The way we see it, there are three key professional service companies that most every company works with: Law Firms, Accounting Firms and Ad Agencies. The first two tend to have tenure-like security with their clients. It's rare for a fortune 500 to change their auditors or main legal counsel, but they trade in agency relationships as if they were the office supply company providing them with pads and paper. Why is that? The way we see it.....
1. Agencies just are not good at managing relationships with or the expectations of their clients. Probably happens during the pitch process when the agency team will say anything to win the account. After telling the potential client that they have the perfect plan to reposition the brand and double the sales, maybe the agencies are setting themselves up for failure by over-committing just to get the gig. It's possible that law and accounting firms do a better job managing client relationships and maybe agencies can learn from them.
2. Advertising work is now considered a commodity. It's just a theory, but maybe CMOs and marketing teams believe that the process of creating ideas and campaigns is the same everywhere and as such constantly looking for someone to do it cheaper and possibly different isn't such a bad thing.
3. The advertising agency is the most easily "non-proprietary" organization to blame bad business performance on and therefore is an easy target. After all, the General Counsel is rarely brought into the CEO's office for an ass tearing when sales are down 5% while the marketing and sales guys shuffle out with a trail of blood dripping down the back of their legs.
We believe it is a hybrid-reason. Agencies tend to over-commit when trying to win business and then when the client's overall business is not meeting expectations (regardless of the reason), the agencies have set themselves up as easy targets to blame. There you have it.