THE AGENCY BUSINESS: Client conflicts can create tension between profit and service

Making a profit and serving clients are most firms' two main goals, but situations can arise that impede the ability to meet both objectives. Paul Cordasco learns how some agencies deal with client conflict.

Making a profit and serving clients are most firms' two main goals, but situations can arise that impede the ability to meet both objectives. Paul Cordasco learns how some agencies deal with client conflict.

What is a PR firm's primary mission? Most responsible agency executives would probably argue it is serving their clients to the best of their ability while growing the firm's profits. And conventional wisdom dictates that these goals are joined at the hip. (How many new clients meet their agency via a recommendation?) But what if there is a tension between a firm's profit motive and their ability to give a client the best service possible? Welcome to the world of client conflict. To be clear, most folks seem to agree that client conflicts occurs when a firm begins work for a competitor of one its current clients. Although there would appear to be gray areas within this description (such as how exactly to define "competitor"), some agency executives take a hard-line against working with clients in the same industry. "There are no gray areas when it comes to conflicts," says Christine Barney, CEO of RBB Public Relations, an independent Miami-based PR firm, with clients that include the Florida Marlins and Verizon Wireless. "My philosophy is that we work for only one client per industry. That way, the entire resources of the firm are dedicated to that client." Others feel conflict can be neutralized, and some firms regularly go to some mild extremes to do just that. Take for instance the experience of Las Vegas-based integrated marketing firm R&R Partners. Although the firm had been representing casino operator Mandalay Resort Group, two years ago it did not automatically balk at the chance to represent a direct competitor, Park Place Entertainment. After consulting with both clients, each casino operator agreed to allow the firm to handle both accounts as long as R&R installed some internal controls to neutralize the conflict. The firm constructed two separate account teams - each headed by an account director. That director acts as the lead strategist on the accounts. The account teams sit on opposite sides of the building at R&R and they even use separate printers. The firm says it has made every attempt to insure that the interaction between the two teams is minimal. "The teams go so far as to not use the same meeting rooms," explains Dale Erquiaga, VP of brand services at R&R. "The Park Place people are set up at one side of the building while Mandalay is on the other side. This way even if the one team leaves materials lying around, the other team will never see them." Yet Barney says that such a concept is still fraught with ethical quandaries. "Even if teams are separated by a thousand miles, a time will come when one client wants a resource that can't be shared and somebody loses," she says, offering an example. "I know some travel and tourism PR people do this a lot. They say, 'We have ten destinations, so that gives us more marketing power.' I'm sorry, but I feel that when I get the call from Travel & Leisure, and they want a destination for a top-five list, I only have one destination to promote because that's who I represent." Erquiaga says both clients are fine with the arrangement and feel that their fortunes are somewhat linked. "It's the 'rising tide lifts all boats' theory" says Erquiaga, "In Las Vegas, the health of the destination comes first. We happen to represent the destination as well [the Las Vegas Convention and Visitors Authority is also a client], so if we do a good job for all three, they all benefit." Other agency heads say they tackle conflict on a case-by-case basis. "It's kind of hard to have a business without working for companies in the same industry," says Phil Morabito, president of Houston-based Pierpont Communications, who has handled conflicts by having separate Pierpont offices handle competing accounts. Nevertheless, Morabito says he always informs clients of his conflict policy even before the issue raises its head. He says he does so by reminding clients from the outset that gray areas exist. "I tell all my clients, 'If you're Burger King, we're not working for McDonald's, but we will work for a restaurant that sells hamburgers.'" ----- Ethical behavior The PRSA's code of ethics' section on conflicts of interest reads in part that a member shall:
  • Act in the best interests of the client or employer, even subordinating the member's personal interests
  • Avoid actions and circumstances that may appear to compromise good business judgment or create a conflict between personal and professional interests
  • Disclose promptly any existing or potential conflict of interest to affected clients or organizations
  • Encourage clients and customers to determine if a conflict exists after notifying all affected parties

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