Tag Archives: marketing agency network

Advertising Delivery Models Are Evolving. How Will the Holding Companies Respond?

12 Jan

dreamstime_xs_127777381When agency holding companies were birthed, they did nothing that directly impacted client businesses. They were corporate entities that owned a number of smaller agencies and the attendant portfolios of real estate, trademarks, copyrights and licenses attached to those agencies. Their primary role was to create shareholder value through structural leveraging.

As time progressed, three things happened that form the basis of the challenge faced by agency holding companies today.

Firstly, aided by low barriers to entry, there was a proliferation in both the number of agencies and the types of functional specialist shops that came to be. In the early days there were “above the line” full-service agencies and “below the line” shops such as sales promotion, direct marketing and PR. Over time, specialists in diversity advertising, shopper marketing and digital media have come into vogue. Highly focused agencies continue to emerge today, as witnessed by the arrival of Amazon “specialist agencies” that assist marketers seeking to do business with or sell goods online via Amazon. Along the way, specialization led to fragmentation and full-service agencies fell by the wayside. Marketers in turn saw their agency networks expand in size as they added specialist firms to their rosters creating a range of agency stewardship and coordination challenges.

Secondly, the holding companies continued to acquire marketing services and advertising agencies. Part of their acquisition strategy involved bringing on specialist firms across a range of competencies to fill out their service offering. Another part of their strategy involved the acquisition of branded agency networks to consolidate activity within select clients (e.g. WPP’s acquisition of Ford agencies J. Walter Thompson, Ogilvy & Mather and Young & Rubicam) and to create walled silos that would allow them to handle competitive advertising accounts. Financial benefits were realized by consolidating functions and paring expenses in areas such as human resources, legal and finance while allowing the acquired agencies to operate independently in virtually every other area.

Finally, along the way the holding companies began to compete as agencies, creating stand-alone client service entities such as; Enfatico (Dell), Team One (Toyota), GTB (Ford) and We Are Unlimited (McDonald’s). The value proposition with these dedicated agency teams was to provide larger advertisers with scalable, seamless solutions served up by the most talented personnel from across the holding company’s portfolio of agency brands. While the premise was certainly compelling, the holding company model did not readily lend itself to a blended workforce concept and often suffered from the lack of centralized business platforms.

Fast forward to 2019 and advertiser preferences remain unchanged. Advertisers desire breakthrough, transformational business solutions served up on an integrated basis and of course, they want them faster, better and cheaper.

In their search for a better “mousetrap” advertisers have begun to take certain aspects of their advertising in-house and or have engaged non-traditional partners including management and technology consulting firms to augment their traditional agency rosters. Of note, the consulting firms, represented by global monolithic brands, blended workforces, common processes and centralized business platforms have made significant inroads with CMOs. This has raised speculation among many industry pundits with regard to whether or not the consulting firms would supplant advertising agencies. Fueling the speculation has been the management consulting firms’ pursuit of agency acquisitions to round out their marketing/ advertising service offerings, it will be interesting to see how well they fair integrating those acquired firms into their organizations both structurally and culturally.

Many in the industry are waiting for the revelation of a new “agency model” that will emerge to magically address advertiser desires and resolve agency holding company challenges. It is our belief that these pundits will likely be waiting for some time.

Advertisers, for their part, will continue to seek out and retain responsive, agile marketing partners that can provide breakthrough, scalable business enhancing solutions. While the idea of an integrated, end-to-end provider is intriguing, it is likely not feasible. Rather, assembling a team of specialists, albeit narrower marketing agency networks, with the advertiser serving as strategist and integrator across the “marketing ecosystem” as Martin Sorrell, Chairman of S4 Capital refers to it is the most likely solution.

As for agency holding companies, we believe that Arthur Sadoun, Chairman of Publicis Groupe got it right when he stated that “the old holding company model is dead” in April of 2018. Advertisers will not embrace a one-stop solution from any of the holding companies. Thus, the holding companies will likely continue their recent focus on right-sizing their networks through the consolidation of both brands and functions and the divestiture of redundant and non-core entities. After all, how many agencies that place or distribute digital media or in-house studios does a holding company need? There may also be a subtle shift from a focus on cost reductions to enhancing the holding company’s ability to cost efficiently scale operations. This could include an expansion of the old “shared services” model, looking beyond HR, Finance and Legal to create centers of excellence around functions such as Data Sciences, Technology, Media Procurement and Production to provide clients across their network with faster, better and cheaper solutions in these areas.

While many lament the decline of the agency holding company, other than the world’s top advertisers, most organizations hire agency brands. While some of the agencies they hire may be owned by the same holding company, more often they are not. Thus the challenge of finding “integrated” solutions for the development of relevant, quick, agile and engaging solutions has been the purview of marketers… at least since the days when the full-service agency model was the standard. As such, the evolution of the advertising delivery model will more than likely be driven by advertisers and less so by agency holding companies.

 

 

 

Two Words That Represent Accountability’s Biggest Obstacle; “Who’s Budget?”

24 Feb

Accountability FinalMany organizations want to implement an accountability program. Virtually all Internal Audit directors would like to extend that accountability initiative across the enterprise and most certainly want to provide coverage for categories with a significant spend, such as marketing.

Yet, in spite of the good intentions, U.S. companies have been slow to embrace independent compliance and performance auditing of their marketing supply chain partners. Ironically, the reason emanates from the answer to a very simple question, “Which departmental budget will be tapped to fund the initiative?” More often than not the answer to that question, in the context of a marketing and advertising spending review, is “Marketing.”

Given this dynamic, it is often a challenge for companies to implement an “unbudgeted” audit project once the fiscal year planning process has been completed, even if results dwarf its cost. Additionally, while many CMO’s have come to value the feedback and insights provided from the independent testing of supplier contract compliance and performance, there are others that still do not embrace audit or accountability initiatives. As a result, unless mandated by the C-Suite, independent accountability testing may never make its way into the budget, causing a huge assurance gap governing that company’s multi-million marketing investment.

There is good news however for procurement, finance and audit executives seeking to remove these obstacles and manage associated risks. Namely, that in addition to the opportunity for process improvements, performance monitoring, contract language enhancements and better controls, these engagements yield hard dollar returns resulting from various financial true-ups and future savings opportunities; far exceeding the fees necessary to conduct the review.

Positive financial returns aside, the costs associated with an audit of an advertiser’s agency network partners is miniscule when compared to the tens of millions or hundreds of millions of dollars being expended in this area.

Perhaps best of all, independent assessments of marketing agency compliance and third-party vendor billings sets a tone of the desired financial stewardship and accountability behavior that the client would like to see employed across its marketing supplier base. In turn, the very act of performing an independent audit, provides a powerful incentive for an agency to diligently self-police itself by tightly adhering to the processes and guidelines agreed to and memorialized in the Client/ Agency Master Services Agreement. In the words of the noted English author and speaker, Simon Sinek:

Actions speak louder than words. All companies say they care, right? But few actually exercise that care.

Interested in learning more about fielding a marketing agency network accountability initiative at your company? Contact Cliff Campeau, Principal at AARM | Advertising Audit & Risk Management at ccampeau@aarmusa.com to for a complimentary consultation on the topic today.

 

 

 

Take Stock of Your Marketing Supplier Network

26 Apr

marketing agency networkWhether viewed in the context of the marketing dollars that flow through an advertiser’s marketing services agencies or their respective roles in building an organization’s brands and driving revenue, a marketing supplier network is a valuable corporate asset.  So how much do you know about the agencies which comprise that network?

Boosting supplier visibility within the C-suite of an organization can yield significant strategic and economic benefits.  The process begins with taking an inventory of those suppliers, their corporate lineage, resource offering, skills, pricing and historical performance on behalf of the company.  Without this knowledge it will be a challenge to optimize the investment made in maintaining this network.  Constructing a database with pertinent details on your supplier organizations is a pre-cursor to assigning roles and responsibilities across an advertiser’s agency base and for determining internal oversight responsibilities.

If this is an activity the organization has yet to undertake, there is a high likelihood that there is a significant degree of overlap across the supplier base and a less than optimal utilization level within a select group of marketing agencies.  Why should an advertiser care?  Because there is an attendant cost to contracting with marketing agencies and to retaining them on the advertisers agency roster… whether those agencies are being effectively utilized or not. 

Additionally, it is quite likely that the controls that are in place vary greatly from one supplier to the next.  This begins with the master services agreement (MSA) that is in place, whether or not such contracts have been executed and or kept current and extends to the resulting statements-of-work (SOW), agency staffing plans and remuneration programs.  While there is an obvious need for customizing MSAs and SOWs by agency type, there are certain terms and conditions ranging from “non-disclosure” and “non-compete clauses” to “right to audit” clauses, “document retention” policies and “intellectual property rights” assertions which provide critical controls that should be present in each MSA.  The question is; “Are they?” Further, once an MSA and or an SOW has been reviewed, updated and executed these documents should be retained in a central database for “ready access” by authorized representatives from Marketing, Procurement, Legal, Finance and Internal Audit.

Cataloging agency costs is another important step in constructing a marketing supplier database.  Armed with a deeper understanding of agency bill rates, overhead rates, direct and indirect expenses and multipliers an organization will be able to construct agency remuneration packages that are fair to the agencies and which generate savings for the advertiser.  One of the important bi-products of this information is the ability to benchmark supplier costs across agencies and makes for some interesting comparisons for those advertisers working with multiple agencies owned by the same holding company.

Implementing a systematic marketing supplier performance review program to be followed by the advertiser’s marketing department and marketing suppliers will provide a layer of qualitative data to further assess the effectiveness of each agency and to proactively identify potential weak links within the network.  Laggards can be targeted for performance improvement actions and or replaced in the event of continued sub-par results.

Ironically, the most valuable benefit of a marketing supplier database is the role it can play in advancing an organization’s collaborative supplier management (CSM) initiatives.  Aside from boosting agency performance and marketing ROI a well-orchestrated CSM program will enhance supplier satisfaction, longevity and fuel supplier motivation to invest in the client-relationship.  In the words of former Federal Reserve Chairman, Alan Greenspan;

“I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as well.”

Interested in learning more about supplier visibility systems?  Contact Cliff Campeau, Principal at Advertising Audit & Risk Management at ccampeau@aarmusa.com for a complimentary consultation. 

 

GM Marketing. Bold Moves or a Business Case for Procurement’s Role in Marketing Services?

31 Jul

General Motors and its CMO just parted ways, suddenly and unceremoniously.  The Wall Street Journal, which broke the story, cited sources “familiar with the matter” when suggesting that the CMO had failed to “adequately appraise the financial details of a recent British soccer sponsorship deal.”  Of note, under that multi-year deal, GM will allegedly pay Manchester United up to $600 million over a seven-year period for Chevrolet to become the club’s jersey sponsor, which includes a $100 million “activation” fee.

Without passing judgment on GM, on their recently departed CMO, or on decisions regarding its $4.4 billion global advertising budget, even a casual observer might ask, “What’s up with GM Marketing?”  Prior to appointing Joel Ewanick to head up marketing for the organization in the spring of 2010, GM had gone through three Marketing Chief’s in the prior twelve months.  

In the two years since Mr. Ewanick’s arrival from Nissan, GM’s Marketing Team implemented a number of dramatic changes, including an overhaul of their marketing services agency network.  This included the abrupt termination of Chevrolet’s agency of record Publicis, firing Bartle Bogle Hegarty on the Cadillac account after five short months without a review (they learned of their fate by reading of GM’s move in the press), consolidating global media buying with Aegis’ Carat, and in March of 2012 GM pared their global creative agency network by 70 to 90 shops and awarding the business to a yet to be constructed agency, Commonwealth Detroit. 

Of note, Commonwealth Detroit is the combination of two agencies; Goodby Silverstein & Partners and McCann Erickson from Omnicom Group and IPG respectively and involves recruiting, building and relocating a team of disparate ad professionals from different agency cultures/ backgrounds to the MotorCity to handle GM’s global business.  Certainly a cross-holding company entity is an interesting approach that is historic in both its boldness and scope.  However, the process of nurturing two distinct creative agencies from two separate agency holding companies to share creative responsibilities, revenues and profits is unheralded.  Does anyone remember Dell and Enfatico?  The irony is that Enfatico was created by recruiting top personnel from agency brands all from within the WPP family. 

Any change in agency alignment is challenging.  Change of this magnitude in an organization’s marketing agency network is both difficult and risky.  Often done under the guise of future “expense reduction” the measures used to forecast those savings typically don’t hold water.  The reason being is that they often fail to account for factors ranging from the cost to unwind the incumbent relationships to the impact of new agency learning curves on account assimilation to the risks this can present to the advertiser on the demand generation side of the ledger. 

According to Bloomberg News, GM posted a global sales increase of just over 2.9% during the first half of 2012 while rival Toyota grew 34.0%, putting Toyota on pace to reclaim the global sales lead this year in the wake of last year’s tsunami in Japan.  In the U.S., GM’s sales rose by approximately 4.0%, in a category that grew 15.0%.  According to Autodata Corp, GM’s first-half U.S. market share fell to 18.1 percent from 19.9 percent a year earlier.  What is the value of a share point you ask?  The answer:  $910 million according to IBISWorld’s Car & Automobile Manufacturing market research report in which they forecast the U.S. automotive market will achieve $91 billion in revenue in 2012.

So what are the chances for success?  Time will tell.  We certainly wish GM and their interim CMO well in addressing the challenges associated with the breadth and depth of changes to their agency roster and the attendant impact on marketing strategy development and execution.  Let’s hope that a sense of reason governs their moves going forward and that the change at the CMO level doesn’t usher in another round of changes in their agency network.  The costs are too high and the risks too great.  While it wasn’t that long ago that GM severed ties with its century old agency of record, Campbell-Ewald, it seems like an eternity.  Interested in reading more on this subject?  Check out the coverage in Automotive News.

Drive Contract Compliance, Boost ROMI

10 Jul

ROMIDoes your organization believe that its marketing investment can have a profound impact on growth, revenue flow and profitability?  If the answer is “yes,” then implementing a strong marketing accountability program can help boost financial outcomes.

Establishing performance criteria within the marketing function, and across the organization’s marketing agency network, is an important first step on the path to improved results and a higher level of accountability.  This can be accomplished by integrating agency financial performance metrics into the letter-of-agreement, and by linking agency remuneration and or incentive compensation to the desired outcomes.  Each metric and incentive goal should be well defined and directly tied to the organization’s business goals.  However, well thought out and agreed-to measures only lay the foundation – a constant review and feedback cycle is required to achieve the desired sound accountability.

A successful accountability plan must be sustainable and is dependent on the development of an agency performance monitoring discipline, relative to the letter of agreement, whereby progress and success criteria can be regularly tracked and communicated to stakeholders.  Unfortunately, too few organizations follow through and make the relatively minor investment necessary to implement and sustain such an initiative.

Perhaps the best way to jump start the control and feedback cycle is through the initial use of an agency contract compliance audit.  Let’s assume that the letters-of-agreement and agency remuneration programs were properly constructed and aligned with desired business outcomes.  Conducting an independent audit over marketing agency partner (creative agency, digital agency, media agency, PR firm, sales promotion agency, diversity agency) activity provides the requisite unbiased focus.  A well-scripted audit process will focus on testing past agency activity and reporting, detection of outlying transactions, review of parameters in place, metric refinement, and identification of process improvement opportunities to further enhance the program.

Reasons for an independent audit are many and varied, but here are a few key considerations:

  1. The organization may lack the depth of resources or subject matter expertise to conduct a thorough assessment of an agency’s contract compliance and performance.
  2. Independent auditors can provide agency stewardship insights and “Best Practice” feedback that can strengthen the client/agency relationship while laying the groundwork for improved performance.
  3. Contract compliance audit firms have the tools and experience to probe on all aspects of the marketing investment cycle ranging from agency staffing investment assessments and fee reconciliations to comprehensive billing reconciliations of both the agencies’ and the organization’s 3rd party vendors.
  4. The compliance and performance metrics gleaned from the audit process can enhance an organization’s marketing, financial and legal controls while supporting the firm’s corporate governance initiative.

In our experience, advertisers that have achieved success in optimizing their return on marketing investment (ROMI) have done so with the aid of a top-down accountability program.  At the end of the day, all stakeholders want marketing to succeed and to lead the way toward attaining its organization’s cash generation and brand equity building goals.  None more than the marketing team and their agency partners.  With solid stakeholder support, linking your marketing goals with your organization’s desired financial outcomes, creating a culture of accountability, and a dedicated effort to monitor performance, the path to success will become infinitely easier.

Interested in learning more about the potential benefits of a contract compliance and performance audit that can accrue to your organization?  Contact Don Parsons, Principal at Advertising Audit & Risk Management at dparsons@aarmusa.com for your complimentary consultation.

Global Marketer Gets Lean & Mean

18 Apr

marketing services agency networkAt the beginning of 2012 PepsiCo announced a series of strategic enterprise expense reduction initiatives.  These included the elimination of 8,700 employees representing 3% of its global workforce plus additional cost reductions of $500 million per annum over the course of the next three years and an announced streamlining of its marketing services agency roster.

It was announced that part of the savings from that initiative would be invested back into marketing PepsiCo’s beverage brands to narrow the competitive spending gap with category leader Coca Cola.  According to Jefferies & Co. in 2010 Coca Cola spent 8% of annual revenues to market its beverage brands compared to 3% for PepsiCo.

On April 13, 2012 it was reported by Advertising Age that Pepsi’s North America beverage division had completed the downsizing of its agency roster.  The result?  Pepsi eliminated sixty-five percent of its beverage division’s marketing agencies, approximately 100 agencies.  Long-time agency partner Omnicom Group was the big winner, strengthening its hold on what has been a long-term client relationship.

To PepsiCo’s credit, it had recognized that its agency roster had become bloated in recent years and took aggressive action to right size its marketing services agency network.  So what will this move yield for the beverage giant?  Well for one, the consolidation of responsibilities across fewer agencies will yield a combination of agency fee and expense reductions tied to the elimination of duplicative efforts and overlapping roles and responsibilities across its marketing agency network.  Secondly, the reduction in the size of PepsiCo’s agency roster will enhance the marketing team’s focus and ability to effectively engage its marketing partners in a meaningful collaboration to build sales, market share and brand strength.

Managing and motivating a smaller group of suppliers is certainly less complex than doing so with an agency network numbering over 150 marketing agencies.  However, post-consolidation PepsiCo’s North American beverage division will continue to work with approximately fifty agencies.  While there will continue to be challenges in aligning agency resource investment and effort with the division’s business goals, establishing performance criteria and systematically monitoring progress across its media, creative services, digital, diversity, promotion and PR agencies this is clearly a step in the right direction.

Hats off to PepsiCo for taking a measured approach to identifying a supply-chain optimization strategy that has the potential to both save money and enhance marketing ROI.  In the words of Benjamin Franklin; “Well done is better than well said.”

The Key to Improved Marketing Procurement Practices

16 Mar

marketing procurement

The topic of Marketing Services procurement practices remains a much discussed, often hotly disputed topic within the industry. There are several reasons why differences of opinion exist, however the time has never been better for marketers, procurement professionals and marketing services agencies to establish a mutually beneficial framework for constructively advancing this discussion.

Recently, a number of global marketers including Coca-Cola, PepsiCo, Procter & Gamble and General Motors have made announcements that directly impact marketing services procurement, albeit in different manners. In the case of Coca-Cola, the organization will utilize savings wrung from supply-chain efficiency gains to fuel its investment in marketing. PepsiCo seeks to streamline its global marketing services agency network, with CEO Indra Nooyi announcing that the organization’s beverage division has identified 100 North American agencies that will be eliminated from its agency network. Procter & Gamble will pare back its investment in traditional media to leverage the reach and efficiency of digital and social media. Dan Akerson, the CEO at General Motors, which just consolidated its global media planning and buying with Aegis Group has stated his intent to “reduce complexities and drive efficiencies.“

In addition to the actions and intentions being announced by large multi-national advertisers, there was an interesting study on marketing procurement conducted by Charterhouse at the close of 2011. Entitled; “The Marketing Maturity Index” the organization surveyed 200 procurement professionals from a cross-section of Europe’s 500 largest businesses. The findings of this study reinforce the need for constructive action in this area:

  • A vast majority (88%) of those surveyed felt that current marketing procurement practices are inefficient.
  • 4 out of 5 claimed that marketing product and services could be purchased more efficiently.
  • 4 out of 10 identified efficiency savings as a “significant opportunity” for their businesses.
  • Only 1 out of 5 felt that their organizations were as lean as possible.

The take away is clear, a well thought out marketing services procurement process can play a key role in supporting both an organization’s supply-chain managementand demand generation initiatives.

To successfully create and manage an effective, highly efficient marketing agency network a collaborative approach may be best. Why? As the breadth of marketing agency networks have expanded and the tenure of CMO’s has declined (around 24 months according to recruiting firm Spencer Stuart) a cross-functional approach to the development, management and monitoring of agency performance and contract compliance is required to safeguard the interests of each stakeholder. Further, the marketing agency network is a vital corporate asset that would benefit from the involvement of and access to senior representatives from Marketing, Procurement, Finance and Legal. Let’s face it the cost of changing agencies is expensive in terms of absolute costs, financial risks and demand generation momentum. Thus, an organization committed to a stable, high-performance agency network stands to gain significant value.

Organizations’ can improve their return-on-marketing-investment by optimizing the performance of their marketing agency network by taking the following actions:

  • Stabilize the Marketing Team and marketing agency network. Organizations lose valuable knowledge when institutional marketing memory is not transferred to others. The rate and rapidity of personnel and agency turnover creates risks in this area.
  • Truth, transparency and respect are necessary ingredients for successfully managing marketing agency networks. Implementing contractual, financial and performance oriented controls can safeguard an advertisers marketing investment and establish a sense of clarity among the supplier base as to “what is expected” and the analytics that will be used to assess performance.
  • Reality matters when its insight that you seek. Monitoring and benchmarking agency performance yields knowledge which can be utilized to drive efficiencies and to socialize “Best Practices” throughout the advertisers organization and across the network.

When it comes to marketing service procurement and the benefits to that can be realized by creating and maintaining a high performing agency network, one can take inspiration from the noted Roman poet Ovid:

“Make the workmanship surpass the materials.”

This perspective is as valid today as it was two millennia ago and it has the potential to galvanize each of the stakeholders in this important discussion around the ultimate goal of marketing services procurement. Interested in learning more? Read a summary of the “Marketing Maturity Index” survey.

Is the Size of Your Agency Network Limiting Performance?

28 Jan

enhance agency network performanceGone are the days of the full-service advertising agency, providing integrated support across a broad range of marketing disciplines. Today, advertisers rely on a network of marketing services agencies that specialize in specific functional areas, geographies or diversity segments. The net effect of this shift is that the number of agencies which comprise an advertiser’s agency network has mushroomed. The question one might consider; “Is a larger network of specialist agencies more than a smaller network effective?”

With this question in mind, it was with great interest that I read a paper entitled; “Why individuals in larger teams perform worse.” The paper was based upon a study conducted by Jennifer Mueller, Professor of Management at Wharton who sought to explore team size and the impact on individual performance. The parallels between individuals serving on a team and specialty agencies collaborating as part of a vendor network are quite striking.

Professor Mueller found that the cost of collaboration was higher for larger teams. Of note, one of the “costs” identified in the study was tied to less time available to form meaningful relationships that boost productivity with each member of the team. How many firms make up an advertiser’s agency network? The numbers can grow to be quite unwieldy when you consider the combination of creative services shops, media agencies, digital agencies, diversity agencies, DM agencies, PR shops, social media agencies, research firms, printers and so forth. Have client-side Marketing staffs grown sufficiently to effectively manage large, diverse vendor networks and to nurture meaningful relationships with each?

One of the other bi-products of large teams was an increased level of stress tied to uncertainty regarding “who to turn to” or to call on when a question or a need arises. This scenario when viewed in the context of the lack of role clarity and responsibilities that exemplify many agency networks and their client-side sponsors can lead to both “relational loss” and “coordination loss” each of which can impede productivity, fuel stress and negatively impact the quality of work.

The key finding of the study was that while larger groups may perform better than smaller groups (up to a point), individuals on smaller teams performed better than individuals on larger teams. Professor Mueller was able to determine that the lack of connectivity between members of a larger team was the key driver of lower productivity.

Thus the challenge for advertisers managing a large agency network is to determine a means of enhancing connectivity between those agencies in a manner which leverages their respective areas of specialization while synchronizing the efforts of the team as a whole. Improved connectivity can aid team building efforts and boost relational strengths. Professor Mueller suggests the appointment of a “troubleshooter” to serve as a quarterback or “go to” person for each team member to turn to when problems solving support is required. Many advertisers have attempted to leverage their agency of record to serve on point in the capacity of “troubleshooter.” However, history shows us that the notion of a “lead agency” serving as the go to contact for other firms in the agency network is fraught with challenges and often proves to be an exercise in futility. Preferably, the “troubleshooter” should be a representative or representatives of the client’s Marketing Team, which more directly supports the goal facilitating disparate vendor organizations to work together in an efficient, connected manner to optimize the organization’s marketing investment.

The addition of a “go to” representative when augmented with clear roles, responsibilities and contract/ compensation models tied to desired performance outcomes is an excellent method for integrating the efforts of a marketing agency network. Further, continuously monitoring agency contract compliance and performance will provide an advertiser with additional controls to mitigate risk, generate a timely stream of accurate marketing analytics data and boost productivity of the agency network. Check out the article in its entirety at Knowledge@Wharton … Read More

 

 

Can Procurement Add Value by Focusing Solely on Cost?

26 Nov

improved agency performanceWhen it comes to Marketing Services sourcing, the short answer is no. Driving costs down is an important element of strategic sourcing but not at the expense of brand building, customer acquisition and revenue growth.

Procurement professionals must take a broader view of their role in the marketing services supply chain if they are to optimize their enterprise value in this important area. Yes, there are a plethora of opportunities for improving an advertiser’s cost basis, streamlining vendor networks and enhancing their agency stewardship controls through the application of sound procurement practices. However, these efforts must be complemented by pragmatic processes designed to leverage an organization’s marketing resource investment in driving the demand side of the business. For example, contracts which provide the organization with the requisite legal, financial and intellectual property controls, creative remuneration systems which incent extraordinary effort, vendor performance monitoring systems which provide transparent reporting on a near real-time basis and the use of an analytics based vendor network benchmarking program to gather intelligence on time and material costs at a task level across the supplier network to inform future resource allocation decisions.

Further, as advertising agencies look to evolve their own procurement efforts, advertiser organizations can realize significant value by providing assistance to their partners in collaborating to determine how strategic sourcing can drive cost efficiencies across the strata of 3rd party vendors that represent an important element of an advertisers marketing supply chain. Remember that while an advertisers marketing services vendor network might number a few to a few dozen agency partners, those agencies represent the advertisers interest to thousands of 3rd party vendors ranging from illustration studios to talent agencies to production houses to media properties. By focusing efforts in these areas Procurement will realize their near-term cost reduction targets and build a system for driving marketing performance for many years to come.

As the old Chinese proverb goes; “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” Interested in reading more on this topic? Check out the article by David Rae on the Procurement Leaders Blog

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