The study, conducted by marketing consultancy R3 in partnership with Spain's Grupo Consultores, revealed that the average duration of the client-agency relationship in China was 2.8 years for creative agencies and 2.4 years for media agencies.
The research was based on more than 500 interviews conducted between November last year and January 2006. According to Greg Paull, principal of R3, the study found that about 40 per cent of China relationships lasted only one year or less, and more than 60 per cent lasted two years or less.
"This trend to short-term agency relationships is also evident in compensation practices, with nearly one in three China marketers engaging their agencies on a project basis," said Paull.
He added that frequent changes in agencies, costly to both parties, result in the agency not being able to contribute at a strategic level, with the client therefore not fully leveraging the agency's potential to contribute beyond advertising.
Creativity, meanwhile, topped the list in selecting an agency partner, while lack of creativity and lack of service were key reasons cited for changing agencies. Strategic planning, experience in a similar sector and the agency's talent also ranked highly among more than 50 per cent of advertisers surveyed.
According to the research, 61 per cent of advertisers interviewed were generally satisfied with their current creative agency and 54 per cent with their media agency, while two in five were indifferent or dissatisfied with their media or creative partners compared to one in five in Europe.
In terms of compensation, more than 50 per cent of respondents remunerated their agency with fees and 21 per cent by commission. Noted Paull: "This represents substantial progress since the R3 compensation survey in China in 2003, where less than 24 per cent of marketers were using the fee-based system."
The survey -- which polled senior marketers at companies such as FedEx, L'Oréal, Nike, PepsiCo, Ford Motor and Samsung -- noted that nearly 30 per cent of client-agency relationships in China were project-based.
