While advertising and public relations are two very different operations, an advertising agency may do more PR than one would think. “Many practitioners and scholars believe that the fundamental goal of public relations is building relationships with an organisation’s key constituencies.” (Hon and Grunig, pg. 6)
Marmalade, a Melbourne advertising agency, was started 11 and a half years ago by Managing Director Victor Maree and several colleagues, and was initially serviced by a media placement agency, which would pay the company a commission for the work they did on behalf of the agency. More recently Marmalade works on its own, managing client relationships and media placement in-house. I sat down with Victor to discuss Marmalade, and to gain some insight into how it runs and is so successful. One of the first things he was ready to point out was that Marmalade is a “fully integrated” agency. He was quick to agree that the role of media agencies is changing, as “consumers are not consuming media in the traditional way”. This transition can pose issues for a creative agency like Marmalade:
‘Integrated Marketing Communication can restrict creativity. No more wild and wacky sales promotions unless they fit into the overall marketing communications strategy. The joy of rampant creativity may be stifled, but the creative challenge may be greater and ultimately more satisfying when operating within a tighter, integrated, creative brief.’ (Smith and Taylor, pg. 18)
How does Marmalade counter this struggle? According to Victor it is Marmalade’s dedication to creativity and not just servicing clients, but “believing in their products”, that makes business so successful. It is this dedication to producing work of the highest standard, and keeping clients engaged and satisfied that allows the agency to function as well as it does.
My discussion with Victor revealed two areas of communication which especially stood out in the company: client acquisition and retention, and pitching to clients.
Client acquisition and retention
As Jacquelyn S. Thomas points out, “customer acquisition and retention are not independent processes” (pg. 262). It is a matter of balancing new and existing clients all the time.
“New business is vital to the health of any business or industry.”
Victor was especially concerned with this in terms of his employees, noting that if Marmalade is not constantly growing and evolving, and gaining new clients, new employees are not given security or assurance that their jobs will remain stable.
As acquiring new business will make way for more potential profit, it is important to measure beforehand if the benefits of taking on the client will outweigh the costs.
“Measuring, managing, and maximizing customer profitability is not an easy task. It requires that in resource allocation decisions, both the benefits and the costs of marketing, sales, and customer interactions are considered.” (Reinartz, Thomas and Kumar, pg. 63)
Victor is not solely concerned with profitability, however, denying Reinartz et al’s statement that “individual customer profitability should be the objective function” (pg. 78) of acquiring a new client. It is important to have a “new business strategy” in place, and to assess a new business not only on what profit it will bring in, but also on what creative opportunities are available in the work. No matter the size or importance of any business, Marmalade and all advertising agencies are “judged on the work that they produce for that client”.
Victor used the example of the ‘Dumb Ways to Die’ campaign. Though the agency that invented it, McCANN, were given the smallest of budgets, working with a well-known but not necessarily liked company (Metro trains), the quality, humour and suitability of the integrated media campaign absolutely took off! It was the quality of the work and the soundness of the idea that has led McCANN to win many awards and be inundated with new clients who have purposely sought them out.
This example brings up another important factor in the client acquisition process: the role that word-of-mouth plays in bringing in new business. Again this comes back to the quality of the work that Marmalade produces.
“Service quality is important for new customer acquisition in the sense that the heavy users tend to be acquired by word of mouth rather than advertising” (Nam et. Al., pg 2)
In addition, “the magnitude of a negative word of mouth effect is twice as large as that of a positive one” (Nam et. Al., pg. 20). Marmalade’s answer to this fact is focusing on “having a fantastic portfolio of work” and “working hard to keep satisfying clients”. For an advertising agency like Marmalade there is no use in trying to keep customers or obtain new ones if the agency does not produce exceptional work for them. This may be an obvious statement – but it is one Victor did not hesitate to make.
When up against competition, on a pitch list amongst other advertising agencies, Marmalade will often step back if the competition is too fierce. As so much must be invested in a client pitch, it is almost worthless pitching at all if there are 10 other agencies also pitching. Victor revealed that the company strategy in this case is a maximum 3 agencies to pitch against.
Overall, for the company, client acquisition and retention is about working hard at it. “You have to live and breathe their products”. There is no option of watching from a distance, as you must live their business with them, prove that you can help them and bring something to the table. It is also a matter of executing things really well, as in the end, you must deliver what you have sold to the client to retain the business.
The Process from Client Brief to Pitch
Pitching to clients is possibly THE most important aspect of business at Marmalade. This is the chance they are given to prove their creative abilities and strengths, and to attract lasting business. It is vital to be always pitching – for Marmalade this is happening at least every month as “it is essential to always be doing something”.
Victor took me briefly through the pitching process:
- The first step is to create a ‘reverse brief’ as a response to a brief supplied by the client. This brief can be anything from a phone call with a list of issues, to a carefully formatted document outlining an advertising opportunity. Some can be very disciplined – as in the case of large client Mercedes Benz.
- It is then a matter of answering several questions: ‘why’ is the campaign being developed, ‘who’ is the target audience/market, ‘what’ do we want to say?
- Ideas are proposed, which must be clearly communicated and soundly researched. Timing, budget and medium must all be taken into account.
- A creative team comes together to share information and ideas. A strategist is often involved, as well as a client services person. In this initial meeting the team gets excited about the product or service, they must live and breathe and feel it.
- Regrouping after a week or so, ideas and proposals are produced and compared.
- 3 or so ideas are chosen initially to be developed further before presenting them to the client.
At all stages, the brief is constantly being referred back to and judged against. Regardless of what ideas are presented to the client, “each element of the communication mix should integrate with other tools of the communications mix so that a unified message is consistently reinforced” (Smith and Taylor, pg 14.) and this message reflects what the client placed on the brief.
In terms of approaching new clients directly, this must be done carefully and selectively. For Marmalade, new clients are often taken on-board after they have approached the agency of their own accord. It is then a matter of pitching to them and coming up with creative ideas that will further encourage the client to sign on with them. In the occasional case that Marmalade approaches a company directly for business, it is a matter of strong communication skills, in-depth research prior to contacting them, and a solid idea that is certain to interest the potential client. This does not happen often, and is a dangerous business as so much time and effort must be put in, without definite indication of the client’s interest.
In most marketing, PR and communications literature, the focus is largely on strategies, profitability and techniques. However, in a real life scenario, an advertising agency will do what works best for them. Often this means being selective about where effort, time and funds are placed. “Effective organizations are able to achieve their goals because they choose goals that are valued both by management and by strategic constituencies both inside and outside the organization” (Hon and Grunig, pg. 8). Marmalade clearly states its philosophy and its goals on its website. In dealing with client relationships, the website states it best when it says:
“Time and time again we’ve seen how much can be achieved through simple good manners and the ability to listen carefully.”
1. Hon, Linda Childers and Grunig, James E. Guidelines for Measuring Relationships in Public Relations. Institute for Public Relations (1999).
This document was published by the Institute for Public Relations, outlining ways that relationships can be measured in PR. In dealing with client relationships, this source proved very helpful shaping my analysis of how Marmalade deals with client relationships, and also affirming why relationships are such an important part of successful business.
2. Reinartz, Werner; Thomas, Jacquelyn S.; and Kumar, V. “Balancing Acquisition and Retention Resources to Maximise Customer Profitability”: Journal of Marketing, Vol. 69, No. 1. (2005)
This document is from a marketing journal and as such the contention is very “profit-based”. This provided an interesting source to contrast to my interview subject’s view that relationships are not solely concerned with profit, but are also to do with credibility and creative opportunity.
3. Thomas, Jacquelyn S. “A Methodology for Linking Customer Acquisition to Customer Retention”: Journal of Marketing Research, Vol. 38, No. 2. (2001)
Another journal article, this piece stressed the link between client acquisition and client retention, which I thought made an interesting contribution to this case study. This also reflected what my interview subject mentioned about working to satisfy existing companies while also attempting to gain new work.
4. Nam, Sungjoon; Manchanda, Puneet; and Chintagunta, Pradeep K. The Effects of Service Quality and Word of Mouth on Customer Acquisition, Retention and Usage. Social Science Research Network (2007).
My interview subject spoke largely about the affect that word of mouth has on business and acquiring and retaining clients. This study provided some excellent research data to assist in highlighting the effect of word of mouth in relation to service quality.
5. Smith, Paul Russell and Taylor, Jonathan. Marketing Communications: An Integrated Approach. Kogan Page Publishers (2004).
It became very obvious in our interview that the role of advertising agencies has changed massively in the last few years. This text provided and excellent backdrop for this change, and in analysing how IMC affects the way businesses run and the mixed communications services that they must provide in the current media landscape.