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Southwest Airlines is legendary for offering low fares. It's no secret that at the heart of that strategy is a manic focus on low operating costs. There is folklore (and it's true) that headquarters employees use the stairs to save elevator electricity and sometimes horde pens from hotel stays to save money on office supplies.
That thinking extends to the communications department and how we deploy outside services. Long ago, we had the internal debate that many clients host: Do we hire an AOR?
For years, Southwest hired agencies for project-specific work, such as assisting with new market launches or special events like a milestone anniversary. Then, when expansion began to the coasts and the borders, debate ensued internally that we'd reached a size that merited an Agency of Record—one big agency to challenge us and to offer support on multiple projects, no matter the topic.
We landed on a great agency, and worked with some incredibly talented people. But, ultimately, found that it wasn't the solution for our brand. Sticker shock at the monthly retainer for a full-service agency meant we were constantly counting pennies when deciding how to use the agency's time. Eventually, the relationship was more about how to determine the "blended rate" than on the strategic counsel we craved.
We returned to our original strategy of hiring agencies for a specific expertise or project. We continue to use this approach, and it works well for us. We are fortunate to be staffed adequately for execution, so our agencies are in place to lend us "round world" thinking that we don't always have time to harness. They offer an outside viewpoint to complement our internal strategies. We have billing arrangements that run the gamut from project specific expenses to regular retainers.
How do brands, companies and organizations plan for agencies’ needs? Is an agency of record the right solution for your organization? The answer may depend on how your business is designed. But here are some insights into what we’ve learned:
Pros:
• Even with multiple agencies, our spending is less than what we were spending with one full-service AOR.
• Brands can shop for expertise in a certain area, such as corporate social responsibility (CSR), regulatory issues, international markets, cyber/data security, etc., and hire talent for that specialty.
• Brands can "spread the wealth" in terms of providing vendor management experience to more of our own staff members.
• Brands can, at times, aggregate outside counsel by asking opinions on the direction of multiple agencies, enabling us to garner a broader perspective when providing things like executive recommendations.
• Multiple agencies know your business, and as a result we get more "disruptive" ideas being brought forward
Cons:
• No one-stop shopping convenience with all practice areas in a single shop.
• Multiple agencies take more staff time to manage and onboard.
• Convergence is happening in our profession, and some see a stable of agencies as counterintuitive to that trend.
• Without an AOR arrangement, conflicts of interest with competing clients must be explored
So, what do you need to consider if you are a client looking for agency support? Here are some questions to ask:
• Will this be a long-term relationship or will it have a beginning and an end (such as in event support or for a product launch)?
• What is the budget? Full-service agencies are a significant investment and your investment dictates the support you are provided.
• What are you really looking for? Strategic counsel or "soup to nuts" plans the agency can execute on your behalf?
As an agency, business development and client services are the bread and butter. "Agencies of Record" retainers may bring in more bacon. And that's tempting.
However, for Southwest we've maintained longer relationships with the agencies we hired for niche reasons than the one we hired to do it all. They are better at what they're better at and constantly sharpening that specific saw, be it social, crisis, CSR, or global perspective.
Speaking of doing it all, that changes often in our dynamic profession. We owe it to our staffs to be constantly looking for fresh ideas, practice areas and emerging experts and we haven't found that one magical firm that does it all. Not yet anyway.
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Linda Rutherford is VP of Communication & Outreach at Southwest Airlines. She can be reached at [email protected]. Follow her on Twitter, @SWAfollower
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