Archive | Advertisers RSS feed for this section

Risks Related to Ad Agency Staff Reductions

23 Feb

LayoffsAdvertisers cut budgets; ad agencies reduce headcount. This is a causal relationship and always has been.

No one can fault an ad agency for making prudent fiscal decisions when revenues decrease.

That said, advertisers need to take precautions in this situation to mitigate their risks, particularly when there are significant downsizings as there were in 2020.

It was recently announced that Omnicom and Interpublic had eliminated “10,000 roles” between the two organizations in 2020, citing the pandemic as the primary reason. This represented an 8.4% reduction in staff for Omnicom and 7.6% for Interpublic. Significant by any measure… and they will not be alone, the other holding companies simply haven’t yet disclosed annual headcount data.

Like with most professional fee-for-service providers, involuntary staff reductions tend to have a disproportionate impact on longer-term, more highly compensated individuals and personnel working in shared services functions such as finance, human resources, legal, procurement, traffic, etc.

Advertisers that have reduced their budgets obviously need to collaborate with their agency partners on revised scopes of work and remuneration programs that reflect new spend levels. Clients that have maintained or increased spending will need to implement safeguards to ensure that their accounts are adequately staffed and supported.

This includes making sure that the mix of agency personnel working on their business is reflective of the need for strategic insights, breakthrough creative and executional excellence in all facets of the business.

Items such as tightening up creative and media briefing and approval processes, specifying media planning procedures and desired outputs, identifying media management guidelines for in-flight stewardship and post-campaign performance reporting and being overt about financial management expectations and reporting (i.e. project tracking, job closure and reconciliation, third-party vendor payments, etc.) are necessary steps for advertisers to take.

In our experience, as long as both client and agency are aligned, working through these situations to mitigate the risks associated with involuntary staff reductions can be effectively addressed.

As Josh Billings, the 19th century writer and humorist advised: “Caution, though very often wasted is a good risk to take.”

Agency Audits: An Advertiser “Right” Not Yet a Standard Practice

26 Jan

dreamstime_xs_7828625For most organizations, the “Right-to-Audit” is a staple in their advertising agency agreements. Worded properly, this important contract language provides the company an opportunity to periodically check ad agency compliance with contract terms, review financial support that should agree to agency billings and to otherwise evaluate various performance metrics.

Yet despite the inclusion of this vital risk management clause and the rights that it confers, far too few organizations actually follow through to perform the testing which would otherwise provide stakeholders with comfort that agency billings are accurate and true.

So, why don’t advertisers audit their agency partners?

One might logically deduce that all clients would periodically review agency compliance, financial management and performance given:

  • The materiality of spend levels.
  • Limited insight to whether agencies are accurately reconciling estimated invoices to actual costs.
  • The complex, multi-layered supply chains, especially in digital media.
  • The well-publicized news of the ad industry’s ongoing challenges with transparency and fraud.

Aside from mitigating financial risk that could be eroding marketing expense effectiveness, another benefit of agency compliance testing is that it can help allay client-side stakeholder (marketing, finance, internal audit, procurement) concern and further build trust. Trust is crucial, particularly clients are relying on agency partners to fulfill their fiduciary and legal responsibilities in stewarding their advertising funds.

In addition, the level of trust between advertisers and their agency partners has been under siege. Consider ID Comms 2018 Global Media Transparency Survey where only one in ten respondents indicated that their “relationship with their agency or advertising client was trusting.” Further, 40% of respondents believed that trust levels were “average” compared to 52% in ID Comms 2016 survey.

We see first-hand where contract compliance and financial management audits identify and address gaps in understanding, controls and reporting that negatively affect client spend effectiveness and erode agency margins. Whether financial definitions, billing basis, fee calculations, project briefing, the approval process, rework levels, custom reporting requests, and or payment timing issues, audits can provide a prescriptive for positive change to benefit all stakeholders.

In our practice we see three principal reasons why the right-to-audit is not employed often enough – and therefore has become much less effective as a control than necessary:

  1. No clear ownership who is responsible for the Audit function in the context of marketing.
  2. Lack of a formal budget allocation process for assurance and risk mitigation for marketing and advertising spend.
  3. Limited organizational understanding of risks related to the advertising category.

As a result, clients continue to invest billions of dollars annually through their agency partners in spite of never verifying whether there are proper controls and regulations to safeguard those funds and optimize the efficacy of their investment. The need is real. Building effective verification and monitoring tools into client-agency relationships cannot be viewed as an option, but rather a prerequisite.

Fortunately, if the will is there on the part of client organizations, the solution is relatively straight-forward.

  • Responsibility for the checking agency financial compliance cannot rest solely with the marketing team. Finance, internal audit and procurement each have a role to play in the process.
  • Setting up a rotational audit program for each of the organization’s audit partners is paramount. Funding the effort through marketing, finance or internal audit budgets can ensure that the program will be executed as designed.
  • Establishing direct relationships between client-side finance and agency finance personnel greatly enhances an advertiser’s line-of-sight into the disposition of their funds at each phase of the advertising investment cycle.
  • Develop a relationship with a co-source supplier with deep marketing audit expertise.

Enhancing an advertisers control framework to include the regular review of their agency partners’ client accounting practices and controls along with their contract compliance to contract terms will inevitably mitigate risks and lead to better management of this important investment. In the words of Simon Mainwaring, brand futurist and businessman:

“The keys to brand success are self-definition, transparency, authenticity and accountability.”

2021 Resolution for Advertisers: Drop Estimated Billing Approach

30 Dec marketing accountability resolution

It is time for marketers’ treasury management teams to turn their attention and scrutiny to the ad industry practice of “estimated” billing. 

Why now?  The long-standing practice of “estimated billing” is a relic of a bygone era and one that EDI technology has rendered as obsolete. 

Toward what end? Simply put, to improve the management of marketing funds, a material expense, to mitigate financial risks and improve controls in and around the disbursement of cash to marketing vendors.

The fact of the matter is that most client organizations do not have a clear line of sight into the disposition of their funds at each stage of the advertising investment cycle. With estimated billing, once marketing budgets are approved, purchase orders issued, agency billing generated and those invoices paid, advertiser controls are insufficient to monitor their funds once the agency has been paid.  This is largely because advertiser funds are now under the control of “other” parties (i.e. ad agencies, media sellers, production resources, etc.) who take the responsibility for closing jobs and trueing up estimated costs to “actual” in a timely manner. 

Unfortunately, the process for reconciling media campaigns, production jobs and agency fees can extend weeks and months after the attendant activities and or timelines have lapsed. Sadly, there is little incentive for agencies to expedite this process and issue the requisite credit adjustments, discounts and rebates. This is largely because they are in possession of client funds and as long as job/ campaign costs have not exceeded client-issued P.O.’s clients aren’t clamoring for a final accounting of advertising activity.

Billing based upon “final” costs provides an incentive to agencies and third-party vendors alike to quickly and accurately reconcile activities and process invoices for payment. The other to advertiser accounts payable teams is the reduction of paperwork in the form of multiple adjusting invoices associated with the estimated billing approach.

In our advertising assurance consulting and audit practice we have observed first-hand the efficiency of actual (in-arrears) versus estimated (in advance) billing methodologies. One of the key commitments required of advertisers to make this work is to establish accounts payable guidelines for its agency partners that ensure the timely disbursement of the funds necessary to settle third-party vendor obligations in a timely manner. Fundamentally, advertising agencies are not banks and should never be asked to settle vendor obligations made on behalf of clients, with their own funds. Conversely, they should not be earning profit from floating client funds either.

That said, many clients and agencies have cash neutrality clauses in their agreements, which prohibit this type of activity. For those agreements that don’t address this issue, we believe that it is simply not appropriate for an agency to make money on the use of client funds. Period. Disallowing estimate billings and requiring the agency to bill only after expenses have been incurred and actual costs known, is a proven way to minimize non-transparent agency profits. After all, allowing the agency to unfairly benefit was never the intent of the estimated billing process to begin with.

For marketers, transitioning to an “actual billing” process in 2021 makes good sense from both a risk mitigation and control perspective. Further, it is more efficient, can reduce payment processing costs and can potentially improve days payable outstanding performance for the agencies and third-party vendors. In the words of the 20th century American poet, Richard Armour: “That money talks, I’ll not deny, I heard it once: It said, ‘Goodbye’.”

Client-Side CFOs Should Take Note… Your Ad Investment is Being Held Hostage

18 Dec

The news of this past week should be of concern to CFOs of companies that have invested in National TV over the course of the last two years.

On December 18th, MediaPost reported that “TV season-to-date” ratings declined between “20% to 30%,” which in turn created a “probable make-good inventory shortage and possible rare TV network cash-back payments to marketers.” Similarly, Digiday reported that “TV networks are overdue on their bills to advertisers” and that some advertisers “are still owed for ad buys placed one to two years ago.”

In short, TV viewing declines have resulted in guaranteed audience delivery shortfalls by the networks. Thus, the networks owe advertisers compensatory media weight or cash-back to make up for that underdelivery. Unfortunately, many of the networks don’t have inventory available to make good on their obligations to advertisers. Complicating matters is the fact that advertiser demand has driven up scatter market CPMs, which makes it less attractive for the networks to offer make-good weight, when they can sell their inventory at a premium, rather than honor upfront market commitments.

Okay. We understand. Audience delivery shortfalls are a fact of life. That said, we cannot think of a good reason why an advertiser would allow a network to take them out one to two years on their guarantees or why their media agency partners would not take a more aggressive stance with regard to securing ADUs (make-good weight) or cash-back.

A guarantee is a guarantee… period. If a media seller cannot deliver on its commitment within the contract parameters, then restitution should be tendered immediately.

So what’s the problem? The answer, and what should alarm CFOs, was the perspective shared by both publications that network and media agency personnel believe that advertisers weren’t “all that interested” in cash-back offers because they “have nowhere to put it.”

Too bad that advertiser CFOs weren’t interviewed by these publications for their point-of-view. From our experience, we have never met a CFO that would rather cede control of any portion of their organization’s ad investment to an agency or a media seller, rather than manage those funds themselves. Who would? If the networks can’t or won’t provide make-good inventory, most CFOs would prefer a check to cover the dollar value of the audience delivery guarantee shortfall. This scenario eliminates any uncertainty regarding the disposition of their funds and reduces the risks of leaving their organization’s pre-paid media funds in the hands of third-parties and perhaps losing track of them altogether.

Advertiser concerns should not be limited to the networks. Media agency National TV buyers have a responsibility to monitor audience delivery, while a campaign is running and to secure in-flight ADUs to cover rating shortfalls when possible. Daypart specific underdelivery is supposed to be tracked by quarter, with make-good weight secured and applied per the terms of the upfront guarantee, which they negotiated on the advertiser’s behalf. Given declining viewership trends, agencies should understand the importance of this aspect of their media stewardship responsibilities and take extra precautions to safeguard their clients’ National TV investments.

The irony… while waiting for their clients to be made whole on prior-year upfront guarantees, media agencies, more often than not, continue to invest additional advertiser funds with the same networks that owe those clients make-good weight and or cash-back refunds.

Our auditing experience repeatedly shows that few CFOs are aware of the important benefits that can be gained by meeting with their marketing team to undertake a formal review of their organization’s National TV media buying and performance monitoring controls including, but not limited to:

  • National TV Upfront Guarantee Letters/Terms
  • Media Authorization Form Language
  • National TV Media Buying Guidelines
  • Agency Weekly Audience Delivery Tracking Reports
  • Agency Quarterly Post-Buy Performance Reporting
  • Agency Quarterly ADU Tracking Reports

The situation described by MediaPost and Digiday poses financial risks for advertisers in general and specifically for those organizations that are not actively managing their National TV media investments.

One Thing Marketers Can Do to Mitigate Advertising Risk

26 Nov

Chances are, in 2020 your advertising budgets were slashed in response to your organization’s fiscal response to COVID-19.

Further, if you’re like most, those budgets aren’t likely to bounce back in the near-term. According to WARC Data’s latest study on global advertising trends, even if the ad market rises by the expected 6.7% in 2021, it will only “recoup 59% of 2020 losses.”

Downward pressure on ad budgets certainly is creating a need for organizations to optimize marketing resource allocation decisions. Yet, given the nature of the ad industry and its complex, layered, often non-transparent supply chain, advertisers may not have ready access to information needed to support these efforts.

As a corollary, in our contract compliance and assurance practice, we have found that those advertisers who do receive timely, detailed, and accurate financial reporting from advertising agency partners benefit greatly – however, most client/agency financial reporting relationships often do not meet this standard.

What is the “one thing” that marketers can do to improve the effectiveness of their advertising investment and to simultaneously mitigate risk? Implement a structured and consistent agency financial reporting (AFR) and monitoring program.

The AFR program’s core element is a finance (client) to finance (agency) relationship and a set of standardized templates to be completed quarterly by each agency partner. AFR submissions include both detailed and summary quarterly and year-to-date activities, and includes at a minimum:

  • Aged work-in-process summary
  • Billings by job and summary, including associated client purchase order, SOW or MSA
  • Out-of-pocket expense & travel by job and summary
  • Budget status by job (approved, spent, balance remaining, job close date)
  • Actual agency hours incurred vs. planned (tied to each staffing plan) for each retainer and out-of-scope fee jobs, including the reasoning for variances
  • Agency fee projection (trend vs. plan)
  • Unbilled media summary

Reporting templates and submission deadlines should be standardized across agencies, managed by client finance (non-Marketing) personnel, and shared cross-functionally within the client organization. AFR details can also serve as inputs to formal, broad-based “Quarterly Business Review” meetings that should routinely take place between client and agency.

The client finance team should take the lead in administering the AFR process, review agency submissions, and have a direct line of communication and relationship with agency finance personnel.

When assisting in implementing these programs, our experience has shown that once an AFR program is pushed out to an agency network and client stakeholders have been through the cycle for two or three quarters (receive agency reporting, review for completeness and reasonableness, perform variance analysis and engage agency finance personnel in Q&A) then ongoing maintenance of the program becomes more routine, engrained, and time commitments decline.

More importantly, advertising ARF monitoring and oversight will mitigate risk, will boost agency reporting accuracy, and will increase shared confidence between client and agency when it comes to financial management and future resource allocation decisions.

Time for Advertisers to Reach Out to the Regulators

26 Oct

Like many business segments, the ad industry has never been one to welcome government involvement when it comes to policing itself, and perhaps rightly so. That said, now may be the time to embrace the regulators.

Why? Simply put, digital advertising fraud is out-of-control. In a recent article in Campaign U.S. author Alison Weissbrot shared the results of a recent study by ad verification company Cheq and Professor Roberto Cavazos of the University of Baltimore suggesting that U.S. advertisers will lose $35.0 billion to ad fraud in 2020. In a sector that represents $333.0 billion in annual spend this means that ten cents of every dollar spent by digital advertisers is siphoned off the top by fraudsters. For perspective, the author cites the fact that this level of fraud is greater than that impacting the $3.32 trillion credit card industry. And the problem is not limited to the U.S. alone. Consider the finding from Juniper Research’s 2019 report on advertising fraud, which indicated that globally lost $42.0 billion to digital ad fraud last year.

Renowned fraud investigator, Dr. Augustine Fou once commented that, “ad fraud is more lucrative than tax fraud, counterfeiting goods or being a Somali pirate.” Adding credence to the increasing role of organized crime and criminal nation states in digital ad fraud, The World Federation of Advertisers (WFA) recently stated that “fraudulent internet advertising schemes will become the second-largest market for criminal organizations.”

For all of its well-intended efforts, the advertising industry has been unable to effectively counter this growing threat. Thus, it may be time for The World Federation of Advertisers, the Association of National Advertisers, the 4A’s, the IAB and their members to reach out to lawmakers and regulators to join in a coordinated effort to uncover ad fraud at its root and to develop more effective means of enforcement to both deter and punish the criminal organizations perpetrating the fraud. The 18thcentury French social commentator, Montesquieu once said that; “there are means to prevent crime – its punishment.” Combining the expertise of the ad industry with the regulatory and enforcement capabilities of lawmakers makes good sense.

The problem of ad fraud is not abating. With the expanded use of technologies such as programmatic buying and artificial intelligence and the complex, often non-transparent nature of the advertising supply chain, the risk of fraud remains high, threatening not only digital ad spend but emerging media sectors such as mobile and connected television as well. 

Will Consolidation Play a Role in Creating the “New” Agency Model?

27 Aug

Consolidation 2It was a simpler time when advertising agencies began to “unbundle” in the 1980’s, separating media planning and placement from creative. This, along with the shift from remuneration systems predicated on commissions to direct labor-based fees, formed the basis for today’s advertising agency model.

While there were certainly variations on the aforementioned theme, this approach served both advertisers and agencies well for the next thirty years. However, as the advertising business became increasingly more nuanced and fragmented, the industry saw a rise in the level of specialization resulting in an increased number of agencies with highly concentrated service offerings. In turn, agency holding companies went on an aggressive acquisition binge gobbling up traditional and specialized agency brands. While there were some efficiencies gained by the holding companies in consolidating back-office functions, the acquired shops were allowed to continue to operate under their individual identities. In so doing, there was little to no cultural acclimation across the holding companies’ agency brand portfolios.

One of the notable consequences of this movement was that marketers saw an expansion in the number of roster agencies, which swelled beyond their ability to effectively manage their now far-flung agency networks. According to Manta Media, in 2020 over 57,000 agencies were operating in the U.S. alone, creating a highly fragmented and competitive marketplace for marketing services providers.

Concurrently, a once stable and manageable business sector was now having to deal with increased levels of complexity stemming from an expansion in the number of media types and outlets, the rapid adoption of changing technologies, the emergence of “Big Data” and an ever-evolving set of consumer media consumption behaviors.

Fast forward to the present and it is easy to understand the position shared by many who feel that the “agency model” is no longer effective and needs to either be fine-tuned or perhaps completely overhauled. These pundits believe that talent constraints, eroding margins, expanding scopes of work, a shift from retained to project-based relationships and the emergence of management consulting firms as viable competitors in the marketing services space have led to the demise of the traditional agency model.

While there have been numerous questions raised, there has been little progress made on client-agency relationship improvements, compensation schema and or agency positioning, let alone ideation around creating a new marketing services delivery model.

There clearly is no “silver bullet” and while we don’t portend to have the answer to remedy all of the challenges facing the industry, we predict that the ultimate solution may involve some of the following actions:

  • Advertisers will streamline their marketing services agency networks with a goal toward eliminating redundant resources/competencies, clarifying agency roles and deliverables, establishing a “lead” agency and providing a framework for long-term, collaborative relationships.
  • In-housing will continue as advertisers seek to improve their controls, gain line-of-sight into the disposition of their spend at each stage of the marketing investment cycle, better assess their return-on-marketing-investment and to drive working dollars. This will involve managed service models where the client takes ownership of the technology and data and engages the agency to plan and execute select components of their communication programs.
  • Compensation programs will blend a balance of direct-labor and or project-based fee methodologies with gainshare and painshare components that link a portion of an agency’s remuneration to the advertiser’s in-market performance.
  • Agency holding companies will “right-size” their brand portfolios, combining and or shedding redundant service providers, consolidating agency brands and developing “centers of excellence” to gain scale efficiencies and improve client delivery within key functions (i.e. broadcast production, digital production, programmatic trading, trafficking, etc.).
  • Agency service delivery models will evolve to simplify advertiser access to the range of agency holding company resources through dedicated relationship management teams that can tap the entirety of a holding company’s offering.
  • Management consulting firms and advertising agency holding companies will co-exist, and in fact, will be called upon to collaborate in providing their clients with integrated end-to-end solutions focused on both building brand and driving in-market performance.

Experience suggests that the best way to solve complex professional services challenges is to focus on the common denominator and craft solutions that ease the burden of the client organization in accessing those services. Thus, consolidation will play a key role for all stakeholders (advertiser, agency, intermediary, publisher) as the advertising industry considers how to evolve its current business models.

The more you drive positive change, the more enhanced your business model.”

                                                                                                          ~ Anand Mahindra

 

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

%d bloggers like this: