"Clients just need to stick with it and be honest with their agencies," says Cathy Constable of AT&T. "If it's not working, give them a chance. Don't just walk away."

"There isn't always an answer to every problem," she continues, "but if we work it together, and know we're on the same page together with open dialogue and communication built on trust, we will be successful."

When Cathy (whose exact title at AT&T is vice president of marketing communications and brand management) speaks of what it takes to make a client-agency relationship work, she speaks from time well spent on both sides of the desk.

That's because Cathy logged the first 18 years of her career on the agency side, predominantly at Saatchi & Saatchi. There she was responsible for managing global brands including British Airways, Tylenol, Motrin, PaineWebber and Bell Atlantic (now Verizon). She was also instrumental in winning the coveted Delta Airlines account, and turning Mexico into one of the world's most popular tourist destinations.

Then, about five years ago, AT&T persuaded Cathy to try the "client side," to see what she could do with an iconic brand in a very tumultuous marketplace. Since then, she's been responsible for all the brand management and marketing communications for the entire enterprise.

"It's been very challenging," says Cathy, "because AT&T is one of the top ten brands, and the leading brand in telecommunications. But it has lost a lot of its favor with the younger constituency."

Addressing that challenge, she quickly concluded, meant making some agency changes. As she explains it: "I found that it's genetically in the DNA of agencies to compete with one another." And so she consolidated AT&T's roster down to just three primary agencies -- Young & Rubicam for advertising; Digitas for direct and DVC for promotions.

I value relationships whether they are with my agency or with my friends or family. I don't take that lightly.

"I've worked closely with my agencies to build a partnership and integration based on trust and collaboration," she says, "because good ideas can come from anywhere."

Speaking from her own, personal experience, Cathy acknowledges that moving from the agency to the client side was a huge cultural shift -- in terms not only of processes, governance or sheer size, but also the expectations that corporate America has in terms of the totality of the business, as opposed to just the communications.

"When you're at an agency," she observes, "you don't get into the real intricacies of your client's business the way you do when you're on the client side." However, she adds, her experience as an agency account manager helped her to manage through the various silos of a corporate culture and learn to exercise "the diplomacy" that's necessary to get people to buy in.

Precisely because Cathy has worked marketing both from within and without agency and client environments, the Association of National Advertisers asked her to chair the 2004 Agency Relations Forum.



How has the client-agency relationship changed over the last five years or so?

What has changed is a commitment to longer-term relationships and to trying to figure out what's wrong and why if it's not working. At the end of the day, you're not picking an agency; you are picking people. If you don't feel that the people you've picked are delivering, then figure that out before just deciding that the agency is wrong.

Often, the agencies are very similar, and it's the people who make the difference. The clients are responsible for making sure that they feel that the people on the team are the right match. The same is true for the agency -- they must make sure they have the right people on the team, who match the client.

I've found, over the years, that if you work with the senior leaders at your agencies when you feel a particular individual isn't appropriate for that relationship, and you make some changes based on what you think are necessary, you build the trust, you build collaboration. You certainly don't jeopardize years of experience and knowledge that you've built up over time.

How will client-agency relationships change over the next five years?

Now that the economy is starting to pick up, and we're less nervous and frenetic in feeling like the sky is falling, I hope more people will return to understanding the root value of the relationship -- the trust, the collaboration, the kind of long-term investment that it takes.

I don't think that the relationships are going to change in terms of the competitive marketplace, the fierceness with which we have to compete. But hopefully we'll recognize that sticking it out for the longer haul is worth it.

Procter and Gamble has been a very stable account for Saatchi & Saatchi for many, many years, for example. When I was at Saatchi, I found that P&G was really willing to stick it out with us, through thick and thin. When we were having tough times they were there for us, and when they were having tough times we were there for them. Personally, I value relationships whether they are with my agency or with my friends or family. I don't take that lightly.

Why have ad agencies lost their seats at the corporate boardroom table?

It's a function of integration. It's not the responsibility or role of an agency to integrate. The client has to force the integration of all the different partners to bring the most to bear for the effectiveness of all the communications research.

With technology making it possible to change your mind mid-stream, there is more potential for havoc and chaos.

I have forced the relationship to happen between our agencies -- DVC, Digitas and Y & R. They used to vie for different assignments, but I don't want them to vie at all. I want them all to come to the table with the same assignment and to deliver their respective core competencies.

That's when they get a seat at the corporate table. But if an agency thinks it is the only partner, then that's where it falls apart for them.

So integrated marketing is a reality and not the myth that some people say it is?

Integrated marketing absolutely is the reality. For example, AT&T was a pioneer in telemarketing, but now needs an alternative because of the "Do Not Call" regulations, and so forth. I don't know if the alternative to telemarketing is with my on-line agency, promotional agency, direct marketing agency, or my general agency. Everybody has the same challenge to bring ideas to the table because the best alternative could be a combination of many ideas.

It is all about integration and looking at the different challenges. It's not so specific as to say, 'well, this is a brand campaign so our general agency should do that' vs. 'this is a promotion so our promotional agency should do that.' It's usually a combination of all the disciplines that solves the business problem.

Given that, do you think that television is still the most important marketing medium for most brands?

No. I've never thought that. I think that it's a very, very important medium that drives fabulous awareness and great emotional connection with customers in a way that no other medium can in 30 seconds, but it's one of many, many important mediums.

Direct marketing is critical. Guerilla marketing -- feet on the street -- is critical in certain times and locations based on your business needs. It really depends on what your business objective is and the best way to reach your audience.

I would never say that it's one medium over and against everything else. When AT&T launched a local service in California, which is a fiercely competitive marketplace, one of our best mediums was guerilla marketing. We got people out there and gave out water jugs or coffee cups -- things like that -- because that was the best way to break through the clutter.

What has been the effect of agency consolidation into the big agency networks?

It is seamless and transparent to me. I work with the people at Y & R and Wunderman, but I don't think about WPP. Now, when I have an issue that comes to the forefront, I always ask my senior leader whether there's somebody in the WPP network who might be able to help. So I use it as a resource, but it's not in the way of getting the work done. I don't feel like I have pressures put on me as a client because WPP has pressures.

How are you using technology to work with your agencies?

That's changed dramatically. I remember when you had to get into the car and go out to the client -- no matter what -- to show them rough tissue. But on a PDF file you can see work in progress on a regular, daily, minute-by-minute basis. Technology has not replaced the fact that you have to do a commercial shoot. However, the way you do the shoot, the post-production, and so forth, has definitely made it much more sophisticated and timely.

Technology certainly has made it easier to change the work in progress. But I don't know if that's always good, because at some point you have to say "it's done," and move forward. With technology making it possible to change your mind mid-stream, there is more potential for havoc and chaos. Sometimes you have to restrain from knowing that the technology can make changes for you, so you don't make changes for change's sake.

How has the way in which your marketing department is organized changed?

We've streamlined tremendously and have put far more responsibility on our partners to do many of the things that we might have done previously. The pressures on us to cut back costs are just so enormous because of the economy and the competition.

Agencies today are a little bit stuck in their old ways and really need to re-think how they service their clients.

We've also streamlined the level of senior management. There are more senior managers and fewer junior managers on the client side. So, we avoid the pecking order of the approval process and we get to the decision leaders more quickly.

Do you see that trend toward streamlining continuing?

Yes, absolutely. All companies are faced with economic realities that aren't going to change even as the economy improves. That's because there are more choices than ever before, and more competition. So being faster to market and making faster decisions are always going to be factors. Every company has a great responsibility to look at their costs at all times, so it's absolutely going to continue.

How has your role as a senior marketer changed, and how do you see it changing over time?

It's funny but I have a management style that really believes in empowering people to lead, but I also need to be informed so that I feel accountable for all of the decisions. If there's a decision I don't agree with, I want to have the authority to step in.

My greatest challenge over the last few years is that I've had to go through five downsizings in four years. I've had to let a significant number of employees -- good employees, really good employees -- go. And so my greatest management challenge has been not only making sure the work gets done, but keeping the morale up, too.

I don't think that reality -- certainly in the telecommunications industry -- is going to change, in the near future. If you talk to a growth industry you might get a different answer, but that's been my greatest challenge.

How do you calculate the return on your marketing investments?

It's a great question and I haven't nailed it yet -- if I had I would have written a book and I'd be famous! It's one of those areas where there are so many different ways to measure it ... but at the end of the day, have you really measured it?

We invest a lot of time in return-on-investment modeling for all the different mediums. We've done this very successfully with our transactional businesses. Specifically, in the case of Call AT&T, we know exactly what we're actually going to get back in overall revenue and profits to within 10 percent.

It's a little more difficult when you're trying to measure the return-on- investment for, let's say a brand campaign. When you're trying to build awareness, the measurements are more emotional and qualitative, as opposed to quantitative. But we've mapped it out so that we can actually see the effect over an 18-month period, to a point where if we make a 6-month investment, we'll pay out in 18 months.

However, it's hard for your chairman to buy that when he needs the pay out in the first 12 months, not 18 months. We've worked very hard with Media Edge, our media buying company as well as Y & R and Digitas to really figure that out. I don't think it's perfect yet. It needs to be refined on an ongoing basis. We have put a scientific approach together, but I always tell everyone that science isn't perfect when it comes to this game.

How should agencies be compensated?

They should be compensated by the overall performance of the business objective. That should be established upfront, prior to the beginning of each year, based on the client's business and marketing plans. They should be agreed to upfront and compensated against those objectives, just like client management is compensated against their own objectives. If they succeed, they should be rewarded. If they don't succeed, they should be compensated accordingly, as well. That's how I work it with all of my agencies.

Say you were back on the agency side -- how would you set up your agency for growth in the future?

That's a great question. Agencies today are a little bit stuck in their old ways and really need to re-think how they service their clients. Their costs should be set up so they are more flexible, although that's very hard because their revenue and their costs (that is, their people) are in their elevators every day.

It's not going to get any easier. The challenges and the struggles will continue. We have to figure out how an agency can be designed to really build that partnership and trust and that knowledge base with its clients. But the agency must also be sufficiently flexible with their cost structure to accommodate the changes within the client side on a regular basis.

It's like a marriage. It takes time. Can't just give it up.