Bruno Gralpois, Co-Founder & Principal, Agency Mania Solutions, Author/Speaker, Thought-provocateur, Client/Agency Guru.
There’s no place like Las Vegas to help you understand the inner workings of gambling. If you visit Sin City and don’t hold some cards, play at a slot machine or toss some dice, you are missing out on what the gambling experience is all about. According to the Las Vegas Convention and Visitors Authority, over 32 million people visited the city last year, and gambling activities in Las Vegas reached a record $13.4 billion in revenue in 2021 alone.
It seems impressive, but it’s quite small in comparison to the level of spending in advertising and marketing—with an estimated $250 billion spent in advertising alone in 2020 in the U.S. The partnership between agencies and clients is essential to success, yet too often, I see clients taking chances with their agencies and risking losing it all. Let’s explore four lessons from gambling that can be applied to the delicate but powerful client-agency relationship. From this, you can learn about betting on the right relationships and how to build the best-in-class agency partnerships against the odds.
1. It’s a game of skill.
Not every game in Vegas requires skill. But every aspect of managing a relationship with an agency does. Sophisticated clients master the art of getting the most value from their partnerships with agencies. They apply rigor to the commercial side of the partnership, from getting the right contract in place to managing the financial relationship and getting optimal business value. They implement effective processes to ensure strong collaboration and outstanding work. They provide strong guidance, manage expectations and provide actionable feedback to steer and continuously improve the relationship. As a result, they set the partnership for success.
Brand advertisers should treat agency management as a professional discipline and invest in building the skills needed among their team so they can become the most effective partner to their agencies. Check out professional on-demand online training programs like the one offered by the Association of National Advertisers (ANA) to improve your agency management skills.
2. Nothing comes for free.
Vegas casinos occasionally invite gamblers to stay at their property at no cost. They may even comp food and wine. Yet, as we know, they are in the business of turning a profit and these so-called complimentary services to attract visitors are a small investment compared to what they expect to generate from them. In the client-agency relationship, agencies are often investing in the relationship, bringing top talent or senior management into projects at their expense. Yet, like casinos, agencies are also in the business of turning a profit and those investments are either leading to more work or will be ultimately absorbed in agency overhead, which clients pay for one way or another.
Brand advertisers should seek full transparency about the agency resources they are paying for and leverage this information so that both parties can build long-term trust. I recommend you use cloud-based scope of work (SOW) solutions to track and analyze fulfilled work requirements and financial data.
3. The house always wins.
In the casino business, the house always wins in the long run. That’s right, they have a mathematical edge over players, and it’s only a matter of time until its realized. In the client-agency relationship, no matter how balanced the partnership is and how thoughtful the client might be about treating the agency fairly and respectfully, as a business partner, the client ultimately pays the bills and has unique leverage on the relationship. We see clients frequently put their account in review (opportunistically or based on a set cadence), evaluate alternative talent in the marketplace and ultimately change agencies.
Brand advertisers should take care not to take unfair advantage of their status or exercise excessive pressure on agency partners. Recognize that partnerships are based on mutual respect, reasonable expectations and combined commercial success. A review should only be triggered when there is a gap in capability. To this aim, make sure to publish partnership principles to help foster a balanced relationship with agencies and monitor adherence.
4. It’s about risks and rewards.
The most successful business ventures are often based on low risk and high reward. However, gambling is known to be both high risk and high reward. The expected reward is often directly proportional to the risk you’re willing to take.
In the client-agency relationship, both parties are taking risks. A brand advertiser may take a chance on a new agency so it can prove itself. An agency may accept some of its compensation to be at risk in return for a larger payout. In both cases, they are taking high risks and expecting a fruitful outcome. The client-agency relationship is risky business, period.
To get the most value from agency partnerships, brand advertisers need to encourage a healthy amount of risk culture, pushing agencies to innovate and challenging them to deliver outstanding work. Set clear expectations with agencies about the level of risk you are willing to take and what is expected in return. Measure and provide feedback on whether expectations were met during your performance assessments.
Agency management can be used to improve the odds.
The nature of any relationship is speculative. Some relationships thrive while others fail. Agency management is the professional discipline needed to improve your odds of success. Let’s face it, gambling, which is often seen as a negative and impulsive activity, is an essential part of the process of partnership building.
Some organizations gamble without knowing it. Or they are unclear about their odds of success. In either case, they must accept the consequences or hedge their bet. Because of this, many advertisers choose to work with multiple agencies instead of relying on a single one.
Marketing is a discipline that encourages risk-taking, which may lead to occasional big payouts. Ultimately, we all play to win. And remember, you only have a gambling problem if you are losing.
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