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Ad agencies feeling more comfortable about being honest with clients
By our News Team | 2023
But too many soft KPIs and the wrong KPIs are a rising concern for agencies, a study by the World Federation of Advertisers finds.
Advertising agencies are increasingly comfortable about being honest with their clients when it comes to performance evaluation, according to new research from the World Federation of Advertisers and strategic partner Decideware, a marketing procurement company.
Client-Agency Performance Evaluations 2022 , a study that was shared with WFA members and guests this month, found that 68% of agencies are now comfortable telling their clients –most of the time – what needs changing at their end, compared to just 45% two years ago.
Photo by Christina Morillo from Pexels
Agencies also reported a slight uptick in qualitative performance being evaluated (56% compared to 54% in 2020), again at least most of the time.
“While this was not a significant increase, ‘holding steady’ might be viewed as a win and the vast majority of agencies now receive some level of performance feedback,” WFA commented.
The findings are based on more than 90 respondents from 82 multinational organisations (49 clients and 33 agencies), with advertiser respondents responsible for more than US$69-billion in global ad spend.
Nevertheless, says WFA, the current mix of KPIs is causing dissatisfaction among both clients and agencies. While the top KPI for clients – client satisfaction – aligns with agency desires, advertisers added that the lack of “measurable or objective” KPIs is their number one concern. Agencies indicate that the wrong things are often being measured.
Inappropriate to be paid based on performance
“The result is that agencies do not always find it appropriate to be paid based on their performance. Mirroring the previous study in 2020, less than half of agencies think their compensation should be linked to the results of their evaluation,” WFA notes in a media statement.
Broken down by agency type, clients seem to be prioritising media, full service and creative agencies for most regular evaluation. In at least three out of four cases, media agencies receive compensation based on the results of evaluations, as KPIs tend to be more objective and measurable.
Digital (35%) and production (44%) partners indicated they are most likely not to get any opportunity to receive structured feedback. Overall, almost one in three agencies surveyed said they still didn’t have any opportunity to evaluate their clients, with a further quarter having to do it in an unstructured way.
Nevertheless, rising agency satisfaction with improved client processes is illustrated by the drop to 13% (from 38% in 2020) in agencies agreeing that “no matter the feedback, client is king and won’t change”.
“Advertisers need to work harder to become the client of choice by actively nurturing agency relationships,” said Laura Forcetti, Director of Global Marketing Sourcing Services at the WFA.
“Doing this means starting ‘at home’ and looking at their own performance before blaming their partners. This report highlights the number one challenge faced by agencies is ‘conflicting needs/expectations across siloed client organisation’. Clients must get their houses in order and performance reviews provide agencies with an opportunity to help them on that journey.”
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