Marketing Procurement

Are you gambling with your agency partners?

Building Partnerships

“Let’s face it: gambling, which is often seen as a negative, impulsive activity, is an essential part of the process of partnership building”

There is no place like Las Vegas to understand gambling. Gambling’s what it’s known for. If you visit Sin City and do not hold some cards, play at a slot machine, sit at a poker or blackjack table or toss some dice, you are missing out on what the gambling experience is all about. Thankfully, according to the Las Vegas Convention and Visitors Authority, over 32 million people visit every year to experience it. Gambling activities in Las Vegas reached a record $13.4 billion in revenue in 2021 alone. 

It seems impressive, but it’s quite small in comparison to the spend level in advertising and marketing and the size of spend agencies and clients are handling together. Their partnership is essential to success, yet too often clients are taking chances with their agencies and risking losing it all. Let’s explore what lessons from gambling can be applied to the delicate but powerful client/agency relationship to strengthen partnerships.

It’s a game of skill

Not every game in Vegas requires skill. But every aspect of managing a relationship with an agency does. Sophisticated clients master the artform of getting most value from their partnership with agencies. They apply rigor to the commercial side of the partnership, from getting the right contract in place to managing the financial relationship and getting optimal business value. They implement effective processes to ensure strong collaboration and outstanding work. They provide strong guidance, manage expectations, and provide actionable feedback to steer and continuously improve the relationship. As a result, they set the partnership for success. 

Lesson learned: Brand advertisers should treat agency management as a professional discipline and invest in building the skills needed among their team so they can become and remain the most effective partner to their agencies. To do: Check out professional on-demand online training programs like the one offered by the Association of National Advertisers (ANA) on the topic of agency management.

Nothing comes for free

Vegas casinos occasionally invite gamblers to stay at their property at no costs. They may even comp food and wine. Yet, as we know, they are in the business of turning a profit and those so called “complementary” services to attract visitors are a small investment compared to what they expect to generate from them. In the client/agency relationship, agencies are often investing in the relationship, bringing top talent or senior management into projects at their expense. Yet, like casinos, agencies are also in the business of turning a profit and those investments are either leading to more work or will be ultimately absorbed in agency overhead which clients pay for one way or another. 

Lesson learned: Brand advertisers should seek full transparency about agency resources they are paying for or leveraging so both parties can build long-term trust. To do: Use cloud-based Scope of Work (SOW) solutions to track and analyze scope of work and financial data. 

The house always wins

In the casino business, the house always wins in the long run. That’s right, they have a mathematical edge over players and it’s a matter of time until they realize it. In the client/agency relationship, no matter how balanced the partnership is and how thoughtful the client might be about treating the agency fairly and respectfully as a business partner, the client ultimately pays the bills and has unique leverage on the relationship. We see clients frequently put their account in review (opportunistically or based on a set cadence), evaluate alternative talent in the marketplace, which ultimately leads them to change agencies. 

Lesson learned: Brand advertisers should not take unfair advantage of their status to exercise excessive pressure on agency partners and fail to recognize that partnerships are based on mutual respect, reasonable expectations and combined commercial success. A review should only be triggered when there is a gap in capability. To do: Publish your Partnership Principles to foster a balanced relationship with agencies and monitor adherence.

It’s about risks and rewards

The most successful business ventures are often based on low risk and high reward. However, gambling is known to be both high risk and high reward. The expected reward is often directly proportional to the risk you’re willing to take. In the client/agency relationship, both parties are taking risks. A brand advertiser may take a chance on a new agency so it can prove itself. An agency may accept some of its compensation to be at risk in return for a larger payout. In both cases, they are taking high risks and expecting a fruitful outcome. The client/agency relationship is risky business, period. 

Lesson learned: To get most value from their agency partnerships, brand advertisers must encourage a risk culture, encouraging agencies to innovate and challenge them to ultimately deliver outstanding work. To do: Set clear expectations with agencies about the level of risk you are willing to take and what is expected in return. Measure and provide feedback on whether expectations were met during your annual relationship and performance assessment. 

The nature of any relationship is speculative. Some relationships thrive while others fail. Agency management is the professional discipline needed to improve your odds of success. Let’s face it: gambling, which is often seen as a negative, impulsive activity, is an essential part of the process of partnership building. Some organizations gamble without knowing it. Or they are unclear about their odds to succeed. In either case, they must accept the consequences or hedge their bet. Therefore, many advertisers work with multiple agencies instead of relying on a single one. 

Marketing is a discipline that encourages risk-taking which may lead to occasional big pay outs. Ultimately, we all play to win. And remember, you only have a gambling problem if you are losing.

About the author

Bruno Gralpois is Co-Founder and Principal of Agency Mania Solutions