Agency Relationships and Growth in the Digital Economy

One of the panel discussions we heard at ProcureCon Marketing last month brought up some useful facts and recommendations for Marketing Procurement people to consider around agency relationships and growth.

Anthony Groves, group commercial director at Dentsu Aegis Network, talked to a panel comprising representatives from the Institute of Practitioners in Advertising, Amplifi UK, Adstream and Sky about their agency relationships and achieving growth in the media marketplace.

He discussed three main topics the panel feel are most relevant now: Trust, Transparency and Growth against the backdrop of the digital economy -- important they say because we are operating in an interesting but unsettled environment. Economically the global outlook is strong, but in terms of the CPGs, we can see disruption everywhere, for instance the growth of Aldi and Lidl; the different ways people shop; retailers coming under assault from Amazon (responsible for 44% of all ecommerce in the US!) and the casualties like Toys R Us and Maplin. Clearly the future belongs to the fast, he concludes. He also cited the influence of the big 4 media organisations in this disruption: Apple, Facebook, Google, Amazon, and others like Alibaba and Baidu, all capitalising on the market. BAAD, is the term they use for them, bad, ant-competitive, addictive and destructive.

At the same time, the agency holding groups are witnessing turbulence in terms of leadership changes, operational challenges, and $billions of business under review, with the consequence that organic revenue growth rates are getting slower!

So what’s behind the trend? Dentsu Aegis Network has looked in some detail and has come up with some contributing factors:

  • FMCGs, their largest clients, are either performing flatly or are in decline, spending less money with them.
  • There is a significant trend towards in-house ad-tech relationships, also resulting in less spending with them.
  • Disruption is affecting the creative side of supply models.
  • Big consulting firms are buying up agencies -- not a significant threat today but they are moving that way.
  • Trust (and transparency) particularly in how data is used, has changed in the industry. CEOs now recognise how important this is, because trust has been empirically proven to drive growth.

The first four are connected by the digital economy – a significant force that is here to stay that will affect us all. But Trust and Transparency can mean something different to everyone, whether you are an agency, buyer, client, auditor, planner, or a CMO, CFO, CDO, or a CPO. And the drop in trust is connected to those four, and is driven by lack of transparency.

So how do we start to build transparency and stronger relationships and therefore trust, it comes down to:

A clean supply chain: aspiring to a 100% brand-safe environment that is viewable is critical; sometimes we have to compromise on reach for quality, but ultimately, we have a collective responsibility for quality and transparency.

Financial exposure: begins and ends with the contract. Each one is different, some focus on full traceability, others on outcomes and delivery of services, but media-spend-related revenues and appropriate disclosure is critical to transparency.

Good data management: our understanding of data storage and usage is also critical – GDPR touches all of us and means better transparency and therefore trust.

Risk and Reward:  this means taking accountability for outcomes – our most successful relationships revolve around this.

Relationships: being honest and open in contractual relationships, even the ones procurement has with internal stakeholders. They need to be nurtured and valued, not locked away in a filing cabinet. We must understand them and continue to have two-way conversations.

The panel confirmed from their own experiences that the most important drivers and principles behind growth are based on partnerships. Contracts are at the heart of this, if they are reasonable, well balanced and reflect the obligations of both parties, they will foster trust and a mutually beneficial partnership.

From a tech provider standpoint, it is the person using and leveraging the technology that drives brand growth. Data is incredibly important, and in the next 10 years it will determine how brands do their work, driven by data-marketing decisions, smart ideas and lower cost factors, because fees are going down. So we need to focus on where data sits, how it can be recycled and leveraged for growth, visibility and ultimately control, which will move the brand forward.

So – the call to arms is: start a conversation and engage in it; embrace disruptive tech and ensure the right conversations are happening upstream with clients, and between commercial and procurement.

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