The Clients Are Now in Charge...for real

And some of the big ones are real monsters…

If fighting for every client dollar amongst our own industry wasn’t enough, now we are fighting the clients themselves for theirs… as well as ours. A couple of stories this last week really brought this fact home. The Wall Street Journal "Thrift Darkens Industry Hopes" once again reported that this recession is causing big companies like American Express and Shell to cut back on the fees they pay their advertising agencies and thus, asking for equal or more service for the same or less. And "Advertising Age" reported this week that the biggest of all companies, Walmart, is actually asking many of the consumer companies marketing through this behemoth to divert some of individual marketing budgets back into Walmart’s budget…or else! (Walmart of course, doesn’t state it so overtly. They simply hide the threat with a wink under the guise of a “simultaneous push to clear their shelves of underperforming brands.”

So why should this concern me, a CEO of not an ad agency, but a PR firm that specializes in clients much smaller than any of the above? Because in this business of marketing and influence, what happens at the top eventually filters down…and in this current recession and 24/7 trade news cycles, that eventually is shortened to ‘very quickly.’ The big clients are now firmly in charge.

Yes, I know, we have all played to the cliché, “the client is always right” or some such platitude. But that usually only went so far as to acknowledge a client’s right as the “spending partner” to have final say in friendly, professional disagreements…sometimes financial, sometimes creative. This is a different animal entirely, and worst of all it appears to be a trend. Companies that only recently spoke of and often treated their ad and PR agencies, not as vendors, but as marketing partners, now in this buyer’s market have shifted completely into the “you’re a vendor” gear and are driving hard compensation deals where only they are the winners.

What’s an agency to do that wishes to work with the big boys and girls of the Fortune 500? Not much, unfortunately. You could always just keep quiet and go along believing it’s only temporary and once the economy has righted itself the compensation and partnership equilibrium will be restored. Do I hear snickers out there? You could of course, speak out and up at the injustice of it all…using what’s left of the media, trade or otherwise, to state your case. The end result unfortunately isn’t likely to be any more satisfying and, even more damaging to your bottom line.

Or, you can concentrate like many of us in this business have on the smaller entrepreneurial companies as clients. But you better know how to work smart… and for less here as well. Yes, we’re seeing even ‘more for less’ client demands among the smaller companies as well; but since we’ve never really dealt with monster budgets, incrementally it doesn’t seem as bad. And smaller companies don’t have the bureaucratic layers of internal marketing, advertising and PR managers professing to have the knowledge and wherewithal beyond that of their vendor agencies. Our clients, (well ok, most) actually act like they really respect and need what we bring to the partnership.

At least for now.