Debate: ‘Clause’ of concern

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November 15, 2021 6:54 AM

Serving two clients belonging to the same industry is tricky business among advertising agencies

The business of brands has been disrupted by the internet economy and will get even more impacted with the explosion of D2C brands.The business of brands has been disrupted by the internet economy and will get even more impacted with the explosion of D2C brands.

Serving two clients belonging to the same industry is tricky business among advertising agencies. If the agency handles a competing brand, it needs to ensure the new client is not targetting the same customer base or offering a similar service. Venkata Susmita Biswas asks industry executives if this condition of exclusivity can be done away with

Krishna Iyer, Director – Marketing, MullenLowe Lintas Group

‘Three or more similar clients is a specialisation’

Because agencies work on a retainer basis, instead of short-term turn-key projects, agencies are expected not to work with competing brands. To handle such issues, we look into the specific ways in which their products and services overlap (or not), before deciding whether they are competitors. Firewalled teams in different locations or even within the same office premises are plausible ways. Ad agency networks or groups that operate with multiple agency brands under them have the advantage of offering a resolution for conflicts.

Stitching up a bespoke team that has a deep understanding of the category and different specialisations under a team banner can be proposed to the client. The pandemic has made city exclusivity a viable option for resolving conflicts. Two similar businesses can be perceived to be a conflict; three or more is a specialisation. There is a lot to learn from the big four consulting companies that thrive by handling conflicting business. Clients seem to be fine with the idea of consultants deep-diving into their business with prior knowledge from their experience with a competitor on a similar problem.

Jitender Dabas, COO & CSO, McCann Worldgroup India

‘Definition of competition needs to be sharper’

The business of advertising and brands has changed drastically over the last 20 years. The average size of accounts has shrunk with the fragmentation of services and, therefore, definitely necessitates a relook at the issue of conflicts and exclusivity in the contracts which are two different things. Conflict needs management through robust processes and transparency. Confidentiality as well as protection of data and ideas can be ensured through robust systems with complete integrity. Bigger agencies with multiple teams and offices can do it easily. Exclusivity, on the other hand, is a clause that involves an opportunity cost for the service provider for not working with anyone else in the market.

The business of brands has been disrupted by the internet economy and will get even more impacted with the explosion of D2C brands. As the boundaries blur in the internet economy, the definition of competition needs to be sharper. Leaving it open either makes it restrictive or leaves room for ambiguity. In the end, relationships based on transparency and trust driven by the sentiment of ‘growing together’ help navigate these issues best.

Lloyd Mathias, business strategist

‘Clients worry about sharing crucial information’

Very often, the communication that a brand puts out relates to the kind of communication strategy a competing brand is creating. Therefore, having the same agency work with two brands that are vying for the same consumer, no matter the level of firewalls an agency puts in place, is fraught with risk.

Agencies have got around this by creating different arms like Wunderman Thompson had created Contract Advertising. But, by and large, clients are hugely uncomfortable because communication is both strategic and tactical in nature. In the case of consulting firms, the advice is more strategic. Clients share a whole bunch of consumer insights, core positioning, brand architecture, etc. Because of this, they worry that once such information has been shared with an agency which is also working with a competitor, the brand’s proposition could be weakened.

In the case of consultancies, brands consider deep knowledge in a particular sector as an asset. The same is true for the public relations industry. Over time, we could see an acceleration in specialist agencies. However, that is unlikely to happen for consumer-facing companies.

Read Also: How Apple’s App Tracking Transparency framework has impacted marketers

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