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 that 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. AORs were long-lasting;
being one meant your clients 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 five to seven 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.
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The AOR status has quickly become a relic of the past, an anachronism from 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 three-to-six- month cycle, and marketing budgets bounce more than a four-year-old on a backyard
trampoline. On the other side, client teams don't last that long, either - many are being promoted into new positions or changing companies to look for new opportunities. As teams
change, new executives come in, rarely respecting the previous decisions and 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. In their defense, however, it's difficult to
manage an account and build a personal relationship with the key decision-makers when budgets are thin and it's all companies can do to maintain their slim margins.
Regardless
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 it's difficult for 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 business metrics. AOR serves a great purpose by creating
continuity and establishing a team with accountable roles. It also means that your team is empowered to try things that may not work, but are calculated risks in favor of 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?