Contact Information

Three International Towers, Level 24, Tower 3, 300 Barangaroo Ave
Sydney NSW 2000
Australia
Telefono: + 61 2 8067 8812
Email:
Sito Web:

Darren Woolley

Darren Woolley

Managing Director

Telefono: +614 11126176


Basic Info

Fondata nel: 2000

Network:

impiegati: 20

Fondata nel: 2000

Network:

impiegati: 20

TrinityP3 Asia Pacific

Three International Towers, Level 24, Tower 3, 300 Barangaroo Ave
Sydney NSW 2000
Australia
Telefono: + 61 2 8067 8812
Email:
Sito Web:
Darren Woolley

Darren Woolley

Managing Director

Telefono: +614 11126176

Managing Marketing: Rethinking Client Conflicts Of Interest

Jack Bensimon is the founding partner and Board Chair of Tadiem and the co-founder of the award-winning agency Bensimon Byrne, and he talks about the issue of clients’ conflicts of interest.

There appears to be a massive discrepancy in the way companies work with their consulting partners and how they work with their advertising agencies. On the one hand, consultants are often chosen and valued for their category experience, and working with two or more companies in the same category makes them an expert.

But for advertising agencies, while advertisers value category experience, they will not tolerate an agency having another client in the same category. Jack shares his views on clearly defining a conflict of interest so that all parties can operate to their full potential.

You can listen to the podcast here:

Follow Managing Marketing on Soundcloud, Podbean, Google Podcasts, TuneIn, Stitcher, Spotify, Apple Podcast and Amazon Podcasts.

Clients want to have it both ways. They want to know that you’ve got the category expertise. But they also want to ensure that you’re not working for anybody who might be a competitive threat to them or a competitor in some undefined or vaguely defined way. Transcription:

Darren:

Hi, I’m Darren Woolley, founder and CEO of TrinityP3 Marketing Management Consultancy. And welcome to Managing Marketing, a weekly podcast where we discuss the issues and opportunities facing marketing, media, and advertising with industry thought leaders and practitioners.

There appears to be a huge discrepancy in the way companies work with their consulting partners and how they work with their advertising agencies. On one hand, consultants are often chosen and valued for their category experience. And in fact, working with two or more companies in the same category makes them an expert.

But for advertising agencies, while advertisers will value category experience, they will not tolerate an agency having another client in the same category. Why is this so? And what can be done about it?

To tackle this conflicting topic, please welcome to Managing Marketing, the founding partner and board chair of Tadiem, and the co-founder of award-winning agency, Bensimon Byrne, Jack, Bensimon. Welcome, Jack.

Jack:

Good morning, Darren. Pleasure to be here. Thank you for having me.

Darren:

It is a conundrum, isn’t it? This whole idea of conflicting clients. We come across it as pitch consultants all the time. Clients will say, “Well, we want the best agencies, but not if they have anyone in this category.” It sort of limits their choices, doesn’t it?

Jack:

I’m old enough to have learned how this industry works over the last 37 years, and young enough to still want to try to change it.

And it is a conundrum because clients want to have it both ways. They want to know that you’ve got the category expertise. But they also want to ensure that you’re not working for anybody who might be a competitive threat to them or a competitor in some undefined or vaguely defined way.

And it’s been going on for forever. I mean, it dates back, I think, to the time when advertising agencies had that kind of a one-to-one relationship with CEOs in the earliest days of our industry. It made a lot of sense. If you were working for Coke helping them build their brand, you obviously weren’t going to work for Pepsi.

Those kind of direct competition, what I would call sort of zero sum conflicts. Where you’re trying to execute a single transaction to a single customer, and the choices are really clear. Obviously, you can’t have divided loyalties. You can’t be sharing confidential information; you can’t be working across purposes. Those things are self-evident.

But the notion of conflict, I think has evolved over the many decades since it became established into something that is far more pernicious in our industry because it’s taken on a life of its own. And in many ways, it’s been a reason why the industry struggles with growth.

It stifles growth for companies that can’t expand because clients won’t allow them to expand. And I think that’s one of the reasons why it’s an issue that I would love to help grapple with.

Darren:

Well, yeah, and one of the things that’s made it incredibly difficult is the way clients themselves are often in organizations now that are not simply classified into a very narrow category. Technology companies, for instance, will often find themselves operating across multiple categories, and this makes an incredibly difficult situation.

And the other one that we run into all the time is financial services. I mean, it used to be banks, but now it’s banks and pension funds and insurance companies and home insurance, and health … and it goes on and on and they’re all conflicts.

Jack:

I have experience with a large grocery chain that got into banking and presented conflicts for a bank client we had simultaneously. So, it’s not even just within financial services. But yeah, the diversification of corporate interests is a real problem because it creates what you might call indirect conflicts. It’s really easy to understand why you can’t serve both Coke and Pepsi at the same time.

But it’s now, I think, a common principle that if a company is earning revenue on a brand that competes with another company’s ability to earn revenue on a different brand, it’s almost as though the conflict exists at the corporate level.

And that’s, I think, what creates a lot of consternation in our industry. It’s almost a semantic issue. If you get to the heart of it, people use the shorthand “conflict”. And that’s actually inaccurate. The phrase is “conflict of interest.”

And I think a lot of people on both the client side and the agency side have grown up without really being taught what a conflict of interest is. In other words, there are interests that put an individual into a decision-making process that is hard to resolve because they have competing interests that are fighting for resolution.

And those kind of conflicts of interest are not generally taken into account when a client determines that something is a conflict. And so, that shorthand of, “is it a conflict?” cedes the decision to a client’s prerogative. Rather than educating both sides of the relationship around what a conflict of interest might be. And allowing them to discuss whether there actually are competing interests here or just competing ownership.

Darren:

It’s a really good point, Jack, and I’m glad you raised it because one of the things that we have seen is some more enlightened clients saying, “Look, we really want to narrow what we see as conflict,” to a point that you raised even earlier, which is direct competitors, where they feel like they are operating similar size, zero sum game, in that they have very similar audiences.

But it’s been interesting because … and again, in financial services, this particular client was open to agencies taking on many of these fintech startups. And I know it’s a high risk for revenue for agencies, but it’s also big opportunities creatively to do work for the fintech startups.

I probed a little bit as to why and they said, basically, we’re adding our agency into our sort of M&A search and selection process, because if they get one that is particularly successful, we’ll be able to identify that very quickly through our agency as an acquisition target. It was quite an interesting strategy.

Jack:

It is, and you’ve highlighted a lot of nuanced strategies over the years. The one that I found most interesting, and I actually had never encountered this until you highlighted it in one of the things I read that you’ve published, is the idea that certain clients will hire multiple agencies in order to create conflicts for their competitors. Particularly if they’re trying to get a really good agency out of the grasp of a competitor.

I hadn’t realized that there was quite that much sort of forethought given to the creation of conflicts until I sort of saw you highlight it. I’m more on the receiving end when an RFP comes in. We’re asked if we have any conflicts. We maybe go to a client and ask them if they’d be okay if we pitched that particular piece of business. And then we hear that, in fact, they would deem it a conflict and they would rather we wouldn’t.

That’s the side of it that I see. But yes, what you highlighted in terms of the fintech experience in financial services is really highlighting what the benefits of allowing agencies to work in areas of specialization could be for clients.

And I think clients who are more tolerant of conflict experience those kinds of benefits. It might be identifying a potential acquisition. It might be uncovering people who’ve got really unique knowledge. Which is what you see where you’ve got agencies that specialize in certain verticals. Where conflicts are like in management consultancies, not just deemed to be unacceptable, but actually encouraged because they build knowledge.

I think all of those things need to be highlighted for clients a little bit more because they are of value. But too often, it just comes down to, “Oh, that company makes money in a category that we’re in, therefore you can’t work with them.” And it’s very arbitrary.

Darren:

Well, look, they also said that as a startup, it’s highly unlikely they’re going to be a direct threat for a long period of time. In fact, most of these FinTechs that operate in a very narrow focus, they’ll find a weakness in the current offering that technology can help.

And I just thought it was a very sort of enlightened view of what conflict of interest, to your point, it’s actually in the client’s interest in that case to use their agency almost as an agent to go out and see what else is in the marketplace and pick up that work.

Jack:

Yeah. Those benefits accrue to clients that are enlightened. It reminds me, we had a lot of financial services clients over the years. We had a very large bank that was not in the business of wholesaling any assets. They were providing more advisory services and so on.

And then we had an asset manager that was a pioneer in the world of Exchange Traded Funds. And they were not conflicts because one was out there selling ETFs and the other one was selling everything under the sun. But retailing it rather than wholesaling it. So, there was never any conflict for a good decade.

And we built the ETF brand by attacking mutual funds. Explaining to people that active management was not as successful as people might have thought. Most active managers don’t outperform the indices.

And so, that’s how we built the ETF business and that worked fine until the bank went out and bought a mutual fund. And all of a sudden now, it’s a conflict that was created through the bank’s expansion. But because the prior relationship already existed, the bank wasn’t really in a position to say, “You have to resign a client you’ve been working with. Let’s try to manage this.”

We went to the asset manager and said, “How do you feel about us managing mutual fund brands, while at the same time doing your work, explaining that mutual funds are not the best way to invest?”

And they took the view and I think you’ve written about this as well — their view was, “We already have the A team, why would we want to work with the B team?” We’ve got people who are building our brand successfully, why should we go and find a new agency just because?

So, they were tolerant of the conflict as well. But what it highlighted for me stepping back a little bit, was how often conflict gets defined by category rather than brand. In other words, if they’re in the category … this ETF brand was going to take business from all mutual funds, it wasn’t Coke versus Pepsi. And this mutual fund was going to potentially capture assets from all ETFs and all other mutual funds.

So, the issue of conflict of interest and where it might reside really comes to the fore in those kind of situations, because defining it by category makes it easier for clients to deem things conflicts.

We had a client, for example in the beer business and along came a client in the wine business. And the beer business was feeling that wine was on an upsurge and beer was maybe not as popular amongst younger drinkers as it might have once been. And so, tastes were evolving, consumer behavior was evolving.

And so, when we had an opportunity to pitch a beer brand, they said, “Well, you can’t be in the wine business and the beer business.”

And that’s a definition of conflict that is extraordinarily broad, because there’s no one beer brand that is going to take business from one wine brand. There are 10,000 wine brands and there are a thousand beer brands.

But the idea that you can’t work in both categories is a definition of conflict, which really does stifle growth and isn’t based on any realistic premise of where there might be a conflict of interest that could cost a particular company some kind of money or material benefit.

Darren:

And look, you raised an interesting point there, because I find a lot of marketers will often have a view, which is quite binary. They think it’s either a win or lose. But very few think about the fact that if you are a relatively small player, and we keep using Coke and Pepsi probably because they combined market share in most markets is up in the 80% or better, and they’re fighting it out for that majority shareholding.

But for a lot of brands in really quite complex and complicated categories, they might be sitting there on 5% or 7%. And that really, it’s not about someone succeeding at their loss, but the possibility of working with an agency that gets both of you to grow and even to do a category job, which you shouldn’t do if you’re a small player, because the category job always favors the biggest player.

Jack:

We often talk in a strategic planning process about brand leaders and how many mature categories have multiple brand leaders. I mean, you take credit cards, you’ve got Visa, American Express and MasterCard, is any of them a weak sister? No, they’re all incredibly successful brands that have carved out distinct franchises.

So, category definitions of conflict are problematic. I’ll give you one crazy example, probably the craziest conflict definition I’d ever seen in my career.

We had taken on through some changes in our company and acquisition and so on, a relationship with an amusement park. And at the same time, we had a relationship with a professional sports team, major league sports team-

Darren:

Please don’t tell me they saw a conflict.

Jack:

Yes. Well, I’m going to explain to you how they saw the conflict. Their definition of conflict — and this was despite the fact that they had actually done cross-promotion with the sports team, had the athletes come up to the amusement park to sign autographs, had coexisted at another agency previously; none of that mattered.

They came to us and they said, “If somebody is at the ballpark, they cannot be at the amusement park.” And so, it was a definition of conflict based on how the consumer spent her time. And if she could spend her time in a different way, then those brands … and I countered by saying, “Of course they could go shopping as well, so does that mean we can’t work with any retailers?”

It really highlighted for me how arbitrary conflict definition would be. It was really just an effort to exert a certain amount of control over the agency. And ironically, the amusement park was about five times the size of the revenue that we were earning on the sports team. And we chose to resign the amusement park because we felt a client that was being that capricious was really not going to be a good partner for us in the long-term.

But that happens. When conflict is in the eye of the beholder and there are no norms or legal definitions or standards, you end up with some of these unbelievable situations where individuals just decide, “Hey, today this is a conflict.”

Darren:

Jack, you raised the fact that it can be seen as a sign of control. I often think … and you mentioned earlier that it’s just easy to use a category conflict as a way of limiting who an agency works with. But I also think it goes a little bit to insecurity on behalf of the marketer, that they feel threatened by you working with any sort of vaguely conflicting “account.” Has that been your experience?

Jack:

Yes. And the reason for that is that legitimate conflicts of interest (like you said, Coke and Pepsi), they actually rarely come up, because Coke’s agency would never be asked to pitch Pepsi, and Pepsi wouldn’t invite them. And they wouldn’t go to Coke and say, “Are you okay if we work with Pepsi?” The legitimate conflicts of interests are so self-evident they never come up.

So, by definition, when you have to clear a conflict with a client, you’re probing around what’s the client’s comfort level. And that comfort level, I would not describe it as irrational, I would actually describe it as insecure.

Because very often, those insecurities manifest themselves, not because I’m worried I’m going to lose business. My brand is going to suffer because you’re going to be promoting a brand that I deem indirectly competitive. It comes because they have to defend the decision to allow you to do it.

And that’s where the insecurities manifest themselves because you’re generally not asking the CEO if it’s okay for you to work with that brand, you’re asking somebody who works in a marketing leadership position, and they don’t want to be questioned by the CEO as to why their agency is now working with that brand.

And so, it’s a defensive mechanism and it’s based on a relative level of insecurity in their own organization that it’s easier to say, “No, just we’d rather you not do that.”

Darren:

I had a unique experience because I had a client come looking for a new agency, and they actually picked the agency that was on the roster of their main competitor. They didn’t know that, they just loved the work that they did.

And they said, “Could you talk to them about whether they’d be open to pitch for our business?” And the agency rightly said, “Well, we have a conflict because …” and I said, “Have you spoken to your client as to whether they’d be happy for you to work on both pieces of business?” And they were, “Well, we hadn’t considered that.” They went off and asked and the client said, with some guide rails around it, that yes, they were happy.

So, we went back thinking we’d achieved what could have been seen as the impossible back to our client and said, “Yes, they’re open to pitching.” “Oh, I don’t want anyone’s castoffs.” And I went, “They’re not casting them off, they’ve said that they’re okay.” “Oh, no, no.”

I mean, it was just so like, it goes to their perception of themselves. That the choice of the agency went to the very heart of, “Well, if they don’t want them or they’re happy for them to work with us, then I don’t …” What was that, “I wouldn’t want to belong to a club that would have me as …”

Jack:

I wouldn’t want to be a member of a club-

Darren:

I don’t want an agency that my competitors would want.

Jack:

Well, it really highlights how subjective and personal these conflict definitions can become. And I don’t want to overgeneralize here, there’s a lot of very enlightened clients out there, like the one you talked to, who said, “Sure, I mean, as long as it’s right …” and we see this all the time, and we have a number of overlapping category clients that make very reasonable assessments of risk and help us manage through that.

But I do recall, in this conflict, I alluded to off the top between a grocer and a bank. We had a grocer that was offering a financial product, a credit card. We had a campaign we were doing for the brand that was very standardized. In other words, every execution was identical, simply produced. It didn’t matter if you were selling baked beans or lawn furniture. It was all presented in a brand style that was very predictable.

And the only thing that we were struggling to do was an ad for the credit card. So, we went to the bank client and we said, “Can we do this ad?” Because you know what the ad’s going to look like, literally, it’s going to be point the camera, shoot the thing, it’s going to be that simple. If we don’t do it, somebody else is going to do it for them.

So, there’s nothing that’s going to change in the marketplace in terms of promoting this credit card. And so, all you’re doing is ensuring that we will not be the ones to actually earn the revenue to do it, they’re going to be forced to go find another partner to make this particular execution.

And we even convened a meeting between these two large organizations and their senior marketing management to see if they could find a way to resolve this apparent conflict. And the client on the grocery side was very keen for us to find a solution. The client on the bank side confided at the end of the discussion when they took us aside and said, “I see what’s in it for the grocer, I don’t see what’s in it for us.”

And I thought to myself, that’s how far we’ve come from the definition of conflict of interest, there’s got to be something in it for you to allow the agency to do that. What about just allowing the agency to grow its business?

To enhance its relationships. To be a strong partner by being able to hire more good talented people to work with you and its other clients. None of those considerations were material, the only one that mattered was, “I don’t see how this will benefit us.”

And what I would like to fight for a little bit is industry norms that get beyond that subjectivity that allow … you once asked me how do you manage this during the pitch process? The pitch process is probably the last place that you want to be exploring conflict, because it’s a defined point in time where (saying no is) the safest thing to do.

I mean, the client that’s looking for an agency wants a clean list. They don’t want to fall in love with a partner that then they can’t work with. At the same time, can you imagine the pressure it puts on agencies to go and clear conflicts with clients?

We do this all the time and it’s a debilitating part of the relationship. Because you kind of have to go on bended knee and say, “Would you be okay if we pitched this client?” You don’t even have the client; you got a 10% chance of winning it. And the client is being asked to do you a favor.

Not only that. It signals to them perhaps, under the surface, that maybe your interests have shifted to some shiny new object. So there is a deterioration in that trust level as well.

None of this should be happening during the pitch process. There should be clear norms and guidelines for how the industry defines conflict so that all you do is go to a client afterwards and say, “Hey, this is an apparent conflict or a potential indirect conflict, but we’re compliant with the industry norms, here’s how.” And you tell them after you’ve won the business how compliant you are.

I think it’s a much better process and it would conceivably be a better way to bolster client-agency relationships than this business of asking permission in advance.

Darren:

The great thing about that as well, Jack, is that you could actually start defining it and building it into clauses within the agreement so that everyone knows exactly what those guidelines are. That the conflict is X, Y and Z. It is not A, B and C. And for absolute clarity here is a list of direct competitors, for instance, that we would feel uncomfortable with and anyone outside of that would be okay, so that the agency, to your point, has absolute clarity.

I just want to double back on something. You said part of the insecurity for a marketing leader is going to the CEO and explaining why the agency they’ve just appointed is also working for a competitor. CEOs, CFOs and COOs don’t seem to have any trouble with appointing any of the big consulting firms on the basis that they’ve worked with multiple or worked with multiple clients in the same category.

What is the dynamic difference there, if you’ve got one, between the big consulting firms that seem to leverage their category expertise really well and agencies?

Jack:

It’s a really interesting question. I don’t think it’s just consulting firms, by the way. I think it’s the entire marketing ecosystem. I mean, you don’t have this issue with market research firms, you don’t have it with production companies. I mean, there’s a whole variety of important players in the marketing ecosystem that clients go to who have no exclusivity provisions whatsoever. Ipsos, for example, or Google.

Google and Facebook, they go in and they have meetings with senior clients about insights that they’ve derived from all their data, and how they can utilize that data to help the brand. And then they will take those same insights, and those same presentations, and they will walk across the street to the competitor and offer them the same deal.

And I’ve seen it, I’ve been in some of those meetings. And they structure their organization around category managers. People who are experts in financial services who will use the exact same thinking, exact same strategic advice for all of the financial players in the market who they think that they can use that information to be able to develop programs with. They’re working on a completely non-exclusive basis.

Ironically, it’s the creative partner and the media buying shops that are really the only ones other than perhaps law firms, I think they’re the only other ones. But in the marketing ecosystem, it’s really just media and creative agencies who are bound by these exclusivity provisions. The rest of the partners that our clients work with are building category expertise and then selling or vending that category expertise on a day-to-day basis as part of their entire business model.

And I think the reason for that, because that’s really the question you asked, it’s because they’re given the latitude to do it. The research companies. They’re using normative data gathered from all of the market research that they do category by category. And they’ll say, “I can pre-test or post-test this creative and I can tell you against other frozen dairy treat creative that we’ve tested over the last 20 years, this is performing to norm, above norm, below norm.”

That normative data gives them enormous leverage in maintaining non-exclusive relationships. But it’s only because they’ve been allowed to gather normative data from all of their clients and then repurpose it and share it the way that Google or Facebook will repurpose and share the consumer data.

Agencies have never been given the latitude to take the category expertise that they could be developing and then repurpose it for greater advantage for a client. Because they’ve never been given the latitude, they don’t have the latitude and they don’t have the expertise. And because they don’t have the expertise, they therefore, don’t have any leverage with the client.

These other organizations, management consultancies and so on, have manufactured leverage by saying, “We now know so much about your business that you must hire us even if we’re working with other car companies or other competitors.”

Darren:

And it’s interesting you should say that; auto clients are always the ones that say, “Well, we don’t want any agencies working with other auto brands, but they must have auto experience.” And you get this ridiculous game of the agencies running around checking with everyone what auto experience if you had at a previous agency.

And then the client sits there and goes, “Well, when did they work on that brand?” And you have to say, “At a previous job.” Because this agency hasn’t had auto for more than 10 years. It’s a ridiculous wasteful game.

Jack:

Well, again, it’s because there are no norms and standards. There is no legal definition of what an agency conflict of interest might be. And therefore, because it’s arbitrary, because it’s subjective, then you get into these situations where we’re all running around in circles trying to gamify, if you will, how we’re going to structure things.

That’s where the Holdco, the holding company model emerged from. It’s probably the most successful conflict management device ever created in advertising. Because if you go and look at the literature on agency-client conflict, nothing new has been written about it in 20 years.

Because since the Holdcos kind of emerged as the solution and clients felt their risk was sufficiently mitigated by Omnicom and WPP and the others creating conflict agencies, so that they could all have their own car brand, the clients feel the problem’s been put to rest.

Darren:

Well, there was a joke at the time that Sir Martin had all of the media agencies start with M so the client would have trouble differentiating which one they were actually with. They’ve since changed that, Wavemaker has broken, but all they’ve done is turned the M up the other way.

When I started my business, because I’d worked in advertising for 15 years and one of my early clients was in confectionery, and we’d put a proposal together to work through on a particular problem.

And they said, “Well, of course, this will be exclusive.” And I immediately said, “Well, how many competitors do you have?” And the CMO went “Oh nine.” And I said, “Well, just multiply that by nine because that’s the income that you’d be taking away from me.” And he said, “Alright, fair enough.”

Do you think maybe if agencies just made a stand on this and had more conversations around what does represent a conflict of interest or do you think the balance of power is too much in the favor of the client, that the agencies are unable to raise this as a topic?

Jack:

Well, so in terms of where this could be resolved, I’ve talked a couple times about establishing legal definitions or norms that agencies could be compliant with. That is something that is very difficult for individual agencies to pioneer. It really needs to be done at the trade association level, and I think it actually begins with a legal principle called restraint of trade.

If you dig into what restraint of trade means, you find it very often used in context of non-competes, non-solicitation and so on. But it’s actually quite interesting that exclusivity as a concept is in itself a form of restraint of trade.

I actually read about this in an Australian publication of all places. I think it was called Human Resources … something. I’m forgetting the name of the publication. But they published a whole piece on the notion that contracts that provide exclusivity or demand exclusivity from a contracting partner have to not exceed reasonable limits.

And that the goal is unfettered trade. In other words, the ability to go out and work with whoever you want. As long as the limits are reasonable on that, then the exclusivity provision can prevail. But as soon as the exclusivity provision is more binding than is reasonable, then in fact, the legal concept of restraint trade is a tool with which you can break a contract. It actually supersedes the client agency service agreement.

The problem is, individual agencies are not going to go to court to resolve this issue with their clients. They don’t want to lose their client. It’s an issue that really should be resolved through trade associations. That’s what trade associations are intended to do, is take collective action on issues of collective interest where individual agencies couldn’t either afford to financially or couldn’t afford to in terms of reputation or risk or whatever it happened to be.

The problem here (and this is the part I haven’t been able to sort of resolve in my own mind) is this is the one issue that I think trade associations are ill-equipped to represent their members on. Because there is this really strange quirk of logic in the conflict definition. Which is, by maintaining sort of vague, arbitrary definitions of conflict, the world needs more ad agencies.

And if you were to actually create norms and standards that said, “These are conflicts, these are not,” you will find it will stimulate the growth and the consolidation in our industry. To a point where the maximum amount of consolidation as prescribed by these norms and rules that we could theoretically all abide by, we’d need far fewer agencies.

And so, the membership of an agency industry association would find it hard, I think, to get widespread support for the idea of tightening up conflict definition and making it a lot more restrictive for clients to use. Because that would actually work against the interest of many of their members who might not have clients otherwise. So, it’s a bit of a wicked problem that way I think.

Darren:

It’s really interesting you say that because back in 2019, we introduced a process for clients that were going to market only because they had some sort of obligation to do so, not because there was need to change agencies.

We introduced a commercial review and we thought the agencies would love this, that rather than having all these tenders that, a client could renew the contract with their incumbent without going to market.

I got as many agencies going, “But you’re taking away opportunities for new business.” And I go, “You’re only saying that because you’re not the incumbent. If you were the incumbent, you’d be very happy with this.” It’s trying to have your cake and eat it too, I think.

Jack:

It absolutely is. But I think you-

Darren:

And there’s a conflict of interest.

Jack:

There is a conflict of interest, but I do think that some of this, what I would consider nonsensical conflict definition should be resolvable somehow.

I think back to mass merchandisers, grocers, people like that who will say that their agency can’t work for a national brand. If they’re selling private label brands on behalf of the grocer, they can’t be working for a national brand in the same category. But the reality is the grocer themselves is selling both brands.

So, what they’re really saying is, we are entitled to profit from both brands, we just don’t want you promoting the one that has a lower margin for us. And I think that kind of logic to me, is so far removed from direct conflict, zero sum conflict, Coke versus Pepsi, that surely as an industry, we have to find a way to establish some rudimentary standards that don’t go so far as to hurt the interests of all agencies and consolidate everything into three big holding companies or whatever. But just bring some common sense to the process so that it’s not so arbitrary.

Darren:

And look, if you manage to succeed, Jack, let me know because we will absolutely be on board supporting that. I have to say, and the reason I write about the conflict over time is because it’s one of those quirks of the industry that raises my curiosity as to why it still exists.

I think to your point, if we can get some guidelines and framework around what is true conflict of interest and what’s just an easy thing to do, I think we’d absolutely improve the industry.

Jack:

I agree.

Darren:

Thank you for your time, it’s been a terrific conversation. Unfortunately, we’ve run out of it. But please, I’d love to circle back with you at some time in the future and continue this conversation.

Jack:

Anytime, Darren, it’s been my pleasure.

Darren:

Just before we go, what client or category, if there was no conflict, would you really like to have in your roster of clients?

The post Managing Marketing: Rethinking Client Conflicts Of Interest appeared first on TrinityP3 Global Marketing Management Consultants.