The other day I was working on a project and needed to calculate the average tenure of TREKK employees. (The answer, in case you're wondering, is 8.5 years. Pretty impressive when you consider the massive turnover marketing agencies and technology companies typically experience.) In the process, I got to wondering what the average tenure of a TREKK-client relationship looked like and how all of these numbers compare to what's happening in the industry.I stumbled upon some very interesting, albeit startling, data. In 1984, the average agency-client relationship lasted 7.2 years. In 1997, that number had dropped to 5.3 years and continued to decline until 2013, where it plateaued at less than 3 years. Two to 3 years remains the average today, according to the Bedford Group. (Thankfully, I also found that the average TREKK-client relationship is well above that at just over 5 years.)
What's causing this and what are the implications on both the agency and client sides?
The Trend toward Specialization
Over the last 30 years, agencies have evolved into specialists – advertising agencies, branding agencies, digital agencies and PR firms. While specialization is important to a degree, it does create fragmentation across your communication programs. And if there's one thing I know for sure about the current market, this is NOT the time for fragmentation! Today, more than ever, audiences expect a seamless experience in their brand engagements. At every touch point and across every channel, they expect marketers to know who they are, what they like, what the need and when they need it. Providing such an experience necessitates greater integration, not greater fragmentation.
Social media has forever blurred the lines between agency roles. Is it the territory of your web or digital agency? Or is it better suited for your PR firm? Or, because you need to create standards for how your brand engages with social networks, perhaps it really should fall within the domain of your branding agency. What if you want to run social media ad campaigns? Isn't that clearly a job for your advertising agency? See the problem? Deciding who the best partner to manage this channel is almost impossible unless you literally divide it by task, at which point, you're only furthering the problem of fragmentation.
Turnover. Turnover. Turnover.
Perhaps at the heart of the problem is the high CMO turnover rate. Today, the average CMO stays with a company only 22 months. No sooner does a new CMO come in and establish his/herself within the organization and they're gone. A new CMO steps in, cleans house internally and externally and starts to build a new marketing wheel. Programs stall if they don't die. Objectives are reset or completely redefined. Progress never has a chance to come to fruition. If progress doesn't stand a chance in this climate, how does marketing effectively justify its budget? How does the CMO get the business support he/she needs to succeed? Answer: they often don't. Out goes that new CMO and in comes another. Out goes the agency, in comes another.
The decline of agency-client relationships has major implications for both agencies and clients. For client organizations, the costs can be even higher. Switching agencies is not easy, nor is it cheap. Hourly rates change, negotiated terms or special offers no longer apply, and all of the shared knowledge between client and agency teams disappear. Client-side marketers then end up spending more time and more money bringing their new agency up to speed, transferring their assets and knowledge, and getting projects off the ground successfully. It can be a bumpy, costly and time consuming transition.
Clearly these are challenging times for both agencies and marketers. In my next post, I'll share my thoughts on how we can work together to bring about a return to more sustainable relationships that produce long-term results and value.
To learn how to unite your sales and marketing, whether you are apart of an agency or a marketing department, click the image below.