Agency Excellence Survey 2006: The importance of being a partner

PRWeek's third Agency Excellence Survey shows that firms need to maintain client service and adapt to changing priorities.

PRWeek's third Agency Excellence Survey shows that firms need to maintain client service and adapt to changing priorities.

Determining success in PR is ultimately a subjective exercise. But impressions can be quantified, and the thoughts of many clients together can form a revealing picture of where the agency world stands in its quest for happier – and higher-spending – clients.

PRWeek's Agency Excellence Survey, now in its third year, is a useful tool for tracking how firms perform in the eyes of those who matter most. It shows not only the changing nature of client needs, but also the speed with which different agencies can gain and lose the plaudits of their clients. While they're not designed to be used specifically for year-on-year comparisons, the survey results do highlight the fact that holding top honors for an extended period of time is a difficult task when clients' needs change from year to year.

In this year's survey, Porter Novelli was the only firm that, with weighting, scored in the top three for the two most important categories of agency attributes – ones that clients deemed "higher profile" or "differentiating." Other top scorers in these areas included Manning Selvage & Lee, Cohn & Wolfe, Ruder Finn, and Waggener Edstrom – the latter three having not been included last year.

The changing face of the leader lineup is not just to do with bringing in new agencies; nor is it solely down to one firm's performance improving while another's falls. Rather, it is to do with the changing needs of clients and shifts in their prioritization of what agencies should be providing. The rapidly changing nature of the in- dustry itself, accompanied by weighty personnel moves and significant account moves, makes maintenance of excellence a challenging proposition indeed.

The process of compiling this year's survey was conducted by Millward Brown. A total of 600 clients were surveyed between late April and early June. (See the full methodology at end of story.) All of the respondents were clients of the PR firms within the past two years, and the vast majority were personally involved in the selection of firms and the management of the relationship with them.

Respondents represented a wide range of industries, including finance, healthcare, manufacturing, and technology. Thirty percent were either C-level executives or VPs; directors of marketing and corporate communications pros were also included.

Their companies tended to be large. More than 40% came from organizations with more than 5,000 employees, and the average was more than 3,000 staffers. Mean annual revenue of the companies was close to $800 million, with 39% of respondents coming from companies with $1 billion-plus in revenue. And they were committed to PR as a marketing communications discipline; they dedicated, on average, 28% of their marketing budgets to PR, and 14% put the number at more than half.

What clients truly want

Agencies were rated on 18 attributes, ranging from "Works within the budget" to "Anticipates problems and issues that could put your company at risk." Clients were also asked to state how important these attributes were to them. Clients were asked not only to rate their existing agencies on various attributes, but also to identify how important these qualities are when selecting a firm. Through the results, Millward Brown can discern which characteristics are cost of entry, of lower importance, of high importance, and differentiating.

As has always been the case, the twin virtues of good client service and a high-quality staff are what separate the good from the great in the agency world. Fundamentally, the most crucial element of an excellent PR agency can be summed up in one word: people.

"It really is hugely important to like and respect the people who will be part of your team," says Patti Temple Rocks, VP of global communications and reputation for Dow. "I need to feel like they're smart people whose work style is compatible with mine and the culture of the company."

Again and again, leading corporate communicators on the client side – those who had been through countless agency review processes (on both sides of the fence) and were experienced with the slickest pitch materials that worldwide agencies have to offer – said the best relationships are forged on a personal level. Considering the close working conditions that agency personnel and in-house teams will experience over the course of their engagements, the answers perhaps aren't surprising.

"We really work closely with agencies and use them almost as extensions of our internal staff. We work as partners," says Paul James, communications manager for Harley-Davidson. "We want good chemistry between our account team and members of our organization."

The survey bore out these feelings. An agency's ability to offer "client service that is truly outstanding" was one of the most important characteristics to clients, as was the necessity for an agency to have "a high-quality staff."

Both of those characteristics fell into the "essential" category, and all major firms doubtlessly strive for them every day. But the survey indicates that staffing issues at firms may be gaining importance in a way not commonly thought. One of the most significant developments in this year's survey was the new thinking by clients on the involvement of senior staff in their accounts. Last year, the fact that an agency "ensures that senior staff is involved with your business" was afforded low priority by respondents; this year, it moved into the category of differentiating factors: those that can separate a winner from a loser in a close review.

"That's absolutely critical," says Bethany Sherman, SVP of corporate communications for Nasdaq. "I always hope that the people I'm meeting with are actually going to be the people working on the account and that there's no bait and switch in terms of being shifted off to more junior people."

The rising importance of senior- staff involvement not only signals an area for agencies to focus on, but may also prove to be a boon to agencies with longstanding client relationships.

Ryan Donovan, director of corporate media relations for Hewlett-Packard, says its work with Hill & Knowlton over the past four years has only put the agency in a stronger position to retain the business in the future.

"H&K has a long history with us, so they understand us and the changes we've been through," he says. "They have institutional knowledge that would be very difficult to re-create with a brand-new partner."

The whole staff

Of course, clients' focus on senior staff means that staff retention and recruitment are becoming even more important for firms. Jerry Swerling, a PR management consultant and director of PR studies at USC's Annenberg School, notes that most companies hire agencies for "staff-oriented" reasons, either to bolster a thin internal team or to add high-level strategic expertise that the company lacks. That, along with demographic trends like the decline of the AOR model and the rising percentage of PR budgets within the marketing mix, leads him to the simple conclusion that "it's all about the people."

"Agencies need to invest in them, train, retain, and spotlight them," he says. "They must recruit, train, and adequately compensate the [best] young talent they can find."

In fact, young agency talent is more than just the senior staff of tomorrow; it is important to appreciate them as the junior staff of today. And some clients, while acknowledging the importance of high-level involvement in their accounts, are savvy enough to review the lower-level staff who may be handling much of their work.

"Leadership at all levels is important, not just leadership in the big offices," says Michael Neuwirth, senior director of PR for Dannon. In a recent agency review, he insisted on meeting with junior staffers – without their bosses present – as part of the review process.

"I know senior management will be there when I need them. That's generally a given with any reputable firm," he says. "What's not a given with any agency is how the junior team carries itself when senior management isn't involved."

Other agency attributes are also being seen differently. The idea that an agency "understands your business," rated as essential in last year's survey, has moved into the "cost of entry" category, meaning it's now so fundamentally important that it's expected as part of the basic price of getting in the door.

Ed Adler, who heads corporate communications for Time Warner, listed it as the first quality he looks for in an agency. "I like that they would understand our company, our business, our executives," he says. "I like any agency we hire to have a good sense of the company and not give a cookie-cutter approach. Not all companies are the same, and they should have different levels of service."

For iconic companies like Harley-Davidson, a close understanding of the business is definitely required. James points out that staffers at all of Harley's agencies were bikers when they won the business and that even more are now. "Motorcycling is not mainstream," James says. "We look for at least understanding, if not active participation."

The agile back and forths of the market are, in fact, the most consistent source of change that agencies must deal with. As clients' businesses adapt in response to obstacles, so, too, must the firms. But another source of change is the media itself; as new media become ever more important, PR firms must know how to balance client needs for visibility against the hype that surrounds the changing media landscape.

Agencies' understanding of the new-media environment ranked as a low priority for clients this year. Nasdaq, for example, monitors blogs and has experimented with podcasting internally, but realizes that such skills take a backseat to more prominent factors.

"I'd say [new media] is probably secondary," Sherman says. Another factor in the attribute's relatively low priority is that clients are not just asked to rate firms they now work with – some may be rating agencies they worked with two years ago, which was a very different time in terms of new media.

If not through flashy skills like blog relations, then, how are major firms expected to stand out from the others? At a time when all global firms offer essentially the same services, must they increase branding budgets to set themselves apart from the competition?

No, say clients. In fact, their thoughts on agency differentiation are quite similar to their thoughts on what makes agencies good in the first place.

"I'd say that true differentiation among big firms is largely a myth," says HP's Donovan. "Fundamentally, what clients care about is the quality and the tenacity of the people on the business."

Sherman, a former executive with Euro RSCG Magnet, says she learned the lesson firsthand. "As an agency, you're focused on your own brand, how you're perceived in the industry," she says. "I don't think clients care about that as much as firms think. I don't."

Corporate communications pros across the spectrum echoed the emphasis on people over branding or marketing across the spectrum. You must win us over with your actual warm bodies, they say, rather than with catchy slogans.

Marketing and branding were largely dismissed by clients or held up as an example to tout an agency's personnel.

"I'm not sure it matters as much as big agencies think," says Dow's Temple Rocks. Harley's James adds, "It's people. That's what differentiates agencies."

The brand itself will get you in the door, most clients say. But the pursuit of excellence will never stop over the life of the relationship.

"The way agencies brand their practice and specialty areas re-flects subtle differences in their approach. Not dramatic or meaningful ones," says Dannon's Neuwirth. "And at the end of the day, it really comes down to the team."

Profiles by Michael Bush, Larry Dobrow, and Randi Schmelzer

Interviews for the Agency Excellence Survey were conducted via computer-assisted Web interviewing [CAWI] methodology. Respondents were recruited from several sources, including, but not limited to, the ERI Panel, PRWeek Contact list, and PRWeek's subscriber list. (Databases were supplied to Millward Brown for the sole purpose of conducting the research.)

The ERI Panel has more than 1 million business pros across the US and Canada, and is made up of opinion leaders, decision-makers, and purchase influencers for companies and organizations. Qualified members are invited to complete an in-depth business-relevant profiling survey that indicates their work roles, responsibilities, job-related interests, and more.

All respondents were PR clients involved in agency selection and management. A total of 600 people were interviewed between April 18 and June 27, 2006.

Modeling of results: Agencies were ranked on two dimensions, high importance and differentiating, which were derived from the stated vs. derived importance analysis. Statements that were high in both stated and derived importance are seen as high importance, while those that are high in derived importance, but lower in stated importance are considered differentiating.

Each agency's attribute scores were weighted according to the proportion of current clients in their dataset to ensure a comparable impact of current clients for each firm. The structure of the model was designed by Millward Brown, with analysis done by a Millward Brown analyst.

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