Is your digital ad agency working with your competitors in your marketplace?

In a perfect world, an ad agency would never have to face the dilemma of serving both a client and their competitor. However, this situation arises quite often. In the past, it was unthought of to work for two competing clients, but in recent years this has changed dramatically. The advertising and marketing industry has undergone a series of structural changes since then, resulting in many agencies working with competing clients. This can result in a conflict of interest.

In this debate, there are reasonable arguments on either side. One side supports agencies working with competing clients, and the other side advocates against it.

Some say that an ad agency serving competing clients is beneficial to both the agency and its clients, because the agency gains a better understanding of the business, its customers, and the workings of the industry. It can allow for an agency to truly learn the ins and outs. Additionally, working for competing clients can challenge the agency beyond normal lengths to ensure that both brands succeed.

Another point made for the side of agencies working with competing clients is that there is no conflict of interest if the agency assigns different teams to each account. This is done to ensure that clients’ accounts are kept separate and to avoid the risk of sharing a client’s private business information.

Those arguing for this side also say that direct competitors have unique strengths that differentiate themselves enough that there is no issue. This can be true. Each business has a unique marketing mix and won’t have the exact strategy as another.

All of this considered, an ad agency working with competing clients can also have its downsides.

It can be difficult for an agency to promote a client in a way that is not swayed by pre-conceived opinions. There’s a chance that individuals at the agency can be influenced by their experience working with the client’s competitor.

Imagine if two major clients hired the same agency to produce their ads – for example, Hasbro and Fisher-Price. Some say that it’s impossible to evenly distribute the workload and agency’s wealth of knowledge to benefit both clients. Others say there is a heavy risk of sharing trade secrets. An agency can assign different teams to each client, as mentioned above, but there is no guarantee that this will happen. There is also no guarantee that information will not intentionally or unintentionally be shared.

In summary, it’s not guaranteed that an agency will always work in your best interest when serving both you and a competitor. When working for two similar companies, you cannot be sure of the actions an agency will take. There might be a confidentiality agreement; there might not be. It all comes down to ethics. What one agency may consider ethical may not be ethical to you or your business.