Tag Archives: marketing services agency network

Ready to Embrace Full-Service Agencies Once Again?

24 Aug

full service advertising agency“Back in the day” is a catch phrase that many of us who came up in the ad business during the full-service agency, 15% commission era are accustomed to using when discussing the state of affairs within the industry today.

Things were simpler then for both marketers and ad agencies. Agencies were valued strategic partners, with C-Suite access that were tasked with developing brand positioning architectures, target segmentation schema and the creation and stewarding of brand communications across customer touchpoints. Marketers managed one full-service agency to handle all of the “above the line” branding and activation activities and maybe one or two “below the line” shops to handle tasks such as sales promotion and yellow pages advertising.

Fast forward to the here and now and the concept of “generalist” agencies, as full-service shops are often derogatorily referred to, has given way to specialization. As a result, marketers have seen the depth of their agency rosters swell in number to represent several to several dozen shops, each responsible for some, but not every aspect of a brand’s interaction with some, but not all segments of that brand’s target audience.

In the current “specialization” model, the challenges for marketers, particularly for those with limited staff resources, that don’t employ a full-service agency-of-record, are many. There are critical tasks and hand-offs which need to be addressed within the client organization and across their agency network, such as:

  • Who is responsible for marketing communications strategy development?
  • Who is on point for the integration and coordination of the communications program across touchpoints? Across media? Across target segments? Across geographies?
  • Who owns the agency relationships?

Factor in the challenges caused by evolving dynamics including organizational silos (i.e. digital versus traditional media), cross-channel marketing and attribution, big data and ad technology and the level of complexity, which marketers face grows to an almost dizzying height.

As to “who” is responsible, the obvious answer is that ownership of these tasks clearly resides with the client-side marketing team. This might help to explain why marketers are feeling stressed out, with many actually expressing a lack of confidence in their team’s ability.

Two short years ago Adobe conducted a survey of 1,000 U.S. marketers and found that only 40% of those surveyed felt that their company’s marketing efforts were effective. This same survey indicated that 68% of marketers were feeling “more pressure to show a return on investment on marketing spend” (ROMI). Earlier this year, Workfront surveyed 500 marketers and found that 25% felt “highly stressed” and 80% stated that they felt “overloaded and understaffed.”

It should go without saying that this is not a healthy dynamic for marketers and doesn’t seem to bode well for organizations seeking to optimize their ROMI.

One might realistically ask the question, are such organizational and or workload challenges impacting brand/ customer relationships? Some industry experts, such as Liz Miller, SVP of Marketing at the CMO council have suggested that consumers in fact have a disjointed perspective of certain brands, resulting in part from inconsistent experiences across touchpoints. In a recent interview with Marketing Daily, Ms. Miller suggested that the key issue facing marketers was delivering a “holistic, connected customer experience.”

Thus it would seem that in this era of specialization, deep agency rosters, headcount pressures on both client and agency organizations, rapidly evolving ad technologies and an empowered consumer, with a wide array of choices a return to “simpler” times would be welcome.

In our experience, advertisers that are successfully navigating this complex, rapidly changing market have done three things that are contributing to their success:

  1. Reduced the size of their agency rosters.
  2. Deputized an Agency-of-Record partner to share in the responsibility for developing strategies and orchestrating marketing activities to deliver a holistic brand experience.
  3. Placed a high premium on effective, collaborative communications with their agency partners and internal stakeholders to gain buy-in to the organization’s marketing communications efforts and to provide regular performance updates.

While a return to the “good ole days” may be nothing more than a fanciful wish, the concept of simplification remains a viable means of steadying the ship and allocating both advertiser and agency resources in a more efficient manner.

As American computer scientist Alan Perlis, once said;

Fools ignore complexity. Pragmatists suffer it. Some can avoid it. Geniuses remove it.”

 

What is the Outlook for 2013

22 Oct

marketing spend forecastAccording to the International Monetary Fund’s world economic outlook, the “risks for a serious global slowdown are alarmingly high” in the coming year.  So how will the economic uncertainty impact the advertising industry? 

Marketing budgets are already under pressure as the U.S. economy plods along at steady, but lackluster growth rates and international markets struggle with the uncertainty surrounding the European Union.  Like it or not, Europe is an important part of the “growth” conversation.  Why? Europe accounts for approximately one-fifth of both the U.S.’ and China’s total exports.  Thus, if the economic situation in Europe takes a downturn, the repercussions on the world’s two largest economies could be significant.

In spite of the challenges posed by the global economic situation, from a marketing perspective, Zenith Optimedia is forecasting a 4.5% spending growth rate in 2013 to $524.7 billion.  Of note, a majority of the growth will occur in the United States.  Zenith’s CEO commented that while marketing spend levels are “solid,” companies are “seeking to ensure that any expenditures are delivering strong return on investment.”

With demand generation a desired, but uncertain outcome for marketers, the role of marketing accountability increases in importance to help keep all stakeholders focused on performance.  Establishing clear marketing KPIs that are aligned with an organization’s business goals, and translating those KPIs into specific performance criteria for each agency in an advertiser’s marketing services agency network, is a critical first step in any accountability program.

Once performance goals have been established, everything will fall in place, right?  Not necessarily.  Advertisers may want to evaluate agency remuneration programs, staffing plans and statements of work to insure that these foundational elements of an agency stewardship system are properly constructed and conducive to aligning their agencies’ resource investments with the desired outcomes.  Layer on a continuous monitoring program which provides all stakeholders with the requisite information for assessing progress and adjusting resource allocations on a timely basis and the chances for improving the efficacy of one’s marketing investment will be significantly enhanced. 

While there are no guarantees when it comes to ROMI, experience has shown that a deliberate systematic approach to marketing resource management can boost results.  In the words of Sir Edward Coke the noted English barrister;

“Precaution is better than cure.”

In a slow growth environment, with budgetary pressures likely for the foreseeable future, this may very well be the “cost of entry.”  In our Agency Contract Compliance & Performance practice, we see the results of marketer commitment to sound accountability practices first hand.

Interested in learning more, contact us for a complimentary consultation on, “Building a High Performance Marketing Agency Network.”  Simply contact Don Parsons, Principal at dparsons@aarmusa.com to schedule a convenient time.

The Future of Marketing is Now. How Will You Optimize ROMI?

9 Oct

key to marketing futureWe’re all familiar with the key trends that have shaped the last several years within the advertising sector; media convergence, fragmentation, consolidation, data proliferation and emerging media.  Now that it is clear that these are not passing fads, the question faced by marketers across the globe is “How can we focus our efforts and resources in a way that acknowledges the fundamental changes which have occurred and leverages our opportunities?” 

In a recent article in AdAge entitled “Marketing’s Next Five Years: How to Get from Here to There” author Matthew Creamer shares a compelling perspective on how marketers can use the knowledge gleaned in the recent pass to chart a path forward.  When one considers the growth of internet and mobile as a percentage of ad spending, much of it at the expense of traditional media, marketers will need to adjust both their resource allocation decisions as well as their performance expectations with regard to crafting and delivering their brand messages to the intended target audience. 

One of the most intriguing changes is in the area of audience measurement and media attribution and the role it will play in influencing marketing strategy.  Consider for example television, which is and will remain the largest ad spending category.  Today, it is estimated that less than 2% of the advertising on television is “data-denominated with guarantees of GRPs and sales attribution.”  As second-by-second audience ratings data continues to proliferate, the impact on addressable TV will be profound.  The role of TV will shift from a cost-efficient means of reaching the masses to that of a media which has the ability to micro-target specific consumer segments to delivery specific or niche product messages in a very direct manner.  

Needless to say, defining the roles of each medium in an ever evolving media set will require the ability to process and analyze “big data” to generate insights that drive an advertiser’s creative and media delivery decisions.  Data analysis will also factor heavily into the establishment of campaign performance criteria, which will likely be more “outcome” focused and the real-time monitoring of progress toward an advertiser’s demand generation and brand development goals.  

These trends will clearly impact the client-agency relationship and the subject matter expertise that will be required of an advertiser’s marketing services agency network.  The clear delineation of roles and responsibilities, the need to harness technology and tap the services of data and consumer strategy and insight specialist and, yes, how agencies are compensated will be seminal issues that need to be addressed within client-agency letters-of-agreement. 

That being said, it is an exciting time to be in marketing whether on the client-side, at an ad agency or working in the marketing accountability field.  According to Mr. Creamer; “even the worst-case forecasts have our economic malaise nearing an end” and a “true recovery taking shape with low unemployment and revitalized consumers.”   Interested in learning more?  Check out the article in its entirety in AdAge.

Marketing Agency Relationship Management; “Who’s Responsible?”

24 Jul

contractWho owns the relationship between your organization and your network of marketing services agencies? Simple question, right? We would suggest that the answer to this straightforward inquiry is more convoluted than you might think.

Here is a process for self-assessing whether your organization has the most basic, yet overlooked, supplier governance characteristics in place:

  1. Identify the functional area(s) and or individual(s) that you believe are responsible for the stewardship of your marketing agencies.
  2. Request of them a current copy of the executed letter-of-agreement (agreement), along with amendments and all relevant statements of work related, including the basis & calculation methodology for current agency compensation.
  3. Request of them a copy of the latest independent agency contract compliance audit results, performance assessment document, and agency fee reconciliation.

From our experience in working with advertisers large and small, chances are very likely that securing the aforementioned documentation will prove to be much more of a challenge than it should be. The reasons are many and varied, and range from the rate and rapidity of turnover within the marketing organization to the lack of a clear established process for managing and monitoring the marketing services vendor network.

In most organizations there are multiple touch points over the course of the lifecycle of an agency relationship that usually involve representatives from Marketing, Procurement, Finance, Legal and Internal Audit. Typically, certain of these groups plays a role on the front-end in on-boarding an agency, negotiating the agreement, ensuring proper controls are set, and developing the compensation program. The groups should then stay involved. However, in practice once initial terms are set, involvement of non-marketing personnel tends to end. This leads to relationship “drift” and creates risks for the advertiser that are directly related to a lack of (or a lax enforcement) of controls and transparency into the stewardship of its marketing funds.

How much does your organization spend on marketing? According to a 2009 Businessweek article, “What Should You Spend On Advertising?” the authors indicated that retailers typically spend between 1.5% – 5.0%, automotive advertisers between 2.5% – 3.5% and consumer packaged goods marketers between 4.0% – 10.0% of revenues on marketing. No matter how you view it, the absolute dollar marketing investment is significant and is worthy of a commitment to solid contracting and contract maintenance procedures, as well as a consistent program to monitor contract compliance and agency performance; all in an effort to optimize the return on marketing investment (ROMI) and manage risk.

Implementing a pro-active marketing services agency vendor management program starts with the perspective that members of an organization’s agency network are valuable contributors to the organization’s demand generation efforts. Secondly, the enhanced asset value generated through clarifying agency roles and responsibilities and synchronizing their efforts can yield asset value well in excess of the advertiser’s agency fee investment. Thirdly, developing performance criteria and agency remuneration systems that align an agency’s resource investment with the organization’s business goals is a critical component of the process. Finally, it is imperative that agency performance vis-à-vis both contractual obligations and KPIs is monitored and feedback provided to insure that each link of the marketing services supply chain is properly focused on what is important to the advertiser.

With the average tenure of a “Top 100” branded company CMO right at 23 months (source: 2004 Spencer Stuart, Blue Paper “CMO Tenure: Slowing Down the Revolving Door”) businesses must provide a level of “continuity” insurance to counter the level of turnover among CMOs, and to avoid unnecessary vendor churn.

Without a commitment to continuity the predictable cycle of upheaval and change within an organization’s marketing agency network will begin anew every two years.

Often when a new CMO comes on board, a number of agency reviews are launched to bring in “their team” and before the new agency even has two full planning seasons under their belt, the cycle begins again. And make no mistake about it, changing marketing agencies carries a level of risk and cost that negatively impacts an advertiser’s ROMI – due to the agency / client business learning curve, cultural assimilation, and transition management, amongst others.

Best Practice: Constructing and implementing a successful vendor management program for marketing services should NOT be the sole purview of marketing. In order to achieve a level of stability and sustainability with an organization’s professional services providers in this area, cross-functional involvement is an important and necessary ingredient.

Thus, shared ownership, strong stakeholder continuity outside of Marketing, along with independent compliance and monitoring support to provide objective feedback on marketing agency performance, can assist an organization in building a responsive, highly productive agency network.

Interested in learning more about a marketing services vendor management program? Contact Don Parsons, Principal at Advertising Audit & Risk Management at dparsons@aarmusa.com for a complimentary consultation; “Building a High-Performance Marketing Agency Network.

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