in much the same way the use of consultants has grown in all areas of sales, marketing, and management (Cohen, 1999). Estimates of the extent to which consultants are managing reviews range from 50 percent to 70 percent (Beard and Kim, 2001; Comiteau, 1998).

Reasons for using review consultants

Consultants in many areas are used for a variety of reasons that appear to fall into three categories: (1) resources, (2) specialization and expertise, and (3) objectivity (Bryan, 1992; Sturdy, 1997). The trade literature on the topic suggests that these reasons likely hold true for the use of review consultants, although it has also been suggested that some advertisers use them primarily to handle agency compensation negotiations.

Resources. Review consultants often assume the clerical and bureaucratic aspects of agency reviews (Stevenson, 1985). These tasks include developing questionnaires, screening prospective agencies, and producing a pool of contenders (‘The Controversial Ad Consultants,’ 1977). The use of consultants in general is attributed to corporate downsizing, which, in the case of corporate marketing departments, has led to a lack of staffing time and personnel available to manage reviews (Cohen, 1999; Goldman, 1991; O’Leary, 1992). Some advertising agency executives favor the use of consultants because they believe reviews will be conducted more professionally and efficiently (Miller, 1990; Stevenson, 1985).

Specialization and expertise. ‘Consultants claim they help clients navigate a daunting clutter of agencies willing to do anything to win new business...’ (Wells, 1994a). Others suggest review consultants expose the ‘unorthodox tricks’ (Wells, 1994a) and ‘ploys’ (‘The Controversial Ad Consultants,’ 1977) agencies allegedly incorporate into their new-business presentations. Some observers warn that agencies attempt to take advantage of clients’ lack of understanding about media planning and buying (DeWitt, cited in Brunelli, 1992; Syedain, 1992). This tendency among consultants and other service providers is referred to as ‘opportunism’ (Moorman, Zaltman, and Deshpand√©, 1992).

Empirical research confirms some client-side representatives lack formal training, expertise, and experience in advertising decision making, or knowledge regarding performance of the client’s role and related responsibilities (Beard, 1996, 1999; Buell, 1975; Korgaonkar and Bellenger, 1985; Korgaonkar, Moschis, and Betlenger, 1984). Agency executives, however, argue they are often victimized in reviews by ‘inexperienced’ consultants (Brunelli, 1992; Goldman, 1991; Lafayette, 1989; Wells, 1994b). Likewise, a leading consultant notes that it is not uncommon for consultants to sell themselves on competencies in which they are not proficient (cited in Cohen, 1999). Specialization and expertise can take the form of inside knowledge of the advertising agency business; the agency review process; and knowledge concerning specific agencies and their personnel, true capabilities, strengths and weaknesses, and potential account conflicts.

Objectivity. As Stevenson (1985) notes, review consultants are hired to ‘establish an objective, systematic framework for evaluating potential agencies.’ Indeed, a survey of consultant clients found that an objective perspective is among the most important reasons for hiring consultants and was also linked by respondents to the need to help overcome prevailing ideas and mindsets within their organizations (cited in Vogl, 1999).

That the objectivity and theoretically neutral perspective of a consultant can help overcome internal barriers to agency selection has been noted in the literature on review consultants. One review consultant argues that consultants help clients keep their minds open and feel more comfortable with their decisions (cited in Donath, 1977). Review consultants are also used when an organization’s internal politics makes choosing an agency too sensitive to handle without the involvement of a neutral outside party (Stevenson, 1985).

Agency compensation. Larger advertisers may use review consultants primarily to handle agency compensation negotiations (Miller, 1990; Pollack, 1997; Stevenson, 1985). Client dissatisfaction regarding agency compensation is common in the industry (Calantone and Drury, 1979; Dagnoli, 1990; Seggev, 1992) and its importance may be growing (Spake et al., 1999). The issue of money is, in fact, one of the most common complaints about consultants in any field (Vogl, 1999). The issue is so important and fee- and performance-based compensation systems becoming so complex (Cram News Service, 2000; Kranhold, 1999; Lamons, 1994) that some suggest advertising agencies may soon start hiring their own compensation consultants to negotiate with those of their prospective clients (Wells, 1994a).

Positive versus negative consequences

Without a strong theory or any previous empirical work directly focusing on this topic, it is difficult to develop a priori predictions of relationships between the use of review consultants and specific relationship outcomes. The various reasons for using review consultants, however, do suggest some explanations for why their use could be associated differentially with the quality of client-ad agency relationships.

In cases where consultants are hired because advertisers lack the resources (for example, personnel and time) or the specialized skills and expertise required to effectively conduct a review, the participation of a consultant could reasonably produce a better match between clients and agencies. Similarly, if consultants bring valuable objectivity to searches and help their clients overcome internal politics and prejudices, then their use should lead to more successful relationships. Conversely, consultants may be hired when managers simply desire to use the presumed objectivity and/or status of an outsider ‘to legitimate or influence a course of action’ (Sturdy, 1997), support their own competitive positions, or share the blame for agency failures. Such uses for review consultants should be reflected in the lack of any meaningful contribution to a successful client-ad agency relationship.

Finally, advertisers using consultants primarily to handle compensation negotiations should be more satisfied with agency compensation. On the other hand, many agency executives and even some review consultants acknowledge that consultants occasionally attempt to prove they can obtain agency services at the cheapest rates (‘The Controversial Ad Consultants,’ 1977; Wells, 1994a). Thus, such ‘cut-to-the-bone compensation deals’ (Wells, 1994b) could be expected to lead to reduced agency incentive to perform, poor advertising, and reduced client satisfaction (Knobler, 1988; ‘The Controversial Ad Consultants,’ 1977).

Extent of influence

The extent to which consultants directly influence the final selection of an agency is obviously an issue of great concern to advertising agencies. Beard and Kim (2001) found that the characteristics of agencies winning consultant- versus client-managed reviews were nearly identical, suggesting minimal consultant influence on final outcomes. This finding is consistent with suggestions in the trade literature that most consultants merely offer advice and guidance during the early and middle stages of a review but leave the final choice to the client (Donath and Revett, 1977; Staab, 1997; Stevenson, 1985; ‘The Controversial Ad Consultants,’ 1977). Similarly, both advertisers and industry observers argue that it is the client’s responsibility to make the final decision (Knobler, 1988; Pollack, 1997), although at least one consultant has acknowledged that some clients do ask consultants to choose the winner (‘The Controversial Ad Consultants,’ 1977).

RESEARCH QUESTIONS

Despite the prevalent and controversial role of review consultants in the advertising industry, no empirical evidence exists to link their use to either positive or negative relational factors characterizing client-ad agency relationships. This study addresses these issues by seeking answers to the following research questions:

Question 1:            Are client-ad agency relationships that begin with consultant-managed reviews characterized by more positive relational factors than those that                                 begin with reviews managed by advertisers themselves?

Question 2:            What are the most prevalent reasons for using review consultants?

Question 3:            Are the reasons advertisers use review consultants associated with positive or negative relational factors characterizing client-ad agency                                 relationships?

Question 4:            To what extent do review consultants directly influence final review outcomes?

METHOD

The sample consists of advertising agency searches that were identified using the ‘accounts in review’ listings published in Advertising Age during the period of January 8, 1996 through December 31, 1999, a cut-off date. This period and population were selected because Ad Age began reporting its ‘accounts in review’ section in the January 8, 1996 issue, and the listings provided a readily identifiable, purposive sample of U.S. organizations that had recently conducted searches for advertising agencies.

Recent relationships were investigated to maximize the number of searches for which there would be an available manager or executive familiar with the details of the search; most importantly, whether or not a review consultant had been used. Given the emphasis on examining conceptual relationships and the difficulty of developing a probability sample of recent reviews, the sample approach seems appropriate. This procedure produced a total of 413 account reviews. Thirty-two duplicate reviews, that is, multiple reviews conducted by the same company, were deleted from the sample, producing a final sample of 381 companies and reviews.

After identifying an advertiser by company name in Ad Age, the advertiser was then located in the most recent edition of the Standard Directory of Advertisers (1999) and an appropriate respondent identified by job title (for example, manager or director of advertising, manager or director of mar­keting communications). Information for advertisers not listed in the Directory was sought from other sources, including standard business directories and corporate websites. In those cases where a suitable respondent could not be identified by name and job title, a more senior executive was selected. All respondents were requested to forward the questionnaire to another executive or manager if they felt there was someone who was a more appropriate recipient, given the purpose of the survey. Contact information for 56 of the original 381 companies could not be found, reducing the sample to 325 reviews.

Procedure

The survey procedures included an initial mailing of a self-administered questionnaire and two follow-up mailings. Survey procedures guaranteed complete anonymity to respondents because of the often-sensitive nature of client-ad agency relationships. Respondents were asked to return a response card mailed separately from the questionnaire for the purposes of identifying respondents and eliminating them from follow-up mailings. A new $1 bill was included in the initial mailing as an inducement, as was an offer of a summary of the study’s results. As noted above, respondents were asked to forward the survey packet to another manager or executive, if they felt there was someone who could more appropriately respond to questions concerning the review and relationship with the current advertising agency.

The survey produced a response rate of 29.8 percent, after the subtraction of five ‘ineligibles’ (for example, had not actually conducted a review) and 35 ‘undeliverables’ reduced the original sample to 285. Similar surveys conducted among marketing and advertising executives and managers over the last several years (Beard, 1996, 1999; Hunt, Wood, and Chonko, 1989; LaBahn, 1996; Morgan and Hunt, 1994; Spake et al., 1999) as well as research reported by the Beta Research Corporation (1991) suggest that a response rate between 18 and 49 percent might be expected from such a sample. The complete anonymity offered to respondents, and the failure of some respondents to return the response card (67 compared to the 85 completed questionnaires), made it impossible to perform a check of sampling adequacy by comparing respondents to nonrespondents. However, a check for potential bias associated with nonresponse was conducted, following the procedures recommended by Armstrong and Overton (1977). Early respondents (the first 25 percent who responded) and late respondents (the last 25 percent) were tested for significant differences between mean scores for the five relational factor scales and three other continuous variables – years in current position, length of relationship, and age. The results of these comparisons revealed no statistically significant differences, indicating a reduced potential for bias attributable to nonresponse. Thus, although the resulting response rate is on the moderately low end of average for such research, the results should be considered generalizable within reasonable limits.

Measure development

The survey instrument included three major sections: (1) occupational and demographic items, including whether or not a consultant had managed the respondent’s search for his or her current advertising agency; (2) measures of relational factors characterizing respondents’ relationships with their agencies; and (3) a ‘skip’ section consisting of reasons for using a search consultant and extent of influence, to be completed by respondents who had used consultants.

Measures of relational factors. Multi-item scales measuring the quality of various relational factors were used identically to their use in past research, with minor modifications where necessary to fit the context of client-ad agency relationships. These scales included the following:

(1) client satisfaction with agency performance (Beard, 1996, 1999); (2) satisfaction with compensation (LaBahn, 1996); (3) trust (Grayson and Ambler, 1999; Moorman et al., 1992); (4) quality of interaction (Grayson and Ambler, 1999; Moorman et al., 1992); and (5) commitment (Grayson and Ambler, 1999; Moorman et al., 1992).

The work of researchers focusing on the reasons for breakups in client-ad agency relationships (Doyle et al., 1980; Michell et al., 1992) has clearly established the importance of the client’s perception of the advertising agency’s performance as a relational factor. Doyle et al’s (1980) research indicates that clients rate dissatisfaction with agency performance the most important cause of failed relationships. Dowling (1994) found that the desire for better creative ideas is a primary reason for switching agencies. This is consistent with Doney and Cannon’s (1997) observation that ‘Considerable empirical and anecdotal evidence suggests that the primary criteria for current supplier selection decisions and future purchase intentions involve a supplier’s performance.’ Beard’s (1996, 1999) ‘satisfaction with agency performance’ scale – originally adapted from Doyle et al. (1980), Michell (1987), and Wackman et al. (1987) – was used in this study.

Some researchers suggest that the importance of satisfaction with compensation as a relational factor is growing (LaBahn, 1996; Spake et al., 1999). Fair compensation is defined as the client’s perception that its agency charges fairly for its services (LaBahn, 1996; Wackman et at., 1987). LaBahn’s ‘fair compensation’ scale was used in this study.

Trust was selected as an important factor for two reasons. First, a recent stream of research on relationship marketing posits that trust may be the most important behavioral factor leading to a variety of positive relationship marketing outcomes, such as perceptions of service quality, quality of interactions, the belief that relational partners will not act opportunistically, and a reduced propensity to terminate the relationship (Doney and Cannon, 1997; Ganesan, 1994; Grayson and Ambler, 1999; Moorman et al., 1992; Morgan and Hunt, 1994; Zaltman and Moorman, 1992). Second, Doney and Cannon’s (1997) research indicates that the processes by which trust develops between a trustor and trustee could be substantially influenced by third-party evaluations, such as those of a review consultant. More specifically, ‘buyers infer the trustworthiness of a supplier through the words and actions of other people and organizations.’ Trust is defined as a ‘willingness to rely on an exchange partner in whom one has confidence’ (Moorman et al., 1992). To measure trust, items from the scale developed by Moorman et al. were used.

The importance of perceived quality of interactions as a relational factor has been well established in both the services literature (Chase, 1978; Danet, 1981; Mills, 1986) and the client-advertising agency relationship literature (Beard, 1996, 1999; Cagley and Roberts, 1984; LaBahn, 1996; Wackman et al., 1987). A scale measuring perceived quality of interactions, the degree to which respondents view their interactions with agency representatives as productive, was adapted from Moorman et al. (1992).

With a growing concern over the decreasing longevity of client-ad agency relationships (Beard, 1999) and recent research interest in the issue of client loyalty (Michell and Sanders, 1995), the commitment of clients to maintaining their relationships with their advertising agencies is clearly an important relational factor. Commitment is defined ‘as an exchange partner believing that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it …’ (Morgan and Hunt, 1994). Morgan and Hunt’s commitment scale, originally adapted from Moorman et al. (1992), was used in this study.

Measures of consultant use and influence. Multi-item scales measuring four constructs of consultant use – resources, specialization and expertise, objectivity, and agency compensation – and extent of influence were constructed using items generated from a review of the literature. An initial pretest of these scales was conducted among 20 academicians and practitioners by asking them to assign each item to the defined construct they thought represented it best, as well as to note when they thought an item could be represented by more than one construct. After data collection, the properties of the final scales were assessed using adjusted item-to-item correlations and coefficient alpha. Reliability coefficients for all the scales used in the study, as shown in Table 1, range from acceptable to excellent (Nunnally, 1978).

TABLE 1: SCALE CHARACTERISTICS: MEANS, STANDARD DEVIATIONS, AND RELIABILITY ESTIMATES*

Scale/Variable Items M SD Alpha
1. Trust 5 4.02 1.75 .83
2. Quality of interaction 4 5.12 1.02 .88
3. Commitment 3 5.47 1.34 .86
4. Satisfaction with compensation 3 4.72 1.11 .64
5. Satisfaction with performance 4 5.16 1.09 .86
6. Resources 4 4.89 1.31 .78
7. Specialization/Expertise 5 4.14 1.27 .83
8. Objectivity 6 4.22 1.49 .90
9. Compensation 3 4.00 1.75 .90
10. Extent of influence 4 3.17 1.08 .68
* Measures were constructed using items assessed on a 7-point scale of strongly disagree (1) to strongly agree (7).

FINDINGS

Description of the sample

The largest percentage of respondents consists of vice-presidents of marketing or advertising (37 percent), followed by managers and directors of advertising (30 percent), and managers and directors of marketing communications (17 percent). Ninety percent of the agencies evaluated by the respondents are full-service advertising agencies, and the mean length of their relationships is a little more than two years. Approximately 40 percent of the respondents represent companies with annual advertising expenditures greater than $60 million, followed by $15 million on less (24.7 percent) and $16 to $29 million (20 percent). The average age of the respondents is 43 years, and they report being in their current positions an average of a little more than four years. In terms of consultant use, the findings indicate that consultants managed about 44 percent of the searches. Given Newsome’s (1980) observation that it takes advertisers as much as two years to fully recover from an agency change, it seems clear that the sample consists of relationships in the early stages of development. Similarly, with an average tenure of four years in their present positions, it seems likely that a majority of the respondents were present during the search that led to the hiring of their current advertising agencies.

Research questions

Research Question 1 asks whether client-ad agency relationships that begin with consultant-managed reviews are more successful than those beginning with advertiser-managed reviews. To answer this question, respondents who managed their own searches were compared to those who used consultants on the basis of the five relational factors of interest and the mean differences tested for significance using t-tests. As the results presented in Table 2 show, respondents’ perceptions of the relational factors characterizing the relationship with their advertising agencies are similar, if not identical, between the two groups. Thus, these findings indicate that the use of search consultants is associated with neither more nor less successful client-ad agency relationships.

TABLE 2: MEAN COMPARISONS ON RELATIONAL FACTORS BETWEEN ADVERTISER- AND CONSULTANT-MANAGED SEARCHES

Dependent Measure Advertisers Consultants Test Results*
Satisfaction with performance 5.16 5.17 t = –.02
p = .98
Satisfaction with compensation 4.61 4.87 t = –1.04
p = .30
Trust 4.71 4.73 t = –.11
p = .91
Quality of interaction 5.10 5.14 t = –.15
p = .88
Commitment 5.30 5.70 t = –1.38
p = .17
* All t-tests are two-tailed

 

Question 2 asks what are the most prevalent reasons for using review consultants. To answer this question, mean scores and percentages of agreement (based on scores greater than 4.00 on a scale of 1 to 7) were calculated for the four scales measuring reasons for consultant use. As the results in Table 3 show, respondents agree the strongest with statements concerning the use of consultants for the resources reason (for example, clerical work, routine chores, and issues of review efficiency), as indicated by both the highest mean and largest percentage of agreement. Approximately 60 percent of respondents agree that they use consultants for the specialization/expertise and objectivity reasons. Less than one-half of the respondents agree they use review consultants to manage compensation negotiations.

TABLE 3: REASONS FOR USING A REVIEW CONSULTANT: MEANS AND PERCENTAGE SCORES OF AGREEMENT*

Scale M SD Percentage of Agreement
Resources 4.89 1.31 74.4%
Specialization/Expertise 4.14 1.27 60.1%
Objectivity/Perspective 4.32 1.49 63.1%
Compensation 4.00 1.78 44.5%
* n = 36; measures were constructed using items assessed on a 7-point scale of strongly disagree (1) and strongly agree (7), with agreement indicated by scores greater than 4.00

 

Research Question 3 asks whether the reasons advertisers use review consultants are associated with positive or negative relational factors. The results of a correlational analysis of the reasons for using review consultants and relational factors are reported in Table 4. As the results indicate, the use of consultants for the resources reason is significantly correlated with commitment to the advertising agency and satisfaction with the agency’s performance. It is nearly significantly correlated with trust. The use of review consultants for specialization/expertise and objectivity are both significantly correlated with quality of interaction, and objectivity is also nearly significantly correlated with commitment and satisfaction with performance.

TABLE 4: BIVARIATE CORRELATIONS AMONG REASONS FOR USING CONSULTANTS AND RELATIONAL FACTORS

Scale 1 2 3 4 5 6 7 8 9
1. Resources .20 .26 –.34 .33 .18 .39* .16 .36*

2. Specialization/Expertise

  .76** .31 .24 .38* .27 –.11 .28
3. Objectivity     .24 .18 .34* .31 –.14 .33
4. Compensation       –.08 .07 .25 –.18 .03
5. Satisfaction with performance         .62** .79** .80** .71**
6. Satisfaction with compensation           .54** .46** .44**
7. Trust             .75** .66**
8. Quality of interaction               .62**
9. Commitment                
Note: n = 36; significance tests are two-tailed
*p < .05, **p < .01

 

In contrast, the use of consultants for compensation negotiations is not associated with any of the relational factors, including, somewhat ironically, satisfaction with agency compensation. Thus, the reasons for using a review consultant are associated differentially with respondent perceptions of positive relational factors in the relationship with his or her advertising agency.

Research Question 4 asks to what extent consultants directly influence the final outcome of reviews. As the mean score of 3.17 for this scale, reported in Table 1, indicates, respondents disagree that consultants have a direct and substantial influence on the final outcome of their reviews. Furthermore, more than 73 percent of the respondents disagree (scores less than 4.00) that their consultants had a direct influence on the final selection of their agency.

DISCUSSION AND CONCLUSIONS

The basic question driving this study is the following: Does the use of review consultants lead to more successful client-ad agency relationships?

Initially, and based on the similarities between users and nonusers of review consultants, the answer to this question is no. The results clearly indicate that relationships beginning with a consultant-managed review are neither more nor less successful, based on the advertiser’s perception of five key relational factors. Thus, the claim that review consultants are ‘matchmakers’ who produce superior client-ad agency relationships is somewhat overstated.

However, the results of this study also indicate that some of the reasons for using consultants are significantly correlated with favorable relational factors. This finding suggests that some individual advertisers do benefit from their use of review consultants. Thus, while consultant-managed searches may not produce more successful client-ad agency relationships overall when compared to client-managed searches, individual advertisers who use consultants for specific reasons do perceive their agencies more favorably in some areas.

One explanation for this finding is that advertisers’ use of review consultants is quite strategic and goal-directed. Rather than painting a picture of advertisers blindly turning over their reviews to so-called experts, the results suggest that advertisers strategically use consultants to accomplish specific goals. As Sturdy (1997) notes, the view of top managers as victims of consultants, who exploit managerial anxiety and insecurity for their own benefit, is contradicted by the fact that many managers play an active role in the consultancy process and are also critical and skeptical of both consultants and their ideas. One conclusion, then, is that advertisers use consultants for specific reasons in their reviews, such as providing needed resources or specialized knowledge of the agency business, but they do not allow these uses to overly influence the final selection of an agency. This study’s finding that approximately three-quarters of the respondents disagree that consultants directly influenced the final outcome of their reviews also supports this conclusion.

Therefore, another conclusion based on these findings is that for advertisers who may lack the resources, experience, or organizational consensus to successfully conduct a review, the use of a consultant will likely produce a more successful out­come than it would have been if the advertiser had proceeded on his or her own. Yet the final results of such reviews will be a client-ad agency relationship that is no more successful than one resulting from a motivated and capable advertiser managing his or her own review. An important, and somewhat obvious, managerial implication of these results is that managers who are confident about their own abilities to handle an agency review should be encouraged to do so. Thus, in those cases where the advertiser organization does possess the resources and experience, and willingness to invest them, there is little to be gained by hiring a consultant.

As the results regarding Question 2 indicate, the majority of advertisers (almost three-quarters) who use consultants do so for reasons of resources and efficiency. This finding also provides additional support for the conclusion above. If consultants are primarily performing review tasks that advertisers are capable of doing, if they simply wanted to invest the time and other resources to do them, then the results of the reviews, and quality of the ensuing relationships, should not be much different than they would be if the adver­tisers conducted their own reviews.

The finding regarding the use of consultants primarily for agency compensation negotiations suggest that this use doesn’t appear to contribute to problems in client-ad agency relationships, as charged by some advertising agency executives. If consultants frequently drive compensation below profitable levels for advertising agencies, then this disincentive to perform would be reflected in the advertisers’ dissatisfaction with agency performance as well as other relational factors. Conversely, it is also important to note that the use of consultants for this reason doesn’t seem to lead to any positive contributions to client-ad agency relationships either, unlike the other three reasons for using search consultants. A managerial implication suggested by this conclusion is that advertisers who use consultants strictly for agency compensation negotiations should be aware that it might not lead to a more satisfactory agreement.

The results regarding the extent to which consultants directly influence the decision regarding which agency to hire should be encouraging to advertising agency executives. The moderately strong disagreement by respondents that consultants directly influence the selection of the agency contradicts advertising agency concerns and criticisms in this area. These results are consistent with Beard and Kim’s (2001) earlier finding that the results of advertiser and consultant-managed searches are nearly identical in terms of several important agency characteristics. One implication of these findings for agency managers and executives is that they can, and should, remain focused on the advertiser as the key decision maker in the review.

As a final conclusion, the results of this study suggest that conflict regarding some aspects of the decades-long controversy over the role of review consultants in the advertising industry might be put to rest. At the very least, review consultants do not appear to wield an undue amount of influence in the review process, which addresses agency concerns of bias and conflict of interest, and their use does not appear to be associated with inequitable compensation agreements or other negative relationship characteristics. However, future research on this topic might usefully address at least two areas. First greater confidence could be had in these findings if the study were replicated with a larger sample and, ideally, over a longer period of time.

Second, it would also be valuable to continue investigating the role of trust in the development of successful client-ad agency relationships and the extent to which a third-party evaluation, such as a review consultant’s, might contribute to it. Trust in client-ad agency relationships has often been observed to be antecedent to productive creative work (for example, Michell, 1984), and more recently, Michell and Sanders (1995) found that mutual trust was rated the most highly among 57 other variables in explaining client loyalty in client-ad agency relationships. One explanation for the lack of a statistically significant relationship between consultant use and trust found in this study is that its effects may vary at different points in the relationship between advertiser and agency. Thus, future research with a larger sample and over a longer period of time would enable a comparison between relationships in the very early stages of development (for example, first six months) and those in latter stages. This would be especially valuable since the results of this study do confirm that trust is highly and positively correlated with many other key relational factors.

 

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  1. The author acknowledges funding support for this research provided by the College of Arts and Sciences, University of Oklahoma, and the Gaylord College of Journalism and Mass Communication, University of Oklahoma.

APPENDIX

Scale Items and Indicated Constructs

Trust

  1. If I or someone from my department could not be reached by our agency representative, I would be willing to let this representative make important advertising decisions without my involvement.
  2. I trust my agency representative to do things I can’t do myself.
  3. I trust my agency representative to do things that people in my department can’t do themselves.
  4. I generally do not trust my agency representative.*
  5. I trust my agency representative to get the job done right without having to monitor his/her progress.

Quality of Interaction

  1. Meetings with my agency representatives produce novel insights.
  2. My agency representative displays a sound strategic understanding of my business in his/her interactions.
  3. My agency representative is very client-oriented in his/her interactions with us.
  4. My interactions with my agency representative are productive.

Commitment

  1. I am committed to my relationship with my agency representative.
  2. I consider my agency representative to be part of my department.
  3. I really care about the future of my working relationship with my agency representative.

Satisfaction with Compensation

  1. Our agency’s charges fairly reflect the service they provide.
  2. Our agency makes a fair profit on the work they do for us.
  3. Our agency’s compensation agreement is too generous. *

Satisfaction with Performance

  1. The agency I work with does good creative work.
  2. The agency gives good marketing advice.
  3. The agency has good account management.
  4. The agency has a good understanding of our business.

Resources

  1. The consultant’s duties consisted of tasks we could have done if we had wanted to invest the time.
  2. We used the consultant mainly because we expected the review would be managed more quickly.
  3. Our regular staff was too busy to handle the routine chores involved in the search.
  4. That the search would be completed in less time was an important reason for our hiring the consultant.

Specialization/Expertise

  1. One of the consultant’s main contributions was deciding which criteria should be used to evaluate the agencies.
  2. We needed someone to manage the search who specializes in evaluating ad agencies.
  3. The process of hiring an ad agency is too complex to accomplish without the help of an expert.
  4. We needed an expert on ad agencies and searches to help us make the best decision.
  5. The consultant’s “insider knowledge” of the ad agency business was an important reason we used one.

Objectivity

  1. The consultant helped us pull together as a team and focus on what we truly needed.
  2. The consultant was needed to help overcome prevailing ideas and mindsets within our organization.
  3. The consultant was hired to bring an outsider’s objective perspective to the search.
  4. The consultant was hired to help overcome issues of internal politics and prejudices involving the search for a new agency.
  5. We needed a neutral, outside party involved in the search.
  6. One of the consultant’s main contributions was simply helping everyone keep an open mind.

Compensation

  1. The consultant’s most important role in the review involved negotiating agency compensation.
  2. We handled the issue of agency compensation ourselves, without the advice of the consultant.*
  3. The consultant played a central role in negotiating agency compensation.

Extent of Influence

  1. We picked the agency the consultant recommended.
  2. The consultant’s recommendation was the most important reason we hired the agency we did.
  3. The consultant’s recommendation had a big influence on the final decision to hire the agency we did.
  4. We needed an expert on ad agencies and searches to help us make the best decision.

*Reverse-scored items.

NOTES & EXHIBITS


Fred K

Fred K. Beard