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The Cost of Feedback is Nominal, the Value Significant.

30 Jun

do advertisers get what they pay for“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.” ~ Elon Musk

Chances are, most will agree with Mr. Musk’s sentiments regarding feedback and its link to driving improvements.

What organization wouldn’t aspire to successes achieved by one of the 21st century’s most prolific thinkers? Consider the fact that Tesla, with a market cap of $160 billion, is larger than GM, Ford and Fiat Chrysler combined. Or that his fledgling SpaceX organization has been valued at $36 billion after its first successful manned space flight.

As such, it was somewhat of a surprise to read the results of a recent World Federation of Advertisers (WFA) study. Conducted by Decideware, the study surveyed 60 global agency leaders on client-agency performance evaluation practices. Below are some key findings:

  • 7 out of 10 advertisers provide their agencies with feedback on at least an annual basis
  • Only 4 out of 10 advertisers allow for agency feedback as part of the evaluation process
  • 3 out of 10 clients conduct face-to-face meetings to discuss evaluation results
  • Agencies aren’t comfortable providing “honest feedback”
  • 43% cited the lack of honest feedback as the “biggest barrier” to effective evaluations

That so few marketers would invite their ad agencies to provide formal feedback on topics dealing with team performance, workflow, process and the overall relationship is a bit of a mystery; particularly given that anecdotally it has long been believed that strong client-agency relationships yield superior performance.

In our experience, we have found numerous examples of successful marketers that believe in and are utilizing a 360-degree evaluation process with their agency partners. Importantly, that process  incorporates candid, two-way dialog, which serves as a fundamental building block for their agency relationship management efforts.

It would be helpful to understand “why” some marketers have chosen not to invite agency feedback or to review performance evaluation results in face-to-face meetings. Are they simply not interested in what their agencies have to say? Are they too understaffed and time strapped to invest in a robust evaluation process? Are they of the belief that if their agency partners had a point-of-view that they would share their insights, without prompting?

Regardless of the reasons for eschewing this fundamental practice, there are compelling benefits to be gained for marketers by course correcting in this area by implementing two-way evaluation frameworks. At a minimum, eliciting agency feedback on day-to-day workflows, briefings and approval processes, in market results and client-agency relationship management can yield efficiencies that are beneficial to stakeholders on both sides.

Beyond near-term improvements in operations and performance, established communications programs, that encourage ongoing candid feedback, help to build trust and strengthen relationships. It is incumbent upon CMOs and agency CEOs to collaborate on putting the appropriate protocols in place to encourage, understand and act upon the perspective each party generates throughout the year.

 

Compliance Programs Can Transform Marketing

24 Jun

compliance-rulesCompliance is a cost of doing business, and companies invest appropriately in compliance and risk management programs and policies. Many have even been successful at elevating compliance to “cultural ethic” status.

That said, few organizations have risk-management frameworks in place for their marketing and advertising spend. Why?

Consider that the marketing and advertising expenses are material to the financial statements. Further, marketing represents a critical link to building brands and driving revenue. If not managed properly, dollars invested are lost to fraud and non-transparent advertising supply-chain practices, lowering working dollars and leading to declines in marketing efficiency. These factors help to underscore the necessity for compliance risk mitigation coverage in this area.

Allaying risks aside, we have been fortunate enough to witness the transformative power of compliance audit work and financial management oversight programs for advertisers. Benefits have included financial recoveries, cost reductions, improved efficiencies and enhanced revenue generation.

Best of all, technology advancements combined with sound compliance frameworks and proven audit work processes afford organizations the opportunity to efficiently conduct comprehensive, periodic reviews of their marketing services agency network. In our experience this is readily achieved without disruption to client-agency workflows or performance.

Aside from the financial benefits, a structured marketing and advertising compliance program can instill a sense of confidence among all stakeholders that advertising related risks are being monitored and continuously mitigated. Additionally, concerns, questions and the unknown regarding a marketer’s ad agency network, are replaced with a sense of trust and confidence. This is a compelling outcome given the important role that an advertiser’s agency partners play.

In the wake of the COVID-19 crisis, marketers will face a myriad of challenges in meeting their organization’s performance expectations. The combination of an uncertain future regarding the consumers’ return to “normal” consumption patterns and behaviors and budget reductions will require a disciplined approach to planning and resource allocation efforts… not to mention the need for flawless execution.

Embracing compliance and extending enterprise initiatives in this area to include marketing and advertising will mitigate risks and boost the return on marketing investment. In the words of former U.S. Navy Seal and NY Times bestselling author, Brandon Webb:

“Being a Navy SEAL and sniper taught me all about risk management. Take away all the risk variables under your control and reduce it to an acceptable level. The same fundamentals apply in business.”

 

Budget Reductions Create Opportunity to Fine-Tune Agency Network

28 May

 

Advertising concept: Ad Agency on digital background

For marketers seeking to generate efficiency gains, looking internally to rethink the processes used to manage planning and creative development workflows can yield significant benefit.

As importantly, looking externally at “how” and “where” work is being performed across an organization’s network of marketing services agencies is extremely important. This involves an objective assessment of the current network of agency partners, their resource offerings, capabilities, performance, and the roles and responsibilities assigned to each.

Without periodic assessment, agency networks can become bloated beyond a marketing team’s ability to effectively manage these vital resources. This risk can be compounded in companies where marketing positions are vacant or have been eliminated as a result of a budget reduction decisions – leaving fewer client-side personnel to manage dispersed agency activities.

Reviewing and creating an inventory of roster agency capabilities and the roles assigned is never a bad thing when it comes to identifying unnecessary expenses or opportunities to consolidate resources and protect against redundancy. Amongst other benefits, since the work necessitates a review of each agency agreement and remuneration program tenets, output should include a comparison of agreement terms, conditions, requirements, and bill rates to ensure consistency (where applicable) and reasonableness of agency bill rates and other costs.

This practice is even more apt when marketing budgets are being cut and agency scopes of work reduced. Such assessments form the objective basis for eliminating duplicative activities and or resources, paring specialty agencies that are not being fully utilized, and eliminating unnecessary fees that are putting downward pressure on working dollars.

Consider; How many agencies do you have that are managing influencers? Involved with social media or content production? How many different agencies are being utilized for studio services or broadcast production? How many agency trading desks are being utilized for the placement of programmatic media? Are you utilizing specialist firms that may no longer be required based on changes to the marketing budget (e.g. event management)? It is highly likely that there are opportunities to consolidate work among fewer partners to simplify workflows, improve communications and reduce costs.

If you are utilizing a “lead” agency to coordinate activities, briefings, production and trafficking across your agency network, it may be worthwhile to solicit their input on potential agency roster moves. Further, once a plan is formulated, collaborating with the lead agency’s account team to affect transitions can be critical to the success of consolidations and the reshuffling of assignments. If you do not employ a lead agency model, the time may be right to consider this approach.

Streamlining external agency networks will improve communication between marketer and agency, enhance business alignment and instill clarity on success metrics. In the wake of current crisis driven budgetary adjustments and uncertainty, companies may want to give serious consideration to such an approach.

“Whatever the dangers of the action we take, the dangers of inaction are far, far greater.”

                                                                                                                   ~ Tony Blair

4 Quick Steps to Boost Marketing Efficiency… Now

21 May

EfficiencyDriving performance, improving efficiency and boosting working dollars are three primary focus areas of marketers the world over. COVID-19 and the related budgetary pressures aside, this has been a focus of marketers and will continue to be, well into the future.

The quickest and often simplest path to attaining these objectives relates directly to process improvements that are well within a Chief Marketing Officer’s sphere of influence.

Below is an overview of the four key process steps that marketers can and should consider evaluating for potential improvement opportunities:

  1. Review the creative development and media planning briefing process with the goal of enhancing the efficacy of this essential practice and applying it appropriately to the ongoing client-agency workflow. A poorly conceived or ambiguous brief drives project costs, causes delays and can result in lackluster outputs.
  2. Streamline the review and approval process to cut down on delays and agency re-work. Minimize unnecessary rounds of review at the ideation and planning stages to mitigate the risk of excess agency staff time or excess costs creeping into the project.
  3. Extend current campaigns and or repurpose proven work rather than undertake the risk and expense of creating new content for select brands and or promotions. For many marketers, brand support and promotional events are often repeated annually / seasonally, allowing them the opportunity to modify and reapply existing plans, approaches and content rather than investing in the development of new approaches.
  4. Encourage the agencies to close and reconcile jobs and campaigns in a concise and timely manner to account for and return unspent funds. Nothing good happens when approved, often pre-paid dollars are left unreconciled for extended periods of time. Marketers should require their agency partners to close jobs quickly, once completed, and true-up actual costs immediately following job closure.

The above areas, if not applied and managed properly, are the source of significant inefficiency which limits a marketers return on investment. As American businessman and author, John Rampton once said:

Make no mistake about it. Bad habits are called ‘bad’ for a reason. They kill productivity and creativity. They slow us down. They hold us back from achieving our goals. And they’re detrimental to our health.”

 

 

 

 

Adjusting Marketing Budgets is Multi-Dimensional

5 May

budget cutAs we began 2020 no one could have predicted the level of upheaval the economy would experience as a result of the COVID-19 pandemic. The changes forced on businesses as a result of government mandated shelter in-place policies, while critical for curtailing the spread of the virus, have been devastating. According to consulting firm, Brand Finance “America’s Top 500 Brands could lose up to $400 billion” due to COVID-19’s impact on the economy.  

Organizations have sprung into action, many slashing advertising spend, along with other expenses as they seek to offset dramatic reductions in revenue and to deal with mounting cash flow challenges.

As marketers approach the mid-point of the second quarter it is clear that the changes to their fiscal budgets will be significant and potentially lasting. In a recent poll of marketing and advertising executives, by Advertiser Perceptions, 77% of those surveyed expect ad spend to be soft through the first-quarter of 2021.

Thus far, many companies have taken a wait and see attitude with some of their advertising and marketing commitments as they rightly weigh options related to modifying, rescheduling or cancelling advertising commitments. Moving forward, decisive action will be required to safeguard and recall funds pre-paid to agencies, production resources, events management companies and media sellers for creative that will never come to fruition, media that will never run and sponsorships that will be postponed or cancelled.

Equally as important is the need to review and likely revise annual agency scopes of work, staffing plans and remuneration programs that have been impacted by the reduction in marketing spend.

These can be challenging and complex conversations to have with your agency partners and in turn, with third-party vendors, particularly because their organizations are dealing with comparable business and financial issues. For the purposes of this article, we want to focus on the client/ agency portion of the ledger, rather than external commitment and resource reallocation reviews that are likely currently underway.

A disciplined approach, focused on contractual terms and current financial facts, will yield the greatest return as you seek to right size your marketing budget in a fair, responsible and expeditious manner. This approach also recognizes that in addition to the goal of reducing costs, companies are seeking to improve financial flexibility and limit risks and exposures. Stephen Covey wisely suggested, it is best to; “Begin with the end in mind.” Same applies now, it is best to begin with a review of current governing documents between advertiser and agency, and any year to date agency financial reporting, in order to answer this handful of straightforward questions:

  1. Does the Agency Agreement afford you the right to modify your Scope of Work and or retainer fee? If so, what is the notification requirement in your agreement?
  2. What Scope deliverables have been completed to date?
  3. Where is the Agency on their Staffing Plan commitments?
  4. What P.O.s have been issued to the agency? For open P.O.’s what is the open balance on each P.O.?
  5. Do you have a detailed Job History Report, that provides financial details for all jobs, open or closed? Can you identify which jobs have been completed? Of those that remain open what are your options to postpone, modify or cancel any of them?

Answers to questions such as these will assist in facilitating productive interactions with all stakeholders, across multiple fronts ranging from informing budget reduction and reallocation decisions to the potential impact of internal or agency-side staff reductions on financial management processes and controls and the corresponding risks.

One area that must be addressed is agency remuneration. Reductions in overall spend, scaled back Scopes of Work and revised agency Staffing Plans necessarily impact agency compensation, whether commission or fee based.

For their part, agencies have rightly taken steps to address the impact of client ad spend reductions. To date, each of the major holding companies have announced plans to reduce expenses. These reductions include; employees being furloughed or laid-off, involuntary salary reductions, the waiver of bonuses and 401k contributions, executive management taking massive pay reductions and a freeze on non-billable expenses… all designed to lower their cost base.

If your agency is on a direct labor-based remuneration program, the reduction in the agency’s direct labor and overhead costs means that the fees which you pay should be reduced accordingly. With this compensation schema, even a modest change in an agency’s cost structure can have a meaningful impact on the fee calculation.

It should be noted that the goal of the compensation review is not to wring out savings at the expense of the agency, but to adjust the fees to reflect the reality of the revised 2020 marketing and advertising budget and corresponding changes to the Scope of Work.

Marketers have a fiduciary obligation to their organizations to account for, safeguard and recall funds targeted for reduction. This can best be done working in collaboration with their agency partners, while affording those partners a high level of respect and empathy. Once the budget right sizing process has been successfully completed, all stakeholders can refocus their attention on the future, perhaps drawing motivation from retired 4-star U.S. Army General, Colin Powell who once said: “Always focus on the front windshield and not the review mirror.” 

 

 

Optimizing Client Relationships: Collaborating Effectively with Procurement

30 Apr

procurementThe “Procurement Phenomenon” at the dawn of the new millennium has morphed squarely into the Procurement Era for Marketing and Communications Services. Agency executives can no longer ignore this new marketplace reality and must now embrace, educate, and in some instances, emulate this very influential Client stakeholder.

Join J. Francisco Escobar, President & Founder of JFE International Consultants for an engaging, complimentary webinar that will take you through the evolution, definition, current trends, and best practices that will guide you and your team in optimizing relationships with client procurement teamsClick Here

Pandemic Impact on Marketing: Prudent Action Required by Advertisers

17 Mar

Action

Ad revenues are projected to contract by $20 billion this year alone, with no clear insight into the lasting impact of COVID-19 on the $690 billion global ad industry (source: eMarketer).

Setting aside the human costs of the pandemic, businesses in general and, advertisers in particular, face some startling decisions as the world implements various forms of social distancing in an effort to stem the spread of the virus.

In the U.S. alone, the NBA and NHL have suspended their seasons, the NCAA Basketball Tournament has been cancelled, Major League Baseball has delayed the start of its regular season and The Master’s Golf Tournament has been postponed. We reference sports for one simple reason, the level of 2020 marketing sponsorships. Advertising and promotional dollars invested by advertisers in these properties alone was estimated by Kantar Media to be $2 billion.

In the U.S. alone, the NBA and NHL have suspended their seasons, the NCAA Basketball Tournament has been cancelled, Major League Baseball has delayed the start of its regular season and The Master’s Golf Tournament and Kentucky Derby have been postponed. Sports is but one example and we reference it for one simple reason, 2020 marketing spend levels. Advertising and promotional dollars invested by advertisers in these properties alone was estimated by Kantar Media to be $2 billion.

Undoubtedly, advertisers will be seeking answers to the following questions as they begin their contingency planning efforts this week:

  1. Of the marketing and advertising commitments we’ve made, what can be cancelled outright?
  2. For those commitments that we’ve made in events, sponsorships or programs that have been suspended or postponed, can we recoup the impacted pro-rated investment amounts?
  3. How will media owners/sellers address upfront or volume-based commitments when it comes to media valuations in the context of advertiser rebates and or cancellations?
  4. If we pull-back on our marketing and advertising activities, what will the impact be on our annual statement of work, agency deliverables and associated fees?

Complicating this assessment for advertisers is the fact that so much of the industry operates on an estimated billing basis. Unfortunately, the advertiser’s line of sight is limited as to what percentage of estimated and pre-paid costs have been spent versus that which remains in the hands of their agents and intermediaries.

It would clearly be ideal to make go-forward decisions with a solid financial understanding when it comes to exactly how much budget can be pulled back and or quickly re-allocated. The risk of a bad decision in this area can often outweigh the costs of a delayed response. To assist in this area, marketers may want to consider conducting billing and agency fee reconciliations to help clarify where on the annual spending continuum they’re at when determining how best to approach potential budgetary reallocation decisions.

The time and cost required to conduct mid-year status checks and financial reconciliation work is nominal versus the inherent risk of making decisions without a complete picture. Importantly, engaging an independent firm to undertake these endeavors allows the marketing team members and their agency partners to focus their collective efforts on reviewing plan commitments, escape clauses and assessing resource re-allocation decisions.

Prudent, measured action in this scenario is a win-win for all parties.

Prudence is foresight and far-sightedness. It’s the ability to make immediate decisions on the basis of their longer-range effects.” ~ John Ortberg

 

 

 

 

 

When it Comes to Programmatic Digital the “Same-Old, Same-Old” Isn’t Working

26 Feb

EinsteinMedia’s murky supply chain, wrought by fraud and congested with too many intermediaries between advertisers and publishers, continues to serve up challenges for digital media advertisers.

The fraudsters at it again with a devious approach to separating advertisers from their media spend. As if digital ad fraud practices including fake devices, fake locations, fake impressions and fake consent strings weren’t enough, the media industry now has to deal with a sophisticated domain spoofing bot.

According to an article in The Drum, fraudsters have now launched bot networks to evade ads.text protections, which was introduced by the IAB to allow publishers to “list authorized sellers” of their inventory. Both DoubleVerify and Integrated Ad Science (IAS) have unearthed fraudulent activity using 404bots, which employ domain spoofing techniques that misrepresent URLs, making buyers “believe that they are getting valid inventory, when in fact it does not exist.” IAS suggests that more than 1.5 billion ads have been impacted since September of 2019.

When will it end? Likely never. Ad fraud is to lucrative and too difficult to detect, creating a literal gold mine for fraudsters. In fact, the World Federation of Advertisers (WFA) estimates that “over the next 10 years, the global cost of ad fraud is projected to rise to $50 billion. The best defense for advertisers according to Shawn Lim, author of the aforementioned article, is “Brands and publishers need to work with transparent supply chains, reputable supply partners, and know what ads are appearing – and where.”

If you’re an advertiser, you would be right to pose the question; “Who has my back?” For all of the money invested by digital advertisers in specialist agency support, fraud detection services and brand safety tools, who is safeguard their funds? It seems as though the only thing advertisers have to show, for the promise of efficiency that was ushered in by programmatic digital media, is suppressed working media ratios.

The risks continue to mount as the amount spent on digital media in the U.S. is approximately $79 billion, with 85% of the total transacted programmatically (source: Interactive Advertising Bureau, February 2020). eMarketer estimates that advertisers spent 38% of their non-social programmatic display budgets on programmatic fees in 2019, a 20% increase over the prior year.

As one example of the congested digital media ecosystem, Danny Khatib, CEO of Granite Media wrote an excellent article in AdExchanger illustrating the inefficiency of the programmatic digital media supply-chain. Entitled; “Can We Please Reduce This Link In The Programmatic Chain Already?” the article advocates for consolidation between the DSPs and SSPs, long thought to function respectively as buyer and seller advocates, with “each taking a 15-20% cut and confusing the heck out of the web ecosystem in the process.” According to Mr. Khatib, “there really shouldn’t be a traditional SSP business separate from a DSP business – that distinction no longer makes sense, if it ever did.”

No wonder advertisers have stepped up compliance and performance audits of their suppliers and have heartily begun to embrace supply-chain optimization. The madness has to end and fueling investments in specialist agencies and adtech solutions is simply not achieving the desired result.

 “Insanity: Doing the same thing over and over again and expecting different results.”          

~Albert Einstein

 

Time for Action, Not Apathy

31 Jan

ActionFraud continues to run rampant as digital media and programmatic buying continue to surge in popularity, garnering ever larger shares of global advertising spend. Regulatory actions around consumer privacy and data protection are presenting a plethora of challenges for the industry and its ability to use data to customize advertising messaging and delivery.

These are seminal issues that the advertising industry has been talking about for years. The risks and costs to advertisers and other industry players are significant. So how effectively has the industry dealt with these critical issues? If one were to generate an opinion based upon results, it would be easy to adopt the perspective that the ad industry has not dealt with these issues well at all.

Let’s start with the topic of ad fraud. While we all read the headlines, the question is; “Have we become numb to the impact of ad fraud on working dollars?” Consider that according to Juniper Research, advertisers lost $51 million per day to ad fraud in 2018. AFFISE estimates that 35.3% of all processed traffic in the first two quarters of 2019 was fraudulent. The World Federation of Advertisers (WFA) has stated that ad fraud will hit $50 billion per year by 2025.

One short year ago Facebook, in a highly publicized move eliminated 2.2 billion fake accounts, this following the elimination of 1 billion fake accounts during the 4th quarter of 2018. Interestingly, Facebook, one-half of the vaunted “duopoly” which captured over 65% of U.S. digital ad spend in 2019, itself accounts for 1 out of every 5 dollars spent on digital media in the U.S. (source: eMarketer) before and after this move.

While surely an astute media planner could readily make the case for Facebook’s appeal to advertisers, the justification for its share of the digital ad market is mystifying to the layman. According to the United Nations Population Division, there are 7.7 billion people in the world. Nielsen Online has identified 4.5 billion internet users globally. So, if Facebook eliminated more than 3.2 billion accounts, albeit fake over the course of four months, how many accounts could it possibly have had? What level of due diligence were agencies and advertisers undertaking to verify the base? Or, could it be that the industry simply has no valid means of verifying or measuring key digital audience factors?

The term “Big Data” was coined in the early part of the 1990s, referring to the vast amounts of data being gathered as the internet expanded. The data allowed marketers to conduct computational analysis that could reveal patterns, trends and associations related to human behavior. As the use of algorithms, artificial intelligence and marketing automation technology has come into vogue, the ability to more finitely target an advertiser’s message to specific niches, based upon this data, held great promise. This led to the meteoric growth of AdTech and MarTech solution providers vying for a share of advertiser dollars.

Then, in 2016, the European Union introduced the General Data Protection Regulation (GDPR), ushering in laws designed to protect consumer data and privacy. GDPR has since served as a model for regulatory action in countries around the world and within the United States, with the introduction of the California Consumer Privacy Act (CCPA). The impact on the ad industry has been significant as marketers, technology providers and publishers have struggled to comply with these varying laws. In turn, this led one important player, Google to announce the elimination of third-party cookies from its Chrome browser to avoid some of the risks associated with privacy regulation. The impact on marketers’ audience targeting and attribution modeling efforts will be swift and significant. Some have suggested that this could even signal the end of personalized marketing.

From this author’s perspective, the industry has not effectively dealt with these challenges. There are simply too many disparate interests at stake, which have served as very real impediments to progress in tackling these issues.

Let’s face it, in spite of the impact of fraud, fake devices, fake locations, fake impressions, fake consent strings, ineffectual brand safety and fraud detection services and a lack of uniform industry measurement and verification standards, advertisers continue to spend on media types, intermediaries and technologies that are simply not generating a return worthy of their investment. So where is the impetus for change?

Rather than working on real solutions to address real problems, the industry adopts labels or coins phrases that cover its retreat. Examples such as “Human Marketing” and the need to treat our target audiences as “people” as a solution to the inability to deal with the challenges presented by big data, technology and regulation to customize and personalize at scale. Or the use of the term “Contextual Marketing” in which ad delivery is based upon scanning texts of web pages and serving up a marketer’s ads based upon relevant keywords, rather than behavioral data. Or the nuanced notion of “Brand Suitability” versus “Brand Safety” to mask the inability to adhere to advertiser blacklists and or to ensure proper editorial adjacencies. Really? How is this all of a sudden more appealing than the noble quest, funded by advertisers, that gave birth to the “MarTech 5000” list.

From the outside looking in, it appears as though the industry is content with taking the path of least resistance, opting for a safer, more self-centered approach to issue resolution, rather than focus on doing what is best for the entire industry and ignoring advertisers’ desires to increase the effectiveness of their marketing spend.

To paraphrase American author, Richard Yates from his novel about 1950’s suburban life entitled Revolutionary Road; “It’s a disease. Nobody thinks or feels or cares any more; nobody gets excited or believes in anything except their own comfortable little mediocrity.”

 

 

Supply Chain Optimization: A Concept Whose Time Has Come for Marketers

28 Jan

Supply Chain Management word cloud, made with text only.Much has changed since the diminished role of the full-service agency in the 1980’s. Decoupling and specialization initially swelled the size of marketers’ agency networks, then the meteoric rise of digital and social media further expanded the ranks of specialist agencies and gave birth to the adtech and martech industries. In the end, all served to significantly expand the advertising supply chain, adding complexity and cost.

A biproduct of these events is downward pressure on marketers’ working dollars, as an increasing portion of the budget is funneled to agency fees and underwriting the growing costs of advertising related technology. Thus, a key challenge faced by marketers today is evaluating how to reduce supply chain related fees as part of their efforts to improve efficiencies, drive revenues and build strong brands.

Strategies for addressing this challenge include; consolidating supply chain partners, reducing the number of agencies and intermediaries in the roster, and establishing distinct roles and responsibilities among agency and intermediary partners to eliminate redundancy and clarify deliverable and KPI ownership. Along the way it’s important to seek better alignment between agency remuneration programs, resource allocation needs and business outcomes.

Scrutinizing and monitoring supply chain partner performance, in the context of the client/ agency agreements that govern the relationships, is a necessary ingredient for successful implementation for each of these strategies. Establishing a formal marketing supplier accountability program also mitigates supply chain related risk while providing a foundation for improving supply chain efficiency.

Unfortunately, too often there is no clear organizational “ownership” around marketing supply chain accountability. While marketing clearly serves as the relationship management lead with suppliers, their principal focus is and should be on brand building, customer acquisition and demand generation.  Therefore, it may be unrealistic to expect marketing executives to serve as the “principal in charge” for supplier accountability. This is particularly so considering the number and nature of obligations that comprise an accountability program, including but not limited to the following:

  • Agency contract compliance reviews
  • Agency remuneration reviews
  • Annual agency fee reconciliations
  • Annual marketing supplier billing reconciliations
  • Annual 360-degree supplier performance evaluations
  • Supplier performance reviews
  • Supplier pricing reviews and competitive bidding
  • Supplier contract and SOW reviews

Based on experience, we firmly believe that involvement and support from corporate groups such as; Procurement, Finance and Internal Audit are critical to marketing supply chain optimization. Involving individuals and leadership from these groups to shoulder responsibility for the accountability program is important to drive supply chain efficiency – or at the very least these individuals can support Marketing’s efforts, ease Marketing’s burden, and bring cross-functional perspectives to bear.

At the end of the day, there are two overriding goals for any marketing supply chain optimization program:

  1. Strong supplier relationships
  2. Optimized use of corporate marketing budgets

In a growing, complex, rapidly changing market sector which represents over $1.3 trillion in global marketing and advertising spend (source: PQ Media) the need to embrace supply chain optimization has never more clear, nor the associated benefits more meaningful.

 

 

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