Strategic Marketing Management | Advertising And Marketing |Agency Solutions

Tips on how to bridge the digital advertising divide

Posted on May 16, 2012 by Stephan Argent

This is a guest post by Stephan Argent - a member of the Marketing FIRST Forum, the global consulting collective co-founded by TrinityP3

When it comes to digital and “traditional” media, clients and agencies seem to have come to a chasm that can best be described as a “Digital Divide”. It’s not good for clients. It’s not good for agencies. And worst of all, it’s not good for consumers.

What’s the digital divide?

Some years ago, we had two types of communication described as “above” and “below” the line. Then along came the thing called “digital” and we stuck our web designers in a corner and let them build websites and banners thinking they wouldn’t do any real damage. After all, it was just a website, right?

But bit by bit, the bicycle and tattoo department (a quote from a former boss, by the way) started to create a dialogue with the consumer. Consumers were able to buy stuff. Send feedback. Ask questions. Express opinions. Choose. All kinds of typical marketing activities were now in near reach of digital resources.

And so the divide between “traditional” marketing and media, and digital came into view.

For now, let’s call it the D-M-Z or Digital Media Zone.

So in the D-M-Z we’ve got agencies scrambling to deliver online strategies, services, campaigns and solutions and clients screaming for strategies, solutions and campaign executions that address the full 360 perspective of their businesses. At the same time, client based C suites are questioning their organization’s very DNA and trying to figure out whether or how to integrate marketing and digital initiatives, and whether the thing called Facebook belongs in PR or Marketing.

To be honest, it’s a shambles.
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Posted in agency solutions, media planning & buying, social media & digital marketing | Tagged agency solutions, argedia, Digital media, digital media zone, marketing communications, marketing first forum, social media, stephan argent, traditional media, TrinityP3 | Leave a comment

The world’s worst advertising agency scope of work defined by a marketer

Posted on May 14, 2012 by Darren Woolley

I know that no one except lawyers, and some procurement people enjoy reading contracts, but in fact contracts are interesting and important documents as they define the terms and conditions of a relationship between two parties.

My legal friends tell me that most litigation is due to the variations of interpretation of the language within the contracts and disagreement over the meaning of those interpretations and the consequences and implications.

Therefore imagine my surprise and horror when asked to review a current agency contract worth several million dollars which defined the scope of work of the agency as:

“To provide the strategic, creative and production implementation to fulfil the advertising requirements of the <company> as directed by the Marketing Department”.

While it is short and simple and could be seen as an excellent description of the services the agency is to provide, it is no “scope of work”.

In fact it is a particularly bad scope of work.

Why?

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Posted in agency remuneration / compensation, agency search & selection, agency solutions | Tagged Advertising agency, agency compensation, agency contract, agency remuneration, agency requirements, agency solutions, Darren Woolley, scope of work, strategic management, TrinityP3 | Leave a comment

ANA Marketing Financial Management Conference, Boca Raton, Florida – Final Day

Posted on May 11, 2012 by Darren Woolley

The final day of the conference closed with a focus on the challenges shared by the CFO and the CMO, courtesy of IBM, the challenges of managing global marketing services and the on-going challenges of agency remuneration, or as the Americans insist on saying compensation.

The ANA Marketing Financial Management Conference 2012 was held at the Boca Raton Beach Resort & Spa, Boca Raton, Florida

The challenges of the CFO and the CMO

Ron Kline @rfk5 from IBM shared the findings of their recent 2011 IBM Global CMO Study, which I had seen several times before. More interesting was the paralells he pulled from the 2010 IBM Global CFO study.

Both CMO and CFO are taking a broader role in enterprise. The CFO is increasingly advising on all aspects of the business strategy and yet increasing feels under equipped in this role. Likewise the CMO is dealing with the broader remit caused by technology and the increasing channels, the fragmentation of audiences and the pressure for marketing accountability and ROI.

Both also suffer from the fact that organisations appear to rarely invest in the technology to provide up to date, real time data and analytics, with both in most cases relying on manual processes to provide this information. Clearly a huge insight for a technology solutions provider like IBM.

But from the CMO perspective, they are looking to answer this challenge by looking externally for help and assistance in addressing this shortfall. They just need to convince the CFO that the cost is justified and here enters procurement.

The challenges of managing global marketing services

Alan Rutherford, Global President of the IAA and chairman of consultancy group Axiology used the first part of his presentation pitching how to select a consultant.

But he made the point that in the increasingly diverse and complex marketing environment, with multiple cultural and political agendas, multiplying media channels, increased levels of governance and accountability it is important to ensure that the quality and professionalism of the consultant matches or exceeds the relationships and transactions they are assessing.
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Posted in agency remuneration / compensation, agency solutions, industry news & trends | Tagged agency compensation, agency remuneration, agency solutions, ana marketing, Darren Woolley, david beals, Financial Management, ibm, ron kline, TrinityP3, value based compensation | Leave a comment

ANA Marketing Financial Management Conference, Boca Raton, Florida – Day 3

Posted on May 10, 2012 by Darren Woolley

The focus is on profitability and margins not costs and price today with a view of the industry from Wall Street by Brian Wieser, Pivotal Research and a panel discussion on Media Trading Desks and a discussion on Media Audits facilitated by the Media Audit Council.

Media auditing moves from a stick to a carrot as advertisers get smarter

Wall Street

It appears that from a Wall Street perspective there is no agency income crisis with most of the holding companies recording record profits in excess of the market growth. And from an investors point of view this makes the holding companies generally good investments, because Wall Street believes that no matter what the price the agencies are able to maintain and grow margins.

After all Marketing should and is focused on cost or price reduction, not the current industry obsession with the profit margins of the suppliers.

While agencies continue to find ways of meeting marketer expectations on quality and price and at the same time maintain and improve margins the industry is performing well from an investment perspective.

There are different perceptions of the various listed holding companies:

WPP: A great futurist machine
Interpublic: A ticking time bomb
Omnicom: Safest investment choice

Media Trading Desks

There is a lot of discussion about the lack of transparency in regards to media trading desks and this has lead to marketer and procurement suspicion about the margins being generated for the agency networks, especially as many of these trading desks operate at the holding company level.

The panel were explaining that if the focus moves from the business model to the benefits, marketers are in a better position using the Trading Desks because they deliver to marketers greater efficiency in buying, data analytics and insights on individual audiences, and overall better campaign performance.
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Posted in agency remuneration / compensation, agency search & selection, agency solutions, industry news & trends, marketing process optimisation, media planning & buying, social media & digital marketing | Tagged agency compensation, agency remuneration, ana marketing, brian wieser, Darren Woolley, Financial Management, holding companies, media auditing, media audits, media trading desks, TrinityP3 | Leave a comment

ANA Marketing Financial Management Conference, Boca Raton, Florida – Day 2

Posted on May 9, 2012 by Darren Woolley

Global growth will continue to be patchy, so how do we maximise the opportunities.

Today was about obtaining a view of the world from four very different perspectives:

The economic perspective – John Swadener, PwC & Larry Cristini, Eurasia Group
The CPO perspective – Hans Melotte, Johnson & Johnson
The CMO perspective - Paul Matsen, Cleveland Clinic
The Agency CEO perspective – Martin Sorrell, WPP

A deficit of economists talk on the patchy global economic performance saying it is here to stay for at least the next 5 years

The economists laid the base of awareness that while there is growth in the global markets, this growth is patchy and unpredictable, with surprising figures showing that markets like the Middle East and Turkey are positioned for growth along with the traditional BRIC markets. This was based on population size and profile, government policy and regulations and media, technology and entertainment spend.

So against this background the next three speakers had more in common than differences:

All talked about the importance of optimising growth and yield over shorter term cost cutting
All reiterated the importance of metrics in not just measuring success, but to optimise performance
All spoke about the importance of integration, not just across marketing strategy, but within teams with finance, procurement and marketing needing to be aligned and then aligning their agencies and suppliers.

Interestingly all mentioned that to achieve this they recommended moving back to consolidating the number of agencies as a way of achieving this alignment and the associated collaboration.
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Posted in agency remuneration / compensation, agency search & selection, agency solutions, industry news & trends, marketing process optimisation | Tagged agency consolidation, ana marketing, Darren Woolley, Financial Management, hans melotte, john swadener, larry cristini, managing multiple agencies, marketing procurement, Marketing strategy, martin sorrell, paul matsen, strategic alignment, TrinityP3 | Leave a comment

ANA Marketing Financial Management Conference, Boca Raton, Florida – Day 1

Posted on May 8, 2012 by Darren Woolley

The pre-conference session kicked off with a presentation on the “maturation of marketing procurement” detailed in a session presented by Steve Lightfoot from the WFA and Paul Duxbury from SPIRE Worldwide.

Paul Duxbury SPIRE Worldwide & Steve Lightfoot WFA on measuring and managing marketing procurement

Through research and case studies developed between the WFA and SPIRE they have identified four stages of Procurement developing in the marketing category.

Balanced Traditional
Success Through External Partnerships
Seamless Integration
Balanced Emerging

The stage a direct procurement team sits within an organisation depends on the two main critial success factors:

Sourcing capabilities
Organisational readiness

With four main performance drivers and more than 40 sub-drivers, they are able to identify the developmental maturation of the marketing procurement function within an organisation and compare this with the ideal and industry best practice.

The bottom line of the presentation is that in the marketing category, direct procurement is becoming more sophisticated and more developed, especially amongst the larger global advertisers. But in the process they are moving from the traditional balance of cost reduction to a more balanced approach across the four performance pillars being:

Integrated streamlined marketing process
Money / budget management
Supplier and roster selection and management
Continuous learning and improvement

Interesting findings from the research were:

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Posted in agency remuneration / compensation, agency search & selection, agency solutions, industry news & trends, marketing process optimisation | Tagged agency remuneration, agency solutions, ana marketing, Darren Woolley, direct procurement, Financial Management, marketing procurement, spire worldwide, strategic management, TrinityP3, wfa | Leave a comment

Is your advertising agency a supplier or a partner?

Posted on May 7, 2012 by Darren Woolley

While many people in the industry talk about being in partnership with their agency or with their client, the majority of remuneration models do not support this position.

Many advertisers and their procurement executives take a buyer/supplier view of these relationships, while the agencies often approach the relationship talking about a partnership.

But what is the difference? Which of these is correct? And what impact does this have on remuneration?

supplier / n. one who furnishes with what is lacking or required, to satisfy a need or demand

This broad description captures the relationship between advertisers and their agencies, where the client requires the provision of creative communication ideas developed for their specific needs and then executed to an agreed plan. Just because this service is customised to the needs of the client does not make the agency a partner.

partner / n. : Law. one associated with another or others as principal or contributor in a business, usu. sharing its risks and profits.

The key point here is they share the risks and the profits. Lets look at some typical remuneration models in the market and determine if they reflect a supplier relationship or partnership.

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Posted in agency remuneration / compensation, agency solutions, strategic management | Tagged advertising agencies, agency compensation, agency remuneration, agency solutions, Darren Woolley, performance based remuneration, remuneration models, strategic management, supplier relationship, TrinityP3, value based remuneration | Leave a comment

The new media buying landscape requires marketers to outperform the market to benefit

Posted on May 4, 2012 by Darren Woolley

There is the joke about two guys on an African safari. Suddenly a huge lion jumps into the centre of the camp and the two start running away from the lion.

One of the guys stops and starts to put on his running shoes.

His incredulous friend asks “What are you doing”.

He replies “I want to put on my Nikes”.

His friend shouts to him “There is no way you can outrun a lion”.

He replies with a grin, “I don’t have to outrun the lion, I just have to outrun you”.

The same philosophy is required to win in the current media trading situation marketers now find themselves in with a soft media market. It is well reported that marketers are concerned about the lack of transparency in media trading with media agencies setting up trading desks to trade media inventory.

Much of this inventory appears to be “bonus” inventory provided by media owners at no cost to the agency networks as part of the sales incentive used by media owners to secure share of market and share of advertiser budget.

While most discussion is about how to stop this practice, this approach is flawed as the situation has been created by a short term view taken by most advertisers to reduce the agency-cost of their media, with the media agencies compliant in this endeavour.

And the only people that seem to be profiting from this strategy are the industry auditors who get paid to go looking for “value bank” of “bonus” inventory and end up only finding refunds due to poor agency accounting practices.

Instead of begrudging the media agencies finding a way of profiting from the soft media market, the focus should be on how to benefit from this “value bank” of media inventory to a greater extent than your competitors and at the same time effectively reduce your media costs.

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Posted in agency remuneration / compensation, agency solutions, media planning & buying, strategic management | Tagged agency compensation, agency remuneration, agency solutions, Darren Woolley, marketing and advertising, media agencies, media buying, media inventory, media market, media planning, strategic management, TrinityP3 | 2 Comments

Paris AdForum Summit April 2012 – The added value of communication agencies?

Posted on May 2, 2012 by Florence Garnier

This is a guest post by Florence Garnier - a member of the Marketing FIRST Forum, the global consulting collective co-founded by TrinityP3

“We are operating in one of the most competitive sectors of all,” says Maurice Lévy, CEO of Publicis Holding group, to worldwide agency relationship consultants on third day of the Paris Ad Forum summit. “Competitive, because agencies are fighting one against the other to win new business, and secondly because once they have won a budget, their task is to make their client win against its competitors, and lastly, because this talent industry is all about egos…and thus competition”

In uncertain economic times, marketers are trying to find communication solutions within the limit of their organizations to implement more reactive and interactive strategies to meet consumer’s needs. With a strong time and cost pressure some of them are questioning the added value of communication agencies…

Make or buy?

It is often said that agencies “sell ideas, orchestrated by talents, and executed on different communication channels” …

“If an agency can be replaced by a senior art Director, it’s not an agency anymore” declares Marco Tinelli, CEO of fast growing international digital agency Fullsix. Because some agencies are not perceived as bringing enough added value, some advertisers (retail, financial services…) tend to internalize some communication functions such as production of creative assets or community management. For those who go along that route without giving it a second thought, there is a high risk to consider communication a commodity, thus loosing the brand heart and spirit. Owner of a strong emotional territory, the luxury sector is known to nurture some defiance of the communication agencies…
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Posted in agency remuneration / compensation, agency solutions, marketing process optimisation, strategic management | Tagged adforum summit, agency remuneration, communication agencies, digital agency, florence garnier, fullsix, marketing first forum, paris, Publicis, strategic management, TrinityP3 | Leave a comment

The lack of transparency in media agencies is due to the agency remuneration models used

Posted on April 30, 2012 by Darren Woolley

While the statement that the industry is on the “cusp of a meltdown” is melodramatic, the current media agency remuneration model is unsustainable. But many in the industry have known this for a number of years.

It is interesting that in the April 20, 2012 AdNews report, Simon Rutherford lay the responsibility with the media agency management and their “greed and egos”, but it is the buyers of these services, the marketers, that are equally to blame.

Demands for lower cost from media agencies, driven by procurement, has seen media agency fees drop globally to an average of around 3% of media spend according to the World Federation of Advertisers (WFA) in 2011. The downward market pressure has achieved the result desired by marketers, but at what cost?

The current situation is predictable as in the face of falling revenue and profit, it is natural for agencies, like all companies to look for new or additional sources of revenue. Here enters the media owners, the third party in this relationship and one who have always been a key player in the relationship.

While media owners play both the marketer and the agencies equally, it should not be forgotten that the media agency was originally a construct of the media owners. Rather than dealing with thousands of advertisers, it was certainly easier forging relationships with a smaller number of “agents” in relationship terms dictated by the accreditation system that ensured the media owners where paid.

Today we have the marketers offering 3% of their total media spend as “compensation” for the agencies’ services, while in many cases the media owner has budgeted 20% or even as high as 30% of the media spend as a sales “incentive”.

In the past this was the 10% – 20% declared commissions, depending on the market and media category and the additional added value. Today this is now euphemistically called “non-media income” and can include anything from commitments for no-cost media inventory to payments for “services”.

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