Understanding the differences between agencies and in-house departments can help resolve some – if not all – of their relationship problems.
Unverschämt is a wonderful word, one of those uniquely German words that sounds exactly like their meaning: outrageous, impudent, brazen. In April this year, unverschämt burnt a hole in Germany’s public relations media, when Thomas Strerath, chief executive officer of public relations firm Ogilvy & Mather in Germany, used the adjective to describe a proposal by Deichmann, the German shoe retail chain and the largest monger of shoes and sportswear in Europe. Deichmann’s crime? To invite 20 agencies to pitch ideas for the chain’s 100-year golden anniversary, all for an honorarium, the paltry size of which prompted the unleashing of unverschämt. After Strerath called for an agency boycott of Deichmann, the chain hurriedly withdrew their offer. This kind of bruising encounter between agencies and their client companies is far from being unique: this issue’s Storyteller section explores the dynamic between the two sides.
Vanya Babanin heads corporate communications at Balkan Star, a leading automotive distributor in Bulgaria. A hard-working but generally easy-going colleague, her patience was severely tested recently by an agency hired to help her company prepare for a major event. Errors and misunderstandings both major and minor – from the scale of remuneration to the timing of a photography appointment – built up steam until, after one particularly vexing run-in, she found herself muttering under her breath that they ought to be thankful she was not their boss.
Such frustrations are part and parcel of the working relationship between an in-house communicator and outside ‘help’. And for the sake of fairness, it should be noted that it cuts both ways: agencies have their own very valid complaints to make about their treatment at the hands of clueless corporates.
One person with a healthy perspective on this is Martin Barlebo, director of group communications at ALK Abelló, a global research-driven pharmaceutical company based in Copenhagen. Before his current in-house role, he was a partner at Danish agency Holm Communication and he can cite several bad experiences which he traces back to an antagonistic attitude on behalf of the in-house communicator, “either because the in-house communicator is insecure or because he or she wants to buy a very narrow service and not involve the agency as partner with full information on the whole project.” Denying consultants the necessary level of information – whether because of insecurity, arrogance or whatever – is clearly the wrong first step.
How and when to call in outside help
What kind of projects are consultancies generally asked to carry out? In executive search firm Korn/Ferry’s survey of Fortune 500 companies, The Chief Communications Officer 2012, 96 per cent of all respondents indicated that they use external agencies for speciality expertise, strategic counsel or execution support. Balkan Star, for example, typically engages agencies for launches of new models or corporate events as well as integrated marketing campaigns. For its twentieth anniversary this year, different agencies were hired for every phase of the celebrations.
Martin Barlebo identifies three areas where an outside communications firm can be useful: “One, simple tasks that you don’t have the time and resources for internally, for example, text production and media follow up to the less important media. Ot two, larger development projects where you need expertise or inspiration or time that you don’t have, for example for developing a new strategy for a specific area. And three, media training, where it is better to have an external trainer who can listen to the key messages and interviews from the outside and who can better challenge the managers being trained without being seen as being too personal.” So the dirty work gets delegated: no wonder there are resentments festering under the surface of this relationship!
The strengths and weaknesses of working with agencies are two sides of the same coin. While Vanya Babanin is quick to praise “the professional support based on a different and usually larger degree of experience, the pre-established teams that can focus on current projects in a set period of time, and the outside perspective which provides refreshment and a reality check,” she also notes “the constant fluctuation of teams and your agencies working on other customers projects during your events”. Martin Barlebo says that agencies are good for “getting things done, bringing in inspiration from other clients and projects and not being limited by a company tradition of idiosyncrasies.” But he also mentions that “the agency will always lack information that flows around in the organisation. Information that gives the context for communication activities, for example what is on top of the agenda of the top management and which internal stakeholders should be on board for a new project.”
Some helpful hints to ensure harmony
The Firm Voice: Outstanding Practices for Public Relations Firms (2009), a compendium developed by the Council of PR Firms, outlines what all parties in the client/agency relationship want as well as the best practices that have evolved from very successful partnerships:
What clients want:
- Chemistry, results and great ideas
- Blending of business and collegiality
- Challenge established assumptions and bring new facts to the forefront
- Anticipation of future events, media attention. A client may not realise it at the time, but proactive measures really pay off
What agencies look for in their clients:
- Set goals in mind
- Management of billing at the outset of the relationship and mutual understanding that things may change
- Constant communication
The compendium also helpfully suggest how to create long-term relationships:
- Pick up the phone every so often and merely ask, “How are we doing?”
- Understand the client’s culture
- Be proactive as opposed to reactive
Spicing up relationships
A major difficulty in the ongoing partnership between agency and in-house is finding the balance between the security of a long-term working relationship with a particular agency on the one hand, and the need for fresh input and new perspectives found by changing partners on the other. Choosing the same agency for different projects has its clear advantage – the company and its working methods don’t need to be introduced each time, and the thorny subjects of trust and price should be implicitly understood. But this can lead to stagnation and inertia (ignoring the fact that long-standing partner agencies can also undergo several personnel changes). According to Babanin, “The best agencies combine the benefits of long-term relations with the freshness of newcomers – they build their teams from long-term contactors with the customer and fresh new minds.” However, “In reality you usually get the same ideas from new persons after long days of education and training and you lose the feeling of being sure how your partner will react in a rapidly-developing situation.”
A sense of involvement
A further problem can be the lack of accountability or sense of responsibility, which is directly related to the degree of involvement in the project. As Luulea Läänne explains in her article on page 78, people – whether consultants or in-house – need to be personally identified with the organisation, else there is an inevitable distancing effect and lack of empathy. As Babanin says, “Many people tend to lose concentration when not personally concerned and involved. And since the company core business is not always of top interest for some people, they need time to get used to the daily tasks and the established ways of dealing with issues.”
Establishing rules for your relationship
So we have identified a few of the major difficulties; what is the best way to fix the problems or prevent them from arising in the first place? For Udo Becker, managing director at Hill + Knowlton Strategies, the most important thing is trust-based cooperation. “Don’t be afraid of weak points in your teams,” he advises, “and assemble the best team with resources from both the in-house and the agency teams.” Martin Barlebo agrees, arguing that “an even closer relationship between agency and company would make the advice and assistance from agencies event more valuable. From my experience, the best agencies are very willing to invest time in a client and want to get to know the client as well as possible.”
Again, the insecurity of the in-house team on the question of just how much access to give their agencies is the obstacle here: according to Barlebo, “In-house communicators are insecure in terms of whether or not the agency is interested in information that isn’t immediately relevant, does the agency want to spend time on getting to know the company, which information can you share with the agency, will the agency charge for the time spend to get to know the company and so on.”
Vanya Babanin also recognises that sometimes it is the client’s own fault if they don’t know what they truly want or expect, but in such cases she has some firm recommendations. “The details should be clarified to a level where the agency could be allowed to do its job,” she states. “It will also be useful if every company could prepare as many internal manuals, descriptions, guidelines, and corporate culture highlights as possible.” Balkan Star produced a 15-page manual for all divisions within the automotive group as well as for the agency partners. “This is a quick and very effective instrument not only for agencies but very often for all internal target audiences and quite underestimated one in my point of view.” Other suggestions include constant on-going feedback and a set of corporate best and worst-cases.
An inch deep by a mile wide (and vice versa)
Another potential remedy to the disharmony between agency and their clients is the flow of personnel between the two camps. The different demands of the two sectors are pretty self-evident. In a blog post on the website of Boston University’s College of Communication in the US, Stephen Quigley, associate professor of public relations, is quoted as using the metaphor of an “inch deep by a mile wide” to describe working at an agency. In other words, you must spread yourself over a wide variety of topics, sectors and specialities in order to respond to a variety of clients. In contrast, the metaphor is inverted for in-house communicators: “a mile deep, and inch wide”. You are expected to go in-depth and immerse yourself in the company’s image and brand by working hard at understanding the organisation’s history and business.
Before taking up her current role as communication director for the Norwegian Defence Research Establishment (FFI), Anne-Lise Hammer had 15 years’ experience as a self-employed communications adviser in the public and private sector (she misses the “freedom and money” but doesn’t miss the “hard work of finding new clients”). As she tells it, she was headhunted and joined the in-house world, motivated by a combination of flattery and relishing a challenge. When asked how her years a s a consultant prepared her for her current in-house role, she describes it as an “excellent preparation”.
Likewise, Martin Barlebo credits his consultancy years for giving him “a huge amount of experience from many different industries, companies and communication challenges and projects. Experience it would have taken many more years to build as in-house communicator.” For this reason, he believes that a corporate communicator who has had experience as a consultant is a stronger communicator (though he adds “that is not to say consultants don’t need to learn how to be an in-house communicator”). Udo Becker “absolutely” agrees for specific reasons: “You naturally show more respect for each other because you know how it is on the other side of the table. Having worked in an agency you know the processes and thus can explain more precisely what you need when working in-house. Having worked in-house, you learned how important it is to understand business goals and how to orchestrate sales, marketing and communications to reach them. This helps to reduce the communications ‘blah blah’ in presentations, to ask the right questions and concentrate on developing activities which really help the client and can be implemented realistically.”
Having worked on both sides of the fence, does he find that, on the whole, communication directors really know how to handle outside help? “A definite no, although some of them still try to keep us counsellors away from their CEO. To all laggards out there: we don’t want your job. We want to support you in delivering the best possible results.” Those that have crossed the divide, in whatever direction, are rewarded with fresh insight into the agency-client dynamic: Barlebo has found that “as an agency normally you are only involved in a small part of the communications directors agenda”, while Hammer has come to realise that “internal communications and foundation of top-down core decisions takes time.”
Most relationships survive and evolve through compromises and mutual understanding: taking note of some of the potential problems and suggested solutions listed here may help you enter your next relationship with a public relations agency with eyes wide open.
The In-house View
Named in 2011's Influence 100, The Holmes Report’s list of “the 100 most important in-house communicators in the world”, Luca Virginio directs group communications and external relations for the Barilla Group, the food company founded in 1877 in Parma, Italy. Today, the group controls such trademarks as Barilla (a multinational pasta maker, and the world’s leading pasta maker), Mulino Bianco, Pavesi, Voiello, Alixir and Academia Barilla in Italy; Wasabröd in Sweden (the world‘s leading producer of flatbread); Misko in Greece; Filiz in Turkey; and Yemina and Vesta in Mexico.
Do you prefer to work with a small handful of large agencies or do you work with several different smaller agencies? In theory everyone prefers to have fewer but outstanding agencies – the fewer the better. And that’s very much in the interest of both parties. Because it simplifies the processes; it makes everything more efficient; it creates scale, hence you can leverage the investments for the best; and finally it makes the work of integrating the different communication capabilities and efforts easier. Still, the main reason for choosing either a few or many agencies is and always will be the performance of the agency and the added value that the consultant is able to bring to our company. We qualify and work with agencies that have a track record of outstanding performance sustained over time.
Do you generally pay a retaining fee or labour-based fee? First of all we pay on a performance-based scale. That’s a basic rule that we apply at Barilla.The more added value you bring to the company and its brands, the more you are rewarded. Then, depending obviously on the project and kind of relationship we have with the agencies, we apply different rules of engagement.
When faced with a new campaign, how do you choose which agency to work with? Each brand has its own equity to grow and nourish. And that’s true for the Barilla corporate brand as well as our other brands. So when we have to choose a new agency, we judge how close the world they live and work in is from the world of our company and our brands, and we evaluate what the agency has delivered in the past. Finally, but most importantly, we want to know the people and experts who are behind the agency name. Small or big, reputable or young, at the end the work is done by people, and people always make the real difference.
What kind of qualities do you appreciate in a public relations firm? First of all the capacity and ability to really understand our company and our brands, their equity, their stories and their needs. Hence we greatly value the capability to listen and to dive into who we are and what we stand for. We also value the capability to translate the benefit of our company and our brands in a story which is compelling and engaging for our target consumers. To succeed in all this requires experience, dedication, passion but first of all a close understanding of who we are and what are the consumer expectations. Only when the agency succeeds in doing this can they propose and produce something which adds value to everybody
Has Barillas’ relationship with its consultants changed over the years? The kind of relationships is unchanged, but the level of contributions and expectations from our side has. That’s a reflection of changes in society and the more important role that communication and external relations play in the success or failure of a company. Agencies today have to prove that they are able to understand and engage a consumer who has changed a lot. A consumer today is very different from the one we were used to just a few years ago. I don’t need to remind you how today’s consumer is interconnected, the role of social media, the ease for everyone to access what they want when they want and the changed role of traditional media. Hence, while the relationship between Barilla and their agencies has not changed, the way we carry out the work has profoundly changed. And we obviously expect that our partners are able to understand, interpret and answer the new consumer needs and behaviours with appropriate campaigns.
Are the agencies integrated into the in-house communications function or are there strict silos dividing the two? We work hand in hand with our agencies. While we are very demanding when we qualify an agency, once we find the right people and the right capabilities we don’t make any distinction between in-house communicators and consultants. They are all part of the same team with the same objective and mission to deliver: engaging the target consumer and making our stories relevant and compelling.
In this tough economic climate, has Barilla’s agency spend remained consistent or are you pressurised to get more out of your agencies for the same price? A very basic – and true – rule especially in the fast-moving consumer goods business is that especially in the crisis moments you have to invest even more. Because every dollar you invest then will bring a much more important added value to the company and its brands in terms of equity building and share of markets. So even though times are challenging for everybody, being brand leaders in the different categories that we operate in means making our best to keep the return on investmentent high. At the same time we must remind ourselves and our agencies that today the ROI of every dollar invested has to be higher than in the past.
The Agency View
The world’s largest public relations firm, Edelman was founded in Chicago in 1952. Originally a team of three in the postwar boom, today the company has global revenues of 615 million US dollars and employs 4,200 people with its global headquarters in New York City. Robert Phillips is the firm’s president and chief executive officer for the EMEA region. He launched his first business while at university and, in 1987, co-founded Jackie Cooper Public Relations at the age of 23, which grew into the leading consumer brand public relations firm in the UK.
Have you seen changes in the kind of work asked or expected of Edelman by your clients? The ‘integrated idyll’ that many of us championed dating back over 20 years has become a client reality. Convergence is now permanent and smart clients know that they can buy communications solutions from a single source. Social digital DNA is no longer a ‘nice to have’ : it is a strategic imperative.
Edelman is famously independent, standing out against the industry-wide trend towards consolidation. Does this mean that the firm is secure in the range and breadth of its competencies, and therefore doesn’t need to acquire other specialist or vertical service providers? Richard Edelman has spoken before about an Edelman family of brands, which is quite distinct from the usual holding company strategy deployed by all of our competitors. We will continue to innovate and build new practice areas and businesses in order to best satisfy client needs. Our aim will always be to stay ahead of the curve in terms of innovation and our independence allows us to be more nimble, smarter, and to make investments that are driven by client-centricity, not a slavish obedience to Wall Street or The City.
What kind of attributes does the ideal candidate for a job at Edelman possess? Hungry. Challenging. Entrepreneurial. Thoughtful. There is absolutely no room or tolerance for complacency or arrogance at Edelman. Personally, I have always adopted a ‘No Assholes’ policy.
Who do you rank as the top three clients and agencies? No simple answer to this question – but the clients that cut-through are those who develop platforms rather than push products; and those who embrace communities rather than talk down to ‘audiences’. Admired agencies are those who do as well as say and who are led by values, first and foremost, and not just the dollar or the bottom-line.
Is there a client that you haven’t yet worked with but would like to in the future? On a personal level, I love to work at the centre of the big issues of our times. Helping restore the credibility, reputation and trust of the banking sector would be a terrific challenge.
To what extent are you integrated into your client organisations? Do you sit in on board meetings, is there a strong link between your team and the in-house department? It of course varies from client-to-client. But no communication strategy should ever be divorced from an acute understanding of business strategy. Great communicators need to be able to grasp both policy and content; business and communications. And, yes, proper consultancies deserve a seat at the boardroom table – as long as the chief communication officer is sitting there also.
And whose responsibility is it to foster this link between agency and client? Responsibility is always mutual
How would you describe the relationship between you and the client organisation’s head of communications? Trusting. Open. Honest. Transparent. Prepared to challenge. Backed by an intellectual rigour and an instinct for ‘what is right’
How would you diagnose the state of the public relations consultancy sector? I think it is in an important state of change. Competition can – and will – come from anywhere: from ad agencies, management consultancies, digital and research firms. Public relations skills need to evolve rapidly to meet real client needs. At Edelman, we talk about the shift from public relations to public engagement. Agencies that fail to understand the stakeholder universe and the deep behavioural change driven by social business are less likely to survive
There has been an exponential growth in public relations: new boutique agencies, growing numbers of ex-journalists and corporate heads joining the ranks, new university course, and so on. What’s your opinion on this plethora of PR, and do you believe that this growth can and will continue? The challenge has always been that public relations is too ill-defined and too many people can ‘jump in’. I am sure this growth will continue but it may not be good growth. There will most likely emerge a clearer division between publicists and consultants; those supported by measurable, outcomes-based systems and those still focused only on media. This is a dangerous focus, in my view. In a world of shared values and shared interests, influence and authority have dispersed and media is not the only route to success.
The agency job market
As part of his role as managing director of executive search firm the VMA Group, Oskar Yasar’s work is intertwined with the in-house and agency market. VMA advises agencies and in-house professionals on such issues as strategic hiring, remuneration and career trajectories. Since joining VMA Group in 2003, Oskar has handled assignments for major international in-house and agency clients including HSBC, UBS, Legal & General, Givaudan, Brunswick and Merck.
Is hiring for agency positions the same as hiring for in-house positions? The trend in agencies now is very much following the in-house marketplace, where I am mandated to find a senior communications director through a market executive search. That same search process is now deployed within the agency marketplace, and that’s an interesting development. Because of our position in the market place, we know how agencies operate, we know the growth demands of these agencies, and ultimately we know what in-house communications directors are now demand ing of agencies.
How does the public relations agency compare to five or 10 years ago? I think the agency marketplace in the last five or 10 years has become more holistic in its outreach. By that I mean it now has to offer a broad corporate reputation management service, rather than the historic vertical sectors such as financial public relations, investor relations, corporate public or marketing communications. For example, some of the largest global agencies have now realised that they can no longer be seen as a financial public relations agency that just offers that vertical service, because communication directors and CEOs now use agencies differently – they no longer hire agencies to do vertical public relations, they hire agencies to offer strategic corporate reputation management advice. We’ve also noticed those agencies that are only offering individual vertical services are seeing a significant reduction in fees as well. The interesting dynamic with in-house corporate communication directors is that a high proportion of them have come out of agencies, therefore they can maximise the output of agencies because they know how they operate. They can say to their agencies, ‘I want to reduce my fee significantly if you’re just offering that vertical’, and so agencies need to broaden out their offering.
So senior management’s changing conception of the role of communication determines their attitude to the agencies? Absolutely, and I’m at an exciting junction because I can see that evolution taking place. But I very much see a transition and evolution in the role of corporate communications and public relations agencies. The other thing we’ve noticed is a real growth in agencies in the past 10 years. There are now more people working in public relations agencies than there have ever been, there are more agencies than there have ever been, and more and more small agencies are being created out of much larger entities. So I think the world of agencies is growing and becoming a more sophisticated and strategic service than it’s ever been. But they’re still playing catch-up to the sophistication and the growth of in-house communication.
For those about to embark upon a career in communications but are unsure of which path to take, how would you advise them on choosing agency or in-house? It really depends on where the candidate wants to take their careers within five to 10 years time. I find that working for an agency gives you a much broader experience of the channels of corporate communication, and sometimes the danger of going in-house through a junior level is that in some – not all – cases, the role is somewhat parochial and too narrow for you to then grow into a different role in a different sector. So it really depends on what the in-house role is offering – if it is broad and gives you an overall experience of corporate communications, media relations, internal communications, public affairs, marketing communications and corporate social responsibility then that is a great opportunity. But if it is a narrow role then my advice is to spend two or three years in an agency, which will open significantly more doors for your future career trajectory. Having that broad experience of an agency is a fantastic way into senior corporate communications role. But the flip side to that is that a high proportion of in-house communications clients don’t like having people with no in-house communication experience as they don’t have the experience of operating within a hierarchy and dealing with the machinations of in-house corporate communications. But it is our job to persuade and convince our clients, which we do consistently. However every case and every opportunity is different but because of the direction of agencies in terms of their growth and sophistication and how cerebral some of their operators are then I think this path should not be discounted by communicators at whatever level of experience or seniority.
Why would they want to leave agencies to become in-house? I think it’s quite simple. In in-house you have one role, which is to communicate the messaging of your corporate brand, whereas agencies by definition are agents for their clients, so you’re working on several different clients, invariably from different sectors, so you usually don’t get under the skin of a company or a particular sector. Also, although senior consultants love the chase of business-building and pitching, many of them reach a stage in their careers where they are frustrated with all of that. And it works vice-versa: you have a lot of in-house communications directors who want to go agency side because they find it somewhat more vibrant and dynamic. There are notable examples of senior communicators moving agency side, and that’s never really happened before. In addition, in these difficult markets there is not much senior in-house movement at the top – which I call the musical chairs scenario. A number of senior in-house communicators are now looking at agencies as a viable alternative and this due in most part to the sophistication and strategic offering of certain agencies – and where they sit in relation to the chief executive officer.