Marketing Procurement – A Push for Simplification Part 2

Simplification in the complex marketing procurement landscape was the theme of the first session at ProcureCon Marketing recently, which introduced the theme of streamlining the agency roster. In the next panel discussion, on the Future of Agency Roster Models, Laura Forcetti, global marketing sourcing manager at the World Federation of Advertisers (WFA), introduced the subject by giving some of the key findings of a recent study they had carried out with 900 members.

When asked ‘could you imagine a world without agencies?’ 17% said ‘yes.’ So the vast majority can’t see the end of the agency – not surprisingly. But it’s the current model that’s in question. When asked whether existing agency models/rosters were fit for purpose, 55% said ‘No,’ and three-quarters of customers are currently reviewing their models. So clearly there’s a pretty wide understanding that there’s a need for change. Interestingly, 74% said they believe agencies should be working as partners for customer brands.

Laura brought along two of the interviewees, Tigran Avakian, Director Global Procurement EMEA at Mattel and Simon Tilden, Global Category Director Advertising at Diageo, and asked them their thoughts on partnerships.

For Simon, partnerships can be a very positive thing, but only if they really understand the brand. The only thing that he can see affecting wider adoption, is remuneration. The model, he believes, is not always fair or designed for purpose. So retainer contracts breeding complacency, time-based ones leading to longer hours on the project, output-based not being fairly compensated, and so on. Tigran made the point that ‘partnerships’ should be about going above and beyond the normal contract, which is how you unlock value.

Of course, they agreed, you have to start by knowing whether a partnership is the right way forward for you. You have to ask whether this is a long-term need, because partnerships are fluid and evolving, and if you’re not ready for that, there’s no point going down that road. Citing the Guinness adverts as a success example; if you have an agency that you trust understands the brand fully, then it’s the right choice.

So, how do agencies get to be partners?

Well, they have to get a foot in the door first. Remember, initially you are just a revenue source, so it’s important to come to the table with clear expectations. Developing a close relationship with agencies takes investment, both time and money. Things can force you to evolve – like a new CMO or a company transformation which means you have to adjust priorities. The key is being able to communicate at all levels, on both sides, and importantly, get the pricing model nailed down right from the outset.

And what about remuneration models?                  

Tigran had found with the rates-per-hour model, that spreadsheets of details, charge backs, sometimes very small, all led to dissatisfaction on both sides and eventually led to the breakup of the relationship and termination of the contract. Spending time building rate cards is definitely not the answer. But the panel also found that performance-based payment, where all the remuneration is put in one bit pot and the agencies compete for a share of the reward, also bred dissatisfaction, as one agency may regard their reward as being ‘stolen’ by another. So there’s clearly a need for a shake-up of models. Simon would like to see a model that rewards agencies on the content they create. Why not? we’ve got the data to do it, he argues. We need to find a way of measuring how successful content is and reward accordingly.

Overall, it’s not just about paying the agency for their work, it’s about encouraging the right behaviour and the alignment of expectations through remuneration. They felt strongly that, whatever the model, you need make sure the details of the agreed remuneration are captured fully in the contract.

So once that’s agreed, how do you keep a relationship going?

One good practice is to run a survey every couple of years and spend time with the agencies to find out what their challenges are of working with you, then set up teams to investigate how you can make that better. Clear advice came through again to put everything relevant in the contract, a set of principles, especially around behaviour, like, for example, who should be in meetings, because if the decision maker isn’t there, there’s no point having them. It’s important that Account directors and CEOs be very honest and define actions.

What’s are the main takeaways you’d like to share?

Listen to market challenges and the business’ strategic projects, shift how you work and evolve with them every year.

Think as a business person. We get questions from everyone, Finance, HR, IT etc, we have to elevate ourselves above the process and find a common language. That breeds trust.

Understand the people in the agencies. There are some very talented people.

Don’t lose objectivity the closer you get to your agencies – don’t allow complacency to happen. You can create competitive tension by bringing new agencies into a roster.

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