As a marketing professional, whose aim is to serve clients in specific industries, such as the organic food industry, I have realized that it is quite possible that I will be serving clients who sell competitive products. With that ethical dilemma in mind, I offer the following presentation.
Alain de Botton, the well-known philosopher and author of several best-selling books, presented a bold challenge to the marketing industry in a Huffington Post article in March of 2012. The article, titled “An Ethical Advertising Agency,” proposed that since the marketing industry is a highly influential force in society, agencies should spend a portion of their time and profits advertising widely-accepted virtues. He suggested that these promotions should be done in the same slick format and distributed within the same traditional media as those being paid for by corporate clients (de Botton, 2012). Twenty people commented on the article, and of that twenty, only one commenter self-identified as a professional marketer. This person, “jlm11579,” claimed that she/he appreciated de Botton’s idealism, but pointed out that the harsh reality is that advertising agencies exist only to serve paying clients, not society. Instead, the commenter recommended that “people who work in the ad industry [should] maintain ethical standards in their everyday life, and, let that example shine through in their work.” (deBotton, 2012, Comments Section).
The concept that individual marketers, who work at an advertising agency, rather than the marketing industry as a whole, should be the source of ethical action plans will be explored in the presentation below. It will be assumed that a Vice President at an advertising agency has been challenged by the CEO to increase billings by 20%. But, to achieve this, the agency would need to acquire two new firms that are in direct competition with existing clients. The following plan will provide recommendations for how a marketer should approach this ethical dilemma. The presentation will begin by outlining best practices and applicable ethical principles. Then, those factors will be used to formulate the action plan.
Alvin J. Silk, Professor of Business Administration Emeritus at the Harvard Business School, proposed that modern advertising agencies can effectively serve competing clients by implementing formal safeguards that protect proprietary information and “splitting account assignments among different organizational units within or across a mega-agency or holding company” (2012). Examples of how these two best practices have been successfully employed by global advertising agencies to address client-agency relations are provided below.
In the summer of 2013, the merger of the second and third largest advertising agencies in the world created an obvious ethical dilemma for the newly formed corporation. Namely, the new agency, Publicis Omnicom Groupe, would be serving both Coca-Cola and PepsiCo (Stampler, 2013). However, agency insiders pointed to formal safeguards that would ensure that the respective soda company’s proprietary information would be protected. One of these safeguards is referred to by the marketing industry as ‘Chinese walls,’ which strictly prohibit agency professionals from discussing accounts among one another. David Bank, of RBC Capital Markets, was quoted in Bloomberg news as saying, “Most advertisers will probably live with this, [agencies that serve competing clients] because, on some level, they believe in the Chinese walls” (Lee & Schweizer, 2013).
Although requiring advertising agency’s employees to be tight-lipped about their competitive accounts, the second best practice offered by Silk, account splitting, provides even further protection. Silk considered this concept to be a hybrid of Japan’s split account system, wherein Japanese advertising agencies would separate accounts “by product, media, or product and media” (Moeran, 2000). The hybrid version of the split account system involves clients’ accounts, rather than product/ media, to be split with “personnel mobility barriers among quasi-autonomous units” (Silk, 2012). For example, when Campbell-Mithun-Esty, which “existed only to serve American Motors Jeep-Renault” (Foltz, 1990) and later Chrysler’s Jeep Eagle division, wanted to go after other auto industry clients, the agency split its account team in two halves. Doing so allowed it to sufficiently dedicate one half of its agency to Chrysler and the other half to potentially competitive accounts. President of the advertising agency, Michael J. Vogel, clarified that Campbell-Mithun-Esty had received Chrysler’s blessing before implementing the split-account tactic and pursuing its competition (Foltz, 1990).
Below, Curt Singh, Director of Client Strategy at INNOVATIVE, explained the concept of split-accounts within a marketing agency.
Perhaps disclosing and seeking permission from existing clients to pitch to or serve new, competing clients is just as meaningful as formal safeguards and splitting inter-agency teams by account. This transparent approach to making business decisions is important, because doing so is ethically justifiable. In “Ethical Marketing” (2005), the authors noted that “clients do use words such as ‘trust’ and ‘loyalty’ as virtues that they are looking for in their agencies” (Bowie, Klein, Laczniak, &Murphy, p. 163). In order to earn the trust of clients, account managers at advertising agencies must be transparent about any business decisions that could affect their clients. As the authors of “Ethical Marketing” suggested, the existing “client can then decide whether the conflict is problematic and, if so, give the agency a choice between resigning or not” (p. 163). This enlightened, ethical approach to making business decisions can be justified by applying two ethical principles, the virtue ethics theory and the integrative social contracts theory.
Virtue-Based Ethical Principle
Having discussions with current clients about an advertising agency’s desire to pitch to new clients aligns with a virtue-based principle, because such behavior fulfills ancient ideologies about living a virtuous life. The philosophers in “Ethical Marketing” explained that applying the ancient Greek ideals, which make up virtue ethics, to business decisions demands that the organization’s individuals act in virtuous ways (p. 31). In other words, from the view of virtue ethics, an advertising agency’s decisions should embody aspirational corporate values, which contribute to its staff’s pursuit of living a good and virtuous life. Consequently, developing a guideline that requires staff to discuss business decisions with clients contributes towards the “development of personal character” among the staff (Bowie, Klein, Laczniak, & Murphy, 2005, p. 31).
Integrative Social Contract Principle
While the virtue-based principle focuses on individual development, contract-based ethics are concerned with the interaction between groups. Bowie, Klein, Laczniak, and Murphy explained that this principle “takes into account ethical standards developed by groups through real social contact and based on their mutual interest in supportive or, at least, benign interaction” (2005, p. 30). Even though the contract-based principle differs in focus, it too can be used as a guiding force in client-agency relations. For example, based on the integrative social contracts theory, an advertising agency should inform existing clients of its desire to pursue new clients, who sell competitive products or services, because the theory maintains that moral behavior is interrelated to economic success. Proponents of this ethical approach would argue that effective business decisions are always guided by accepted social norms, which benefit all stakeholders (Bowie, Klein, Laczniak, & Murphy, 2005, p. 30).
Action Plan Summary
If one considers the effectiveness of the best practices and the moral potential of the ethical principles, which were outlined above, it becomes clear that these factors can be used collectively within an action plan designed to navigate through client-agency relations. For instance, if a Vice President of an advertising agency finds that the only way to increase its annual billings by 20% involves acquiring two new clients, who are in direct competition with two existing valued clients, she or he could implement the following action plan.
First, the agency should have a formal guideline that strictly prohibits employees from discussing competitive accounts with each other. Moreover, the consequences of not following this guideline should be swift, severe, and visible. Second, the agency’s operational infrastructure should be designed in a way that establishes mini-agencies within the advertising agency. In other words, if one agency serves two competing clients, each client should have its own dedicated team of account managers, creative staff, market researchers, etc. Finally, the agency should empower its staff to disclose business decisions to their clients, especially if those decisions involve pitching to firms, which sell competing products or services. This plan has the potential to be both effective and ethical, because it incorporates industry-tested best practices and formal ethical principles.
De Botton, A. (2012). An Ethical Advertising Agency. Huffington Post. Retrieved from
Bowie, N. E., Klein, T. A., Laczniak, G. R., & Murphy, P. E. (2005). Ethical Marketing. Upper
Saddle River, NJ: Pearson Prentice Hall.
Foltz, K. (1990). The Media Business: Advertising – Addenda; Campbell-Mithun-Esty Splits
Account Team. The New York Times. Retrieved from
Lee, E. & Schweizer, K. (2013). Pepsi-Versus-Coke Ad War has Publicis-Omnicom Win Either
Way. Bloomberg. Retrieved from http://www.bloomberg.com/news/2013-07-29/publicis-merger-would-put-archrival-ad-campaigns-under-one-roof.html
Moeran, B. (2000). The Split Account System and Japan’s Advertising Industry. International
Journal of Advertising. Retrieved from
Silk, A. J. (2012). Conflict Policy and Advertising Agency-Client Relations: The Problem of
Stampler, L. (2013). Coca-Cola and Pepsi Are Still Silent About Their Ad Agencies’ Huge New
Conflict of Interest. Business Insider. Retrieved from http://www.businessinsider.com/coca-cola-pepsib-silent-about-publicis-omnicom-merger-2013-7