Trade dispute hits whisky makers
Retainer goes as big advertiser revamps its marketing strategy
The ASB has taken one of its key advertising agency partners off retainer in a revamp of its marketing strategy. The Herald understands that while the bank will continue working with branding partner True on a project basis, it will no longer be paying the agency an annual retainer, estimated by one source at more than $500,000 a year.
ASB general manager of marketing Shane Evans would not confirm or deny the information, saying only that the bank would continue working with both True and its other agency partner, With Collective.
Sources told the Herald that at least some of the retainer previously paid to True had been shifted to With Collective.
Although With Collective also does a fair share of branding work, the agency has built a reputation on the digital side of the business, specialising in the use of data to create personalised marketing.
It is understood that ASB felt the retainer was better spent on the more responsive, day-to-day aspect of the company’s advertising than the branding work that usually has a longer gestation period.
True managing director Steve Kane confirmed to the Herald that the agency’s relationship with ASB had moved from retainer to project based.
He would not be drawn on any possible job losses, saying it was too early in the revised relationship to confirm any structural changes.
Kane said the impact of the ASB move had been lessened to some degree through new business wins, including Stihl, and securing all of the Ballance account. (True previously held the brand side of that business.)
Kane added that his agency would continue to work with ASB and had projects in the pipeline.
True isn’t alone among the big branding shops in having lost retainer fees from major clients. Fonterra, Tui and BNZ are just some of the clients to have changed their retainer agreements in recent years.
Kane told the Herald the ASB’s move was part of a broader industry trend.
“Clients are constantly reviewing how they work internally, and naturally that affects their
relationships with their agencies,” the agency boss said. “We similarly need to adapt to ensure we’re giving them what they want.”
He said this was one reason why the agency had decided to bolster its project management team, to better guide clients through the complex modern media environment.
Worrying trend?
Speaking to the Herald on condition of anonymity, an industry source said it was worrying to see major companies take their lead branding partners off retainer.
He said this could undermine the longer-term impact of branding work, as marketers chase short-term gains.
These comments are in line with the work of advertising researchers Les Binet and Peter Field, who have argued persuasively for companies to focus on longer-term brand work because it creates stronger businesses in the long run.
The source, however, told the Herald the problem was that marketers were often given intense short-term targets, which didn’t take into account the longer-term implications of good branding work.
Losing a retainer also places further pressure on advertising agencies because it makes it more difficult to hold onto the best creative thinkers. Without the funds to secure the talent, agencies may end up relying on freelancers or stretching available staff further.
However, the source said retainers were likely to return in coming years.
NZME boss tackles Govt
Clients are constantly reviewing how they work internally, and naturally that affects their relationships with their agencies. Steve Kane, True
Michael Boggs, the chief executive of Herald owner NZME, is calling on the Government to back its rhetoric and stop funding Google and Facebook.
“The Government says it wants the organisations to do much better on the one hand, but then also funds them to the tune of tens of millions of dollars every year,” he says.
Boggs notes that as much as 62 per cent of the $1 billion spent on online advertising in New Zealand goes directly to Google, and that government agencies regularly contribute to this.
Instead, he would like to see the Government make a commitment to local media by pulling back on Facebook and Google advertising.
“If you think about it from a Government perspective, which is meant to be supportive of New Zealand media, why do they need to spend a single dollar with any overseas media company, given they can reach everyone with local media?
“Maybe the only agency that could justify it is Tourism New Zealand because they’re trying to reach international people to bring them to New Zealand.”
Boggs’ comments follow similar calls from independent ad agency Special Group, which questioned whether government bodies should be investing their marketing funds in ad agencies owned by international holding companies.
While the Government has made changes to its procurement policy — requiring government bodies to support locally owned businesses — there has been a reluctance to pull advertising from Facebook or Google.
Even after the Christchurch terror attack, there was no governmentwide restriction on social media advertising. At the time, the Government said it was focusing on regulation.
Boggs isn’t the only media boss interested in challenging the status quo when it comes to digital advertising. This year, MediaWorks chief executive Michael Anderson told the Herald he would like to see media owners in New Zealand working together rather than fighting over the digital scraps left behind by international giants.
Boggs agreed with this sentiment, saying there was an opportunity for many players in New Zealand to come together.
“The future of New Zealand journalism and broadcasting is really important and we have to take proactive steps to protect that,” he said.