Client conflict: a juggling act

You might think you know what client conflict is and how to stop it becoming an issue, but some cases are much trickier than others.

We are all confident that we can spot a case of client conflict from the off. If your agency works for Coca-Cola, then it’s going to take a brave, highly imaginative – or professionally suicidal – account director to put forward a case for pursuing a contract with PepsiCo.

But not all conflicts are quite so obvious. "A chocolate bar client versus another snack client is a more difficult one," says Alex Bigg, general manager of Edelman’s London office.

Other relationships are more oblique. Last year Luther Pendragon was moved to tell its healthcare clients that it was no longer working with Philip Morris after a number of them questioned its work with the tobacco firm.

A rule of thumb might be that if you have a burger manufacturer as a client and you are approached for business by a healthy eating charity – or there is an airline on your books and you are about to go into a pitch with an environmental group – it is wise to trust the twitching of your antennae.

Trouble could lie ahead. Yet part of the problem is that there is no consistent understanding between clients and agencies about what it is that constitutes conflict.

Bell Pottinger Public Affairs, which ran UK lobbying work for Kellogg’s, was pushed aside after sister PR agency Bell Pottinger won a brief for the spin-off of Kraft’s global snacks business, Mondelez International.

The breakfast cereals giant saw the relationship as a direct conflict – and that was that. And Coke versus Pepsi is one thing, but Portland may have been surprised to be ditched by Coca-Cola after Omnicom bought a majority stake in the agency.

The reason? Omnicom constituents handle much of PepsiCo’s global advertising work.

Yet the dynamics of the PR sector – as more agencies get sucked into multinationals in buyouts and mergers – can throw up such difficulties, and if the proposed $35bn (£20bn) marriage between Omnicom and Publicis ever becomes a reality, then these potential flashpoints will only increase.

Moreover, the sheer breadth of some businesses means it is difficult (as Microsoft’s UK PR director Nicola Taylor admitted to PRWeek last year) for them to find an agency that is not in conflict in some way, somewhere.

"Managing conflicts is one of the biggest single inhibitors of growth for some agencies, particularly if you build your business around large blue-chip brands with fingers in a lot of pies," says Brendon Craigie, group CEO of Hotwire.

"For instance, software companies cover a multitude of fields that could rule you out of ten to 20 areas."

Communication is key

To counter this, every client and agency to which PRWeek spoke emphasised the importance of communication when conflict – real or imagined – arises. "The ethical compasses of your staff are often the best indicators," suggests Craigie.

"Views tend to vary," acknowledges Steve Earl, managing director, Zeno Europe. "While direct, head-to-head conflict of interest is pretty obvious, others can overlap or be situations that may cause conflict in the future.

The common denominator to achieving resolution is to be transparent with all parties and apply common sense."

In this way, conflict can be best seen as a test of integrity. "Budgets might be tight," says Pat Pearson, MD of healthcare at Firstlight.

"Targets have to be met and there is pressure to pull in the business – but the most important thing is to be open with clients and potential clients."

Companies are, after all, relying on your absolute discretion. Nigel Emms, director of brand and communication at commercial vehicle group Iveco, speaks for many when he says: "We would not work with an agency that has a PR account with a direct competitor.

"Agencies are privy to a lot of information about your company, people and plans. Even though you have confidentiality agreements in place, people move on."

Such a view makes perfect sense, but there may at times be more room for manoeuvre than it first appears. "It’s easy to see two brands in the same sector and think: ‘Shit! Panic!’" says one agency boss.

"Agencies can have nervous breakdowns about it." But some clients can be realistic about the issues agencies face. "Sometimes clients may surprise you," says Pearson.

"They’ll say: ‘We’d rather you didn’t follow this lead but go ahead’."

The idea that an agency, as a trusted partner, could work confidentially with a competitor is not desirable, admits Alan Sumner, head of public affairs and patient advocacy at the UK arm of German pharmaceutical company Boehringer Ingelheim.

"But with the right account teams working in silos with firewalls it can work," he says. "After all, the agency’s reputation is dependent on this confidentiality. I’d prefer a monogamous relationship here, but I know that it’s not always possible."

Peter Bingle, former Bell Pottinger boss and now founder of Terrapin Communications, believes IT safeguards mean it is perfectly possible for one agency to service two competing clients using Chinese walls between different teams working on password-protected material, for example.

But Hugh Davies, director of corporate affairs at mobile phone company Three, urges caution. "Chinese walls assume the sands aren’t shifting," he says. "All you need is a takeover, an alliance or a campaign." Clients will need reassuring that internal safeguards are robust.

Discover a compromise

Another way that PR agencies have traditionally got around conflict is to create a separate brand. Zeno is part of the Edelman group although Earl says: "We don’t position ourselves as a conflict shop because that’s not a good long-term strategy." But he adds: "Zeno does have clients that would be deemed to conflict with Edelman clients."

Hotwire’s own such shop, called Skywrite, lasted five years although Craigie insists that conflicts were only one reason it was set up.

"We ran both in a very ethical way: there were separate teams and none of this ‘people carrying two business cards’ malarkey," he laughs. "But the idea of setting up an agency that is only for conflicts is not sustainable."

While wary of direct conflict, clients seem willing to accept some crossover – and might even welcome it. "It wouldn’t concern me if an agency was working for a car company, even though Fiat [Iveco’s owner] is a car company," says Emms. "And I think there can be benefits to agencies holding related accounts, such as suppliers.

It’s amazing the doors that can be opened when Client A wants to do something and uses Client B’s products to illustrate it."

Davies agrees. "There are often potential opportunities to be had," he says. "We [Three] would say to an agency that if they are talking to anyone in our ecosystem – for example, a handset manufacturer, software company or a content or connectivity provider – then they should check in with us.

But we are a funnel for all sorts of companies, such as Samsung, Apple, Nokia, Microsoft, Google, Sky and the BBC, and quite often their teams are working with us or selling to us." Case studies or editorial ideas that could be beneficial to several clients may come from a relationship with a single agency.

There is another possibility. "If you have an agency team that is so good in a highly specialist area such as pharma, transport, planning or defence then conflict doesn’t really matter," Bingle says.

"The client doesn’t really care because all they want is the expertise the team offers."

But whatever you decide, you need to talk. "Agencies that are open and willing to share potential problems are the ones that come out on top," says Davies.

That is not to say there is no risk attached to broaching conflict. "I’ve been in a situation where an agency I have been working with has asked permission to work with a competitor," recalls Sumner.

"It certainly changes the dynamics of the partnership, whatever the outcome. It can address issues and lead to improvement in the working relationships – or end it pretty abruptly. Trouble is, you don’t know which one it will be."

One agency veteran says that the conversation typically goes one of three ways: a third of clients will say "that’s fine", a third will be unhappy but continue with you as long as more internal safeguards are put in place – and one third will say "how dare you even think about it" and end the relationship.

Even if you do not like those odds, it would be foolish to lie about potential conflict: "silly" and "unwise" were two of the politer words PRWeek heard to describe this. "You’ve got to be transparent because you are going to be found out," says Bigg. Craigie goes further, saying Hotwire has "definitely" won business as a consequence of clients feeling that they have been taken advantage of by other agencies.

Bingle backs up the warning to be straight with clients: "Be truthful because if you’re not, you will be damaged," he asserts.

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