November 02, 2019

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Robin Seasock

There tends to be a cyclical movement regarding where an agency optimization function sits within an organization, but it usually resides in either the marketing or procurement group. Regardless of where the program sits within an organization, the idea around optimizing the agency partnership has evolved from a focus on process efficiencies and cost savings to real opportunities for marketing procurement and marketing operations to partner with brand marketers to create additional value for executive stakeholders and the business at large.

That's because an agency optimization program is where managing agency relationships happens. Sometimes it is referred to as marketing procurement, agency excellence, or marketing operations, among other names, but whatever it's called, marketing, agency operations, agencies, procurement, and key stakeholders in finance and the C-suite can all benefit from a well-established agency management program.

Here are four key ways brands can use an agency optimization program to get the most value out of their agency relationships.
 
Supporting Brand Goals

Different stakeholder groups all approach the advertiser-agency relationship from different angles: The marketing team desires unbridled innovation to achieve its brand goals. The finance organization wants to balance budgets and allocate funds for optimal ROI. The procurement team strives to optimize agency value. The agency wants to produce great work, profitability, and grow its business.

Even though each stakeholder approaches the advertiser-agency relationship differently, the one shared priority is meeting and exceeding the brand's goals. The agency management program is put in place to help these disparate stakeholders understand their priorities and help them embrace that one unifying goal.

In that capacity, agency management programs can help establish structure and consistency around how brand teams communicate with agencies and instill consistent methods of working. When everyone is working under the same set of standards and guidelines, the expectations are better understood by all parties. That single vision means everyone is focused on how they can contribute to an organization's success.

No marketer works with an unlimited budget, no marketing procurement person says they want to stifle innovation for the sake of cost savings, and no agency says it wants to reap tremendous profits at the expense of the client. Still, at times there is a push-and-pull struggle between stakeholders as they jockey for priority. Some of that activity is healthy, and it is good for an organization to have appropriate checks and balances, but if there is too much tension between groups it means that the stakeholders aren't focusing their energy in the right place. Having an agency optimization program in place can help strike a balance and keep each group moving toward a singular goal — the success of the brand.

To illustrate that point, consider a brand goal to have a stronger presence on social media, based on the idea that it would directly affect sales growth. The marketer defines the brand goals and works with the operations team to establish key performance indicators (KPIs) to measure performance. Procurement helps identify best-in-class agencies specializing in social media and negotiates for the best value from the provider. Finance helps orchestrate the funding across the organization. The agency provides its expertise and guidance to drive a strong social media campaign for the brand team. By establishing and communicating clear goals, everyone can focus on using their expertise to reach the same goals, doing their part to drive brand growth.

Optimizing the Role Each Stakeholder Plays in Driving Agency Value

Each stakeholder plays a role in improving the performance between the agency and the advertiser. By focusing each stakeholders' perspective onto a single goal, such as driving growth, brands can create a common sense of purpose and align thinking across the organization around a single train of thought. Here's what that might look like for five different groups:
Marketing

In focusing on brand growth, marketers might ask themselves the following questions:

  •     What agency work do we invest in to optimize revenue growth?
  •     Where and how can we drive innovation?
  •     What is the optimal marketing mix?
  •     Who is the key agency talent to work on our brand account team?
  •     What does performance history look like for agencies, and what is the performance trajectory?
  •     Is the agency stronger in one area than another area?

Finance

When the finance team looks across brand teams and how it can allocate budget to help drive growth, it might ask the following questions:

  •     If incremental funding is available, where do we distribute those funds?
  •     If budgets are to be cut back, where do we look first?
  •     Which projects are budgeted for but have not yet started?
  •     Which projects are least likely to deliver against the strategy of brand growth?

Procurement

Procurement sets the strategy for the advertiser's agency model and must have a good understanding of the marketplace. These are the types of questions they must ask:

  •     Which agencies deliver the greatest value, taking into consideration quality, speed, reliability, cost, innovation, and risk management?
  •     Who has niche expertise that can help drive brand growth?
  •     What topline spend data can we provide marketing that will help them make more informed decisions faster?

Operations

The goal of the operations team is to optimize the performance of the agencies and the relationship with the advertiser. When working toward a goal of driving growth, the operations team might ask itself the following questions:

  •     What are the appropriate KPIs?
  •     How are agencies performing against those KPIs?
  •     Which agencies are most likely to contribute to the success of the brand's goals?
  •     Which agencies perform well and are integrated into the advertiser's culture?
  •     Which agencies need an improvement plan?
  •     What are the factors that contribute to the success or failure of agencies?
  •     What is the appropriate remediation plan to improve overall performance?

Agencies

Agencies want to succeed at meeting their clients' brand goals. Here are a few questions an agency may ask:

  •     How can we use the results of the performance evaluations to strengthen our value to the client?
  •     How can we partner with the client to have a more collaborative relationship that delivers greater results against brand goals?
  •     How can we use the client's agency management framework to help provide consistent and clear communication?

Using Data Wisely to Help All Stakeholders Lift Performance

Data plays an important role in helping an organization achieve brand goals. Large advertisers have a treasure trove of agency-related data available to them. If they are not leveraging that information for the betterment of the brand's performance, they are missing an opportunity.

Advertisers should have consistency in their agency data, and it should be consolidated. They should have an understanding of the deliverables their agencies are producing, of the timing and the costs associated with those deliverables, and of how their agencies are performing. These components enable advertisers to analyze data across brands, geographies, agencies, and lifecycles, among other factors, and glean insights to address future goals.

Advertisers often don't have ready access to their own data, so they ask their agencies to gather information for them. When agencies spend their time focused on administrative activities it may be at the expense of what clients value most: creative and innovative brand work.

In addition to the incremental data requests that come from clients, agencies have a fair amount of their own administrative burden to address, from the development of scopes of work to documenting the time spent on tasks to billing activity. Agencies and advertisers should constantly look for ways to streamline and optimize their current processes, and a formal agency optimization program should help that effort.

Performance evaluations can be a great source for additional data. Agencies can optimize the value they bring to the brand when they are given an opportunity to participate in an agency evaluation process. Such a process lets the agency know where they stand and what areas need improvement.

Often, advertisers will ask agencies for feedback on the advertiser's performance. This is an opportunity for agencies to shed light on parts of the relationship that are not working as smoothly as they could be. An open exchange of feedback helps both parties focus on areas for improvement.

Learning How to Create Better Results from Agency Optimization Practices

Giving every stakeholder a shared mission and getting them to move in the same direction provides an opportunity to generate incremental value for the organization.

However, according to Enrique Cordero, the chief client officer at the management consulting firm LinkRFx, there are two ways to achieve value and define what it means to an advertiser: value capture and value creation.

"Reducing the number of agencies or consolidating your business with a few is an activity that for years has been utilized to drive cost efficiencies and minimize complexity in the supply base," Cordero says. "[That practice] revolves around the concept of leverage, which in practical terms is about capturing value — for the buyer that is — by paying less for the same output." Cordero is describing how advertisers have often leveraged their spend with agencies to capture value in their investments. That approach works well for a while, but it does not fully optimize the agency-advertiser relationship. Cordero continues: "When advertisers change their behavior from 'capturing' value to 'creating' value it brings greater benefits to all."

Cordero's point is that advertisers who partner with their agencies to build strategic relationships, moving beyond a transactional dynamic to a more collaborative one, end up creating value for everyone involved.

Building a strong agency management program requires a commitment from every stakeholder, but when such a program helps lift agencies and brands to achieve or exceed brand goals, it can be a smart investment.

Advertisers who invest in developing better relationships with agency partners are investing time and resources into getting better brand performance in return. By training their agency partners on their processes and systems, advertisers are engaging those partners in the marketing process as trusted allies. That level of collaboration builds a kind of value that lifts everyone to new heights.

The evolution of agency optimization means breaking through the traditional roles of the stakeholders and focusing on the contributions each stakeholder makes to achieving brand goals.

Robin Seasock (@seasockr) is the account director at Decideware, a partner in the ANA Thought Leadership Program.

 

 

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