Tag Archives: ad agency

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

The Real Cost of Agency Employee Turnover

31 May

talentTalent. Whether viewed in the context of attracting, developing and or retaining ambitious, gifted employees, talent management is a major challenge for all professional service providers, perhaps none more so than for advertising agencies.

As the industry has evolved over time, the ability to attract entry-level talent has become more difficult. Agencies have reduced their on-campus recruiting presence, starting pay levels are not as competitive as other professional services firms, such as management consultants and agencies are viewed by many candidates as “sweat shops” with low pay, long hours and little loyalty.

Sadly, once a young graduate joins an agency, some of these perceptions too often mirror reality. This is often compounded by limited opportunities for training and development, in favor of a “baptism by fire” on-boarding process marked by immediate deployment onto client accounts with high expectations and demanding, results oriented environments.

The end result for advertising agencies has been an increased level of employee turnover. In turn, this lack of stability has led to higher operational costs ranging from increases in time-on-task to higher recruiting and training costs. The impact of increased agency employee turnover rates negatively impact clients. This often takes the form of higher re-work rates and the need for greater staff coverage to cover of employee inexperience and a lack of direct knowledge of the client’s business.

More significantly, many would argue that these talent issues have negatively impacted client/ agency partnerships, resulting in shorter tenures and more shallow relationships between personnel on both sides of the aisle.

For its part, the industry has acknowledged that “talent management” is a challenge that must be addressed. Given the rapidly changing marketing landscape, driven in part by a seemingly never ending stream of technology advancements, there is a clear need to expand not only the depth of the agency talent pool, but the breadth as well. The need for application developers, coders, data scientists, user-experience architects, social community managers and content curators and creators is now just as important as attracting account managers, copywriters, art directors, media planners and buyers.

By comparison, management consulting firms have been able to more successfully manage their talent pipelines, attracting the best and brightest of our university graduates, developing that talent, retaining their personnel and achieving billable rates that are much higher than their agency counterparts (or should we say competitors).

The irony is that management consulting firms have quickly morphed their business models, competing directly with traditional ad agencies. Firms like Accenture and Deloitte now provide a full suite of marketing and advertising services involving branding, attribution modeling, digital management, graphic design, social and experiential marketing to provide clients with end-to-end customer engagement support. Importantly, these firms also have the ability to readily deploy personnel within these functions on a global basis.

With an expanding set of competition including other professional services firms, technology firms, media sellers and advertisers migrating select functions ranging from their agencies to in-house solutions the challenges for agencies looking to address their talent needs will likely remain steep in the near-term. That said, given the importance professional staff play in establishing trust and credibility with clients, the growing pressure from advertisers for full-disclosure remuneration systems and the resulting need to build out agency teams and the pool of billable hours will be critical to driving top-line success.

If agency holding companies want to avoid becoming temporary staffing firms, one important element in the talent acquisition cycle is to build strong agency brands with compelling cultures that appeal to college graduates, young professionals and mid-level managers. With the multitude of agency’s within their networks, holding companies may ultimately have to consider consolidating and integrating some of their agency brands to create scale, introduce a broader range of services and to provide meaningful career development opportunities for their associates.

Beyond building compelling brands/ cultures, agencies will likely have to rethink their staff compensation programs, which over time have become very polarized, with top managers earning significant salaries and more junior personnel laboring at lower salary levels with few perks. Unfortunately, the easiest way for these folks to advance their economic status is to jump ship and go to another agency for a loftier title and a bigger paycheck. Too often this pattern is then repeated every two to three years.

This will require ad agencies to begin with rethinking entry level pay, which pales in comparison to what a college graduate can earn by going to work for another professional services or technology development firm. There is no sense in ratcheting up the on-campus recruitment effort, if an organization is not willing to back that up with a competitive compensation program.

According to a 2014 4A’s report, average ad agency starting salaries of $25,000 paled when compared to the $70,000 paid at management consulting and technology firms and $125,000 for 1st year law associates. Sir Martin Sorrell called it right in 2011 when he called the agency talent situation “criminal.” In the past, agencies were able to leverage the industry’s reputation as an energetic, forward thinking, collaborative, fun sector and the agencies themselves were thought to have engaging cultures that helped candidates look beyond compensation. Today, it is the technology companies that are viewed as having employee friendly cultures, while agencies are viewed as having more competitive, more cutthroat culture, which does not appeal to millennials.

Earlier this spring, Digiday published an article suggesting that as challenging as the competition for entry-level personnel might be, the real talent crisis was in middle management, individuals with 3 – 5 years of experience. These are the frontline troops, the doers and problem solvers. While compensation is a concern for this group, they are also looking for “more challenges” and “leadership experience.” Often times, they cannot satisfy their desires in this area at their agency and when they leave, many don’t stay within the industry.

In our experience, addressing the challenges of attracting top talent and reducing turnover in the ad business is an important component in reinvigorating client/ agency relationships, boosting the levels of trust and confidence… and the caliber of the work. We hope that agencies can make meaningful progress in this area and once again become desirable, highly coveted career alternatives for talented young people.

 

 

What is the Key to Client-Agency Success?

2 Dec

client-agency relationship successCollaboration? Two-way communication? Transparency? Respect?  Certainly.  But these positive relationship traits are present in many client-agency relationships that fail to withstand the test of time. Thus there must be another reason that the average tenure once measured at 7.2 years in 1984 and 5.3 years in 1997 and pegged by many at less than 3.0 years today continues to wane. 

The factors often cited for this decline include; client-side marketing turnover, shortened tenures of CEOs and CMOs, agency leadership turnover and clients outgrowing an agency’s capabilities to support their marketing needs.  There is no question that these events can play a contributory role in changing the dynamics of an advertiser’s relationship with its agencies.  However, these are also factors which have been effectively dealt with by advertisers and their agency partners enjoying long-term relationships.

Think about the typical start to a client-agency relationship:

  1. Review conducted
  2. Agency selected
  3. Contract negotiated
  4. Work commences
  5. Both parties settle in to the day-to-day pattern of creating and distributing ad messaging

Most experienced marketers and agency executives have seen this routine repeat itself time and time again.  The common denominator is that events progress from a competitive review to initial campaign development in short-order at the expense of a deliberate, considered on-boarding process.  Out with the “old” partner and in the “new” with virtually no transition overlap or time for the new agency to truly get up to speed on a client’s business.

So what is the missing link?  Most advertisers have not embraced the discipline of supplier relationship management (SRM).  Too often, advertisers invest few if any resources in strategically planning for and managing the interactions with each of their agency partners or in clearly identifying the roles and responsibilities of each agency in their marketing services vendor network.  

Letters of agreement, statements of work, agency staffing plans and remuneration agreements are necessary relationship management tools which provide guidance to both advertisers and agencies in the area of contractual expectations, controls and reporting.  However, few would consider these items as a replacement for sound operational planning that clearly lays out a governance framework, the tenets of organizational interactions, expected behaviors, ground rules for collaboration and a definition of what constitutes success in the context of the relationship and in-market performance. 

When one considers the size of an organization’s marketing budget and the importance of that investment in the areas of demand generation, brand building and share accretion it is curious that the industry hasn’t more readily adopted SRM. 

Changing agencies is costly and can be fraught with risks to an advertiser’s market position and financial performance.  Thus it stands to reason that an organization should be prepared to make the requisite investment in its marketing supply chain to develop solid, long-term agency relationships predicated on the effective and efficient stewardship of their marketing spend to attain superior results. 

Given the potential benefits of SRM to marketing agencies, it is a wonder that they are not leading the charge on this front as a means of extending their tenure and enhancing their positions as strategic contributors to their clients’ business.  Regardless, the benefits to stakeholders on both sides of the client-agency relationship are to numerous and meaningful to ignore. 

So, if you’re contemplating a change in agencies, use the event as a starting point for the application of SRM to your organization’s agency network.  In so doing you just may reap the benefits of the words intoned by Henry Ford;

“Coming together is a beginning.  Keeping together is progress.  Working together is success.” 

 

 

 

 

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