Ad agency Goodby Silverstein made a ballsy judgment call recently when it walked away from its $80 mm relationship with Discover Financial Services to pursue the much larger Visa USA, a direct competitor.
Sadly, Visa announced today it would select an Omnicom agency to be its new AOR, leaving Goodby with zero clients in the credit card sector.
I think most professionals would admire Goodby for its bold decision. They went for the brass ring and lost. You can’t say they don’t have guts. On the other hand, smallish clients might think twice about hiring the firm in the future, thinking they’ll be discarded like yesterday’s newspaper when a larger, more attractive competitive client attracts Goodby’s attention.
It’s all part of the client-agency mating ritual which, as Lewis Carroll might say, just gets curiouser and curiouser.
I must admit to cringing when I read the dismaying news about ad agency Berlin Cameron losing its two anchor accounts last week and having to downsize 55 of its 90-person staff.
It was a "there but for the grace of God go I" feeling since Peppercom has twice faced similar circumstances in our 10-year history. One occurred when a division of GE and its 35 percent of our billings decided it needed a global firm to "best meet its needs." Another occurred very early on when a now defunct business insurance client was acquired by another one, and 40 percent of our billings disappeared faster than you can say or spell "actuarial."
These were painful but healthy lessons for us to learn. When a business relies too heavily on a few key clients, it creates too many vulnerabilities and, in my opinion, distorts the client-agency relationship since the client knows it wields tremendous power (and we’ve experienced a few, very abusive client managers who knew this fact and took advantage of it).
The "too many eggs in one basket" syndrome is a house of cards strategy that can immediately impact a firm’s image and reputation if the client(s) departs. Advertising Age, for example, ran this headline in covering Berlin Cameron’s double loss: "The fall of Berlin?" And they quoted an industry analyst as saying, "From a new business perspective, some clients may pause for a second and wonder what’s going on." Such comments can be the kiss of death for an agency and the beginning of a self-fulfilling prophecy that can only end in acquisition or Chapter 11.