Wednesday, March 11, 2009

6533: Sleeping With The Frenemy.

Alberto J. Ferrer doesn’t visit The Big Tent as frequently as in the past; hence, we should relish his rare perspectives all the more.

Multicultural Shops at Risk in the Frenemy Era
How Long Before Your General-Market ‘Partner’ Steals Your Account?

By Alberto J. Ferrer

These days, it seems like everyone is working with everyone else, regardless of competitive status. Microsoft sells advertising to agencies while at the same time competing with them via their own ad agency. Clients request their multicultural shops work hand-in-hand with their general market agencies, with which they compete. The lines are certainly blurring when it comes to defining who is a competitor and who is a friend.

The multicultural agency is in a particularly tough spot here. Not only is it often required to work with general-market agencies on client assignments, but it is often asked by clients to share strategies, insights, learning, tools, assets, research, etc., with the general-market shop on the account. This is the same shop that will later turn around and try to take that very account (or at least other accounts for which the multicultural shop is vying).

Talk about being between a rock and a hard place. Multicultural agencies want to be good partners to their clients and work well with the other agencies, which are increasingly competing for multicultural business (any size budget will do). The general-market agencies don’t mind sharing. Like it or not, they are safe in their belief that no sane client would ever assign their multi-million-dollar general market account to a multicultural shop. But there is ample reason for the multicultural shop to be hesitant and cautious in its working with these frenemies.

One particularly insidious development of this phenomenon of competing agencies working together is the agency bait-and-switch move. This happens when the general-market agency, realizing that, even with its existing resources and holding company’s sibling multicultural shops, it doesn’t have enough to go into a new business pitch that includes multicultural. What they do, then, is seek outside shops that bring in the best-in-class expertise and “partner” with them for the pitch. In many cases, these agencies end up being good contributors to the overall pitch process, adding value in general, as well as impressing the clients, specifically in the multicultural area.

Once the pitch is won, the general-market agency lays out a management process for the client, offering a streamlined and simple work process by channeling everything through them. The multicultural shops are forced to negotiate scope of work, staffing plans and fees with the general-market shop, which acts as de facto client as well as partner, depending on the situation. But still, the multicultural shop soldiers on, being a good partner and swallowing a lot of pride.

After time passes, work is done, business is built, and things continue moving forward, the deafening thud of the other shoe dropping is heard. As the economy sours and thoughts turn to saving money, the leader on the business (the general-market shop), has a great idea. The client can save money by consolidating the multicultural shops’ business within the general-market agency. Think of all the fees saved! Further, more money can be saved by reducing the commitments to these ethnic markets and thus lowering the client’s investment in multicultural marketing. Brilliant!

Out comes the one multicultural marketing person in the entire general-market agency (or maybe just an agency staffer who passes off international experience as multicultural expertise) to talk the big talk to the client. We can do it for you at the same level of quality, he’ll say, but more efficiently because we’re part of the same company (never mind that that same company passed him over during the pitch process). We’ll save you money.

And so it ends, with the general-market shop using the credentials, experience and ideas of the multicultural shops to win the pitch, then persuading the client to switch horses in mid-race for a net savings in fee dollars (all the while increasing its own fee revenue by taking on the multicultural work) and a reduction in multicultural marketing budgets. That’s music to the ears of the client CFO and procurement folks, but should be like fingernails on a chalkboard to the CMO. Sadly it isn’t. Why do marketers allow this to happen?

Clients should ask about these “partnerships” and really understand them. What are the relationships between the agencies involved? What is the long-term commitment to working together? Will they get the same (or better) level of quality in multicultural work that they saw during the pitch? And general-marketing agencies should do some soul-searching of their own. If the commitment isn’t there, don’t come knocking on the door of multicultural shops. Bait-and-switch isn’t only bad for clients; it’s also a poor way to partner.

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