Relationships between US clients and their advertising agencies are at – or near to – record lows, according to the 2003 Salz Survey of Advertiser-Agency Relations.

The seventeenth annual survey, conducted in May for Nancy L Salz Consulting in New York, examines the health, effectiveness and amity of relationships between agencies and clients – and pronounces the patient seriously ill.

The cause of the breakdown? " Everything comes back to the economy," opines Nancy L Salz, president of the eponymous consultancy. "It's a tough, tough world out there; tough for both sides."

The principal difference since the last survey, she believes, is that "last year, agencies were feeling the effects of the economy more than advertisers; but now, the advertisers have caught up (or `caught down') with the agencies … It's two years in a row of lower expectations among advertisers of what advertising can do for them."

Asked to rate the quality of work from their agencies on a scale of one to ten (10 highest), advertisers' averaged rating remained low at 7.2. Although a slight improvement from last year's 7.1, it was disappointing alongside the record of 7.5 set in 1986 and matched in 1996.

Conversely, when agency executives were asked for the percentage of major clients for which they were they able to do their best work, the response was 56.6%. Not only is this a historically low figure, it represents a significant decline from last year's response of 69%, itself a record high.

"It's two years in a row of lower expectations among advertisers of what advertising can do for them," commented Salz. But even though the survey "does not reveal a pretty picture this year," Salz found some encouraging results.

Advertisers and agencies agreed that campaign development costs would decline if they could work together more productively. Advertisers estimated this would yield savings of 17% while the average agency expectation was that savings could reach 23.5%.

Both sides agreed that higher ad-development costs were attributable primarily to senior management clientside: too many rounds of creative revisions, too many approval levels for creative changes and too many disagreements about strategy as well as the creative elements of the ads.

The Salz survey's sentiments about the advertising economy echo those uncovered in a similar study by the American Advertising Federation. Although 54% of the top ad executives polled thought the industry was slowly recovering from its prolonged slump, they doubted that robust growth was just around the corner.

Ten percent of those responding to the AAF survey said they thought that while the industry's decline had reached bottom, any recovery was uncertain. Only 16% believed the industry was recovering well and anticipated strong growth.

Data sourced from: New York Times; additional content by WARC staff