Intelligence

Have you noticed the average tenure for an ad agency relationship is not much longer than the average tenure of a CMO?  The average CMO seems to last about 18-24 months in their role, and the average agency relationship seems to be about 24-36 months.   Somewhere along the way the term “AOR” became a dirty word!

Obviously, but in case you might have forgotten the meaning of the term because of its lack of use, AOR refers to Agency of Record.  In the old days, AOR was a statement of trust and commitment between agency and client.  AOR’s were long-lasting and they meant your client trusted you, empowered you for success and were willing to let you work on their business for the long run.  In those “old days” some AOR relationships lasted as many as 40 years!  Before the birth of the Internet, an AOR relationship meant you could count on that business for at least 5-7 years, and probably for closer to 10, assuming that nothing detrimental to the business happened.   It meant you would staff a solid team against the business, you could count on the work to keep them busy, and you could plan a strategy that saw further out than 6 or 12 months.  

The AOR status has quickly become a relic of the past.  An anachronism of a bygone era. 

These days the relationship between client and agency rarely lasts longer than the tenure of the CMO, or the key decision makers on the team.  From one side of the business, Wall Street manages the future and Wall Street doesn’t like a long-term commitment to expenses.  Too many businesses manage their P&L on a 3-6 month cycle, and marketing budgets bounce more than a 4-year-old on a backyard trampoline.   On the other side, client teams don’t last that long, either being promoted into new positions or changing companies to look for new opportunities.  As teams change, new executives come in and they rarely respect the previous decisions and are known for “bringing in their own”.  This is a fact of corporate America and not one that can be readily refined.

Of course, agencies are to blame here as well.  Agencies focus much of their time on the tactical execution and have lost the art of account management, but in their defense its difficult to manage an account and build a personal relationship with the key decision makers when budgets are thin and its all they can do to maintain their slim margins.  

Regardless of where the blame lies, or who has the most input on the factors that shape the environment, the fact is that fewer and fewer agencies are getting an AOR stamp on their relationships and more are doing project work.  Project work can be profitable for the agency, but its difficult for the clients to have a long-term strategy when their partners aren’t locked in as well.  Managing multiple partners, or vendors as the relationship may state, means less time focusing on the execution of the strategy and the achievement of the business metrics.  AOR serves a great purpose in that it creates continuity and establishes a team with accountable roles.  It also means that you’re team is empowered to try things that may not work, but are calculated risks in favor the brand.  When you don’t have a long-term commitment from your partners, you play to not lose rather than play to win.  Playing to win sometimes mean you take a big swing, and miss.  Playing not to lose means you play it safe and just try to put the ball in play. 

From my point of view, I like to play to win.

Don’t you agree?