South Africa: Ad Campaigns – What You Don’t See

The advertising and media industry, like many, has been impacted by the Covid-19 pandemic. But, unlike a host of others, it has been fragile for several years. Global ad spend is expected to fall 9.1% by 2021.

Ad agencies are faced with shorter consumer attention spans, plummeting budgets, ever-changing media channel dynamics, and pressure to deliver faster than ever. This, coupled with growing client concern about their return on investment, has led to problems in the relationships advertising agencies have with their clients.

An unspoken problem in this relationship is the opportunistic behavior of both parties, to the deliberate detriment of the other. Beneath glamorous award ceremonies, witty campaigns of our favorite fast food joints and jumping on the latest bandwagon of the Instagram challenge are misleading behaviors. The Wimpy-McDonald’s scandal is a good example. After pitching an idea to McDonald’s, advertising agency employees OwenKessel Leo Burnett began work at a new ad agency, “The Odd Number.” There they pitched the same idea they pitched to McDonald’s. In the end, competing fast food chains ran the same ad.

A recent study exposes how clients (i.e. corporate marketers) and advertising agencies in South Africa act in this way. This is admitted by advertising agencies and customers themselves. Both sides acknowledge that opportunism exists, blame the other, but also acknowledge the existence of opportunism on their part.

The study draws attention to client-agency opportunism by describing how it occurs. It concludes with a discussion of how today’s client-agency dynamic can be improved. A suggestion, for example, is a simple two-way communication. Advertising agencies and clients should be clear about their goals and available resources. This will set expectations for the relationship, to avoid misunderstandings, assumptions, or tit-for-tat behavior.

We interviewed account executives at leading ad agencies, representing the ad agency, and marketing executives at established companies, representing the client.

Opportunistic behavior

Research shows that ad agencies and clients act opportunistically before and after signing a contract. Based on the verbatims of key account managers and marketing managers, the following conclusions were reached.

Before the contract, advertising agencies overpromise and withhold information. Often, senior managers presenting to the client are promised to work on the actual campaign, but junior employees end up working on it after the contract ends. Other ad agencies list on their website which clients they have done menial or non-menial work for, giving a false impression of their credibility.

A particularly unique trait of ad agencies is their focus on earning rewards, rather than doing what’s best for the client’s return on investment. They might suggest, for example, that the client pay R150,000 (about $8,990) for a TV ad, with the intention of using the campaign to win an ad prize. In this case, the customer would have benefited more from spending the money elsewhere.

Clients act opportunistically before the contract by exploiting ad agencies and withholding information. They might promise to pay the ad agency for 80 hours of work, but intend to subtly ask ad agencies for an additional 10 hours of work during the process without additional pay. Some clients steal the creative ideas that ad agencies give them.

Once the honeymoon phase is over, opportunism grows. Both parties continue to withhold information to maintain an advantage over the other. Advertising agencies overcharge by misrepresenting their actual hours worked on the campaign. They also mislead their client into believing that the work undertaken is arduous. This type of behavior was prevalent with the advent of digital marketing. Clients overpaid to set up websites or Facebook campaigns because it was unfamiliar territory. They didn’t know how many hours it took them to create a Facebook ad.

Some agencies neglect or block the work of small clients to meet the demands of larger clients. Other agencies create separate entities to work with competing brands in the same industry. For example, Entity A works with “Betty’s Burgers” and Entity B with “Bob’s Burgers”. In cases where allocated human and financial resources are agreed upon in advance, some agencies fail to disclose to the client when an employee has left their agency. This leaves the advertising agency with more money to distribute among its staff.

After the contract, customers mainly use their power advantage to mistreat ad agencies. This includes calling the ad agency’s key account manager on a Sunday morning to demand work for 8 a.m. the next day. Some clients also send vague WhatsApp messages as memoirs and expect the agency to deliver an outstanding campaign from that. In some cases, marketers may blame ad agencies for their “bad work”. This is done to encourage their board to hire an alternative advertising agency that the marketing manager has a personal relationship with.

Either way, opportunistic behaviors in these relationships will continue to prevail. Although there are genuinely altruistic people, opportunism is inherent in human behavior. This is evident by cases, such as Facebook and Cambridge Analytica; Volkswagen’s Dieselgate; and the North Face-Wikipedia scandals.

That said, favorable working relationships can be fostered by two-way communication, accountability of both parties, early search for an appropriate cultural fit, being fair and realistic when billing and paying, embody reliability and adapt to changes in the environment as partners.

This article is based on the study Perspectives: Client-Agency Opportunism: How Does It Happen and What Can We Do About It?, which Raeesah Chohan co-authored with Richard Watson and Leyland Pitt, and which was published in the International Journal of Advertising.

Dr Raeesah Chohan, Senior Lecturer in Marketing, University of Cape Town

Marilyn J. Hernandez