Managing Marketing: The complex issue of ever expanding agency rosters

Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Nathan Hodges, General Manager of TrinityP3 Marketing Management Consultants discusses with Darren the ever increasing complexity of marketer requirements that leads to corresponding expansions in agency and supplier rosters, especially in large marketing departments in service centric companies such as telcos and financial services.

Nathan_Hodges

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Transcription:

Darren:  

Okay, welcome to Managing Marketing and this week I’m joined by Nathan Hodges who’s General Manager here at TrinityP3, welcome Nathan.

Nathan:

Hi Darren, how are you?

Darren:

I’m well.  But I was actually thinking that this is a great opportunity for me because having been away for a number of weeks, I know you’ve been working on some big projects for clients around their roster management.

The fallacy of the full service agency

Nathan:

Yeah sure, absolutely.  There’s some huge projects going through, one of the big hot points at the moment for us is roster size, roster management, the complexity that people are faced with and what the hell they do to go and manage that and improve it and get a handle on even what’s there.  So yeah, we’ve been busy Darren while you’ve been away sunning yourself or whatever you’ve been doing.

Darren:

Well look, it’s interesting because I think back to when I was working in advertising, before TrinityP3 and it really was the start of this process because when I started at Mattingly or Grey Advertising or even when I finished at JWT, it was really a transformation from what was called the full service agency to this much more fragmented approach.

Nathan:

Yeah, I mean so similarly, you’ve got me thinking now about when I started back at what was called BMP, but BMPDDP in London where I spent six years, which was perhaps one of the best full service agencies in London at the time.

While I was there, we were going from full service to the media agencies spinning off and all the controversy that that caused and then I went to BBH where that situation had been in play for two or three years.

It seems strange doesn’t it, that that’s actually not necessarily that long ago but in marketing terms, in advertising terms, in channel terms, it feels like another century, it feels much further back.

You look at the agency structures now where people are talking again and they tend to be people of a certain vintage and a certain kind of era saying, “Oh let’s go back to putting the sauce back in the bottle.  Let’s try and become a full service agency again”, and I’ve just got my doubts because I can’t see how the hell you could manage the level of complexity and the level of specialism that you need to master these days with an agency structure without subcontracting everything.

Darren:

I was going to bring that up because I’ve read articles recently where people, not just in Australia, around the world, are talking about going back to the full service agency and we’ve seen examples of creative agencies working to bring media back in-house and we’re also seeing increasingly the big media groups adding content they call it, they don’t call it advertising, but content creation into that mix.

Do you understand why the industry yearns for the full service model? Continue reading “Managing Marketing: The complex issue of ever expanding agency rosters”

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It’s time to get back to Marketing ROI basics and that means starting with the budget

This post is by Zena Churchill, a Senior Consultant at TrinityP3. Over the past 20 years, Zena has worked for some of the biggest international and national brands. Having worked both agency and client side, Zena has strong insight and experience across most facets of marketing, specialising in media, strategy and BTL.

How would you handle finding out your marketing spend had been misreported by millions of dollars? More importantly, how would you go about reallocating that spend against campaign activity to give you a better indication of ROI? Could you? Would you?

ROI is a hot, hot topic. Well to be honest, it has been for a while now but as ROI software, apps and other such tools become accessible to businesses of all sizes, it seems it’s all anyone can talk about.

Marketing ROI

I blame it on the culture of instant gratification and the fact that everyone these days from the CMO’s, CEO’s and CFO’s feel they need to know NOW how a campaign is tracking against spend (remember the good old days when you could take 6 weeks after a campaign ended to give your post analysis, but I digress).

To be honest I love the fact we are now drowning in so much instant data we can gloat about our successes or sob about our failures several times an hour, or simultaneously depending on how your day is going. But in my opinion, focusing myopically on this live tracking ROI against spend once a campaign is in market is overlooking the much more important budget management process of capturing the spend correctly in the first place.

A major part of the work I do with TrinityP3 involves understanding how a marketing team functions at every level – from briefing, to strategy, stakeholder engagement to ROI and everything in between. And over the course of a project engagement I will get to know a marketing team inside and out, spending hours talking to people across the marketing team to find out how it works.

Do CMOs really know how their marketing budgets are being spent?

Continue reading “It’s time to get back to Marketing ROI basics and that means starting with the budget”

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The hidden waste buried inside many agency retainer agreements

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

While the reported trend is to move away from the resource-based retainer, it continues to be popular with agencies because of the guarantee of cost recovery and cash flow and with advertisers because of the “all you can eat” and “set and forget” convenience.

Agency retainer agreements

The reason for the move away from the popular retainer is because of the increasing fragmentation of the advertisers scope of work requirements, resulting in an increased number of agencies on the roster and a diminishing in the prevalence and importance of the Agency of Record (AoR). There is also the continued downward pressure on costs in an attempt to drive greater cost efficiencies and ultimately cost reduction in marketing.

In our work helping advertisers move from the current cost based remuneration to a value-based model, we have found a consistent flaw in the application of the popular retainer model. This flaw goes some of the way to explaining why many advertisers have consistently reported a perception of poor value from their agencies, even with the agencies providing extensive timesheet proof of that value.

Let me explain the flaw.

Linking retainer to scope of work

The best practice methodology for developing a retainer model is to link the specific scope of work to the agency resources required to deliver the scope and then the direct salary cost multiplied by the overhead and profit margin.

The flaw in developing a transparent retainer is not just in the ability to define the specific scope of work, which can be a challenge for some marketers, particularly in highly volatile categories, but in making sure the scope of work covers all of the requirements of the marketers up-front.

Previously we have written about the scope of work being like the blue prints or plans for a home. Making sure the detail is specified up-front is important for managing costs. Later additions usually come at a premium and last-minute changes can be expensive.

Therefore the lack of a very detailed scope of work means that the proposed retainer has flexibility, or more accurately contingency, to ensure the agency has adequate resources to cover the unforeseeable requirements. While this lack of specificity in the scope of work and the deliverables of the relationship may appear insignificant, let me demonstrate later the impact this has on the value of the retainer.

Effect of the top down approach to retainers

Continue reading “The hidden waste buried inside many agency retainer agreements”

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How to strategically align an existing team

This post is by Zena Churchill, a Senior Consultant at TrinityP3. Over the past 20 years, Zena has worked for some of the biggest international and national brands. Having worked both agency and client side, Zena has strong insight and experience across most facets of marketing, specialising in media, strategy and BTL.

Hands up who has ever moved into an exciting new leadership role only to have the gloss of it all rapidly fade when you realise the team you are now responsible for just doesn’t work – at all?

strategically align an existing team

No matter how experienced you are in the industry, one of the biggest challenges you will face when you take on a new position, either within the same company or with a new company altogether, is taking on an existing team.

These teams will have a dynamic and with that a status quo, so as a result it can be tough to integrate in and make leadership decisions while you are still trying to figure who is who and what the hell is going on.

If you have ever been in this situation, or you are currently in it you know how it goes. Everything is great for the first few days, but by the end of week one it becomes very obvious that there is a team problem. Understaffed, overstaffed, under skilled or a really poor team culture, whatever the issue, it will rise to the surface very quickly, and unless it’s dealt with it will just sit there – festering. So what do you do?

From the extensive work TrinityP3 has done with marketing teams over the years we regularly see variations of the same three approaches taken by marketing managers to address the issues they are facing (or not), each with vastly different results.

The ‘nothing to see here’ approach

Also known as the ostrich method, this approach involves ignoring the issues at hand and pretending there is ‘nothing to see here’, while deep down secretly hoping the issues work themselves out before anyone else notices.

The problem is, everyone has already noticed and they were hoping you would be the one to sort it all out (they just forgot to mention it during the interview process). Doomed to fail in the long run, the biggest issue with this approach is that these problems will continue to impact both the teams and your performance, meaning you are setting yourself up to fail in your new role from the get-go.

The ‘rearrange the deckchairs on the titanic’ approach

Whilst the origin of this phrase is up for debate, the fact that this is one of the most ineffective approaches you can take is not. For fear of upsetting the team or because the company won’t allow you to move anyone on (yes, I have worked there), rearranging the deckchairs means you feverishly scramble around inventing a new team layout with exactly the same people. Continue reading “How to strategically align an existing team”

Posted in marketing process optimisation, strategic management | Leave a comment

10 key issues to consider when building your marketing technology stack

This post is by Anton Buchner, a senior consultant with TrinityP3. Anton is one of Australia’s leaders in data-driven marketing. Helping navigate through the bells, whistles and hype to identify genuine marketing value when it comes to technology, digital activity, and the resulting data footprint.

Marketing technology Stack

And the winner of Chiefmartec’s 2nd ‘Stackies’ Award, for the best in class Marketing Tech Stack is…

Datapipe – for organising its marketing tech stack around the buyer’s journey.

Datapipe’s tech stack also clusters components around different marketing functions (e.g. Search Engine Optimisation, paid search, conversion, remarketing, email marketing, CRM etc), plus highlights the data flows between each technology.

They applied a simple question:

“how does a particular software technology solution move buyers forward?”

Datapipe

Before I go on, just to make sure that we’re all on the same page, what is a marketing tech stack?

I like this definition, “a grouping of technologies that marketers leverage to conduct and improve their marketing activities.”

Or if you want to get a little more technical it’s a mix of software products and programming languages that allow the consumer’s side (i.e. front end – browsers, smart phones etc) to link to a business’ server side (i.e. back end – operating system, server, database etc). I’ll refrain from getting too technical, as I know my limit, and will therefore focus on three key words from the first definition.

“Grouping”. Whilst the digital technology trends are changing all the time, it is important to see your solution as a group (or ecosystem). Hence you need to decide WHY they are in the group and HOW they work together within the group.

“Leverage”. Whilst an overused marketing buzzword, it is important to remember that marketing technologies are to be used for advantage, not just because they are the latest shiny toys.

“Improve”. And most importantly in the first definition, marketing technologies need to improve upon current marketing activity. So when considering your tech stack you need to be clear on what your current state is, and how you are going to measure improved marketing performance with new technologies in place. It also means that you need to consider external improvement (ie: advertising targeting technology, content management systems, social management, experience optimization, etc), plus internal team improvement (ie: customer tracking systems, marketing operations, campaign performance, analysis and insight etc).

Having had many clients ask me about their marketing tech stack and data ecosystem, I have decided to write this post on some of the key issues to consider when building, or evolving a marketing tech stack.

It’s not an easy topic as according to Radius.com, the average marketing team has more than 17 tools in their stack. And according to Scott Brinker at Chiefmartech, in 2015 there were 1,876 tech vendors in 43 categories. So, as you’re probably experiencing, it’s a minefield out there.

To quote Emmanuel Negri, Solutions Architect at Canon Australia, “the amount of possibilities can often generate a state of paralysis when it comes to defining exactly what you want to achieve.”

So given the confusion and complexity here are 10 points to help make sense of it all. Continue reading “10 key issues to consider when building your marketing technology stack”

Posted in data & direct marketing, marketing process optimisation, social media & digital marketing | Leave a comment

You want transparency from your media agency? Look at your own behaviour first

This post is by David Angell, General Manager of the fast growing Melbourne market and National Head of Media. David has extensive commercial and media experience gained through a fifteen year career in media agencies, which he uses to help drive optimal results for TrinityP3 clients.
Transparency from media agency

The most hated man in media? Or simply the most honest?

I read with interest the recent interview with Jon Mandelthe ex-Mediacom CEO credited, via some forthright conference commentary about his experiences, with playing a major role in sparking the global media agency transparency debate that has dominated much of the industry agenda over the last 12-24 months.  

The frothy headline asks if he is ‘the most hated man in advertising’. I can’t give you an answer to that without doing a survey of some kind, but I do suggest that if nothing else, he’s being pretty direct and honest in his opinions (albeit ten years after actually running a media agency).

What’s all the fuss about?

All the key topics were covered in Jon Mandels’s interview; the role of AVBs, the US-based investigation into agency practices, the newly released ISBA guideline contract out of the UK, the legal action allegedly taken by some agencies to protect their secrets, and the drain of distrust, complaint and counter-complaint around which media agencies, marketers and commentators are viciously circling.

The importance of an agnostic approach to media strategy

Much of the debate is – well, debatable. But the one thread in the whole piece that surely no-one can disagree with relates to agnostic media strategy. Continue reading “You want transparency from your media agency? Look at your own behaviour first”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, media planning & buying | Leave a comment

How Value Based Compensation can support Zero Based Budgeting

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

We are increasingly enjoying discussions with a range of advertisers and marketers on the implementation of Zero Based Budgeting (ZBB) to the marketing function in their organisations. Unilever recently announced publicly that they were adopting ZBB for their global marketing teams and many other major advertisers are either already down that path or following suit.

Value based compensation

The reaction from many marketers we have discussed ZBB with is interesting as there appears to be a lot of skepticism about the reason for the introduction of ZBB into marketing and the impact it will have. But the fact is that this trend also means that increasingly more organisations are considering changing their agency compensation model to better align the agency fee to the intention of the ZBB approach.

What is Zero Based Budgeting (ZBB)?

Unlike the top down budgeting that many organisations and many marketing functions currently use, ZBB is a bottom up approach. This means instead of taking last year’s marketing budget and adjusting it to either inflation, or scope of marketing plan or the like, you commence at zero and build the the budget based on and aligned to the tasks required, but more specifically the results required.

ZBB is about creating a budget based on investment and projected return on that investment delivered. It requires the marketers to link the budget invest to the return on that investment or the delivery of a specific result or outcome from the inputs and outputs of the marketing plan.

The principle of ZBB is about investing in the value of the outcome, but the current agency compensation models, the resource-based models, typically hourly rate and retainers, are based on costs. The cost paid for the agency outputs, is based on the cost of the inputs and not to the value of the investment or the value of the output or outcome.

To deliver a specific output, required by the marketing strategy, designed to deliver a specific outcome or result, the cost is the same, if the value of the outcome is a dollar or millions of dollars.

What is Value Based Compensation (VBC)?

Continue reading “How Value Based Compensation can support Zero Based Budgeting”

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Sustainability and the hidden cost of your media inefficiency

This post is by Chris Sewell, Business Director at TrinityP3. Chris has a wide ranging knowledge of all areas of the advertising and procurement world and specialises in helping companies understand the environmental impact of their marketing spend. 

For many years, CPM (‘Cost Per Mille’, otherwise known as cost per thousand as a dollar value) has been a staple metric used to calculate media efficiency and develop media plans.

That’s all well and good. But as we move into a carbon constrained future, there’s a growing argument which holds that the carbon cost of communication will become a much more important consideration in media planning and buying.

Sustainability and media

At first glance this hidden cost might not seem significant. But as the media market fragments, the carbon footprint of buying media inexorably grows.

Take television as an example. As the number of available channels grows (7, 9, 10, the affiliated ‘free to air digital’ channels within those networks, as well as the multifarious channel offering on Foxtel), so the audience fragments, and therefore becomes harder to reach.

This means that TV buyers, as time goes on, need to buy more individual TV spots to hit the same number of people.

Add to this the requirement of multiple frequency (the number of times an individual sees a commercial) often inherent in a low-CPM strategy, and suddenly, the amount of times that your TV ad needs to run has significantly increased, even in the last five years.

Oh, and did I mention multi-screen strategies? Yes, the fragmentation of TV extends beyond… well, beyond TV. People are watching on their mobile devices, on their computers, on their tablets… all of which offers more options for the media buyer to serve an advertisement.

And this is just TV related video content, you understand. I haven’t even touched on the broader internet yet.

So, in summary, the requirement for low CPM, coupled with the intense fragmentation of the landscape, ultimately causes a big bump in the carbon emissions caused by the same advertisement being placed many more times that it ever has been before.

Making the Right Strategic Choice

Let’s take a look at some of the choices being made here – not just from a carbon emissions perspective, but from a simple strategic viewpoint. Continue reading “Sustainability and the hidden cost of your media inefficiency”

Posted in green marketing & sustainability, industry news & trends, media planning & buying, social media & digital marketing | Leave a comment

The critical mission to save the Marketing Director

Bill Merrick has more than 20 years experience in international business, gained in marketing, advertising and PR – from packaged goods to infrastructure. He is now, from London, partnering with Darren Woolley to launch TrinityP3 UK – to bring all of their combined experience and insight to clients in Europe.

Life and lessons go hand in hand

When I left Ogilvy a little while back, I had been in sales, marketing, advertising and communications for nearly 40 years.

I had lived and worked in 10 cities in 7 countries on 3 continents.

I’ve had the luck to work with some great companies, some brilliant colleagues, and some very enlightened clients.

Marketing Director

 

But I’ve also had the misfortune to work on some brands that no longer exist and with some clients who probably shouldn’t. Experience has taught me that one needs to see a lot of bad to be good in the marketing and advertising business.

Along the way, there are of course, lessons to be learnt.

The first one counted the most to me. This is a business with a very specific focus – selling things where the return should be greater than the investment.

The second is to learn to do this each time, more efficiently and more effectively, so that you get better.

And the third, is that to get better and better, you have to be very, very specific about who you have to talk to – and where and how to talk with them – each time you want sell something different to someone else.

So in 40 years I learnt that marketing and then advertising work on these questions:

Who do you want to talk to?

What do you want to say?

How and where will you say it to them?

And what do you want them to do as a result?

Simple. Not really….

Continue reading “The critical mission to save the Marketing Director”

Posted in agency remuneration / compensation, agency search & selection, marketing process optimisation, return on investment, social media & digital marketing | Leave a comment

Is Media Transparency desirable only until it costs advertisers money?

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

There is a lot of discussion regarding the importance of transparency in media, especially in regards to digital media and programmatic buying. The discussions in the US between the advertisers, represented by the ANA, and the agencies, represented by the 4As, led to open public disagreements and calls for apologies.

Media Transparency

The same discussions are being held between their various counterparts around the world. Even in Australia the Media Federation representing the media agencies developed and provided guidelines on transparency with their advertisers counterpart the AANA.

But it is interesting having discussions with advertisers on an individual basis regarding media transparency. It appears that on an individual basis the attitude is more aligned with the famous ad man Bill Bernbach “It’s not a principle until it costs you money.”

The lack of transparency

Transparency in digital advertising has two main considerations.

The first is view-ability, as Comscore estimates that more than half of the ads served are not actually seen by the audience, either because they are served down the page or they are served to a ‘bot’ designed to drive up the traffic count for a particular site.

The second is the financial cost of the ad being served, which is complicated by the number of companies involved in the process which the WFA believes contributes to up to 60% of the advertiser’s digital media budget value being eroded through kick-backs, commissions and the like.

The industry will tell you that is due to the technical complexity and the relative early maturity of the industry. The large number of stakeholders involved in the process will most likely consolidate with time, until then the digital media ‘ecosystem’ will continue to be clouded and murky.

Both of these issues are playing heavily in the discussions on transparency but equally controversial are the agency margins on these transactions.

The lack of agency transparency

At last year’s ANA Advertising Financial Management Conference in Phoenix, Arizona (a conference that we have attended every year for the past five years) the Chairman of GroupM, Irwin Gotlieb was clear in his statement that they were transparent in their lack of transparency when it comes to their digital media arrangements.

While this could be seen as good politics, it fed the concerns of advertisers that all agencies are significantly profiting from this lack of transparency. This is fed by reports that some of the holding companies are showing healthier profits, fed by the increased margins from their trading desks and programmatic buying services.

These services are often set up as separate companies to the media agencies and as such become third party suppliers to the media agency. Therefore, the contract between the advertiser and the media agency does not cover this relationship, except perhaps to simply require that any costs from the third party are passed on at net to the advertiser.

Therefore if the contract with the agency defines the remuneration model, such as margins and fees, these do not apply to the programmatic buying / trading desk facility as a third party subcontractor or supplier.

This means that while the media agency may operate on extremely slim margins, making them a very attractive financial proposition, they are able to profit through these third party transactions with no transparency for the advertiser.

The choices for advertisers

Continue reading “Is Media Transparency desirable only until it costs advertisers money?”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, media planning & buying, social media & digital marketing | Leave a comment