Strategic Marketing Management | Advertising And Marketing |Agency Solutions

When marketing pitch consultants get agency remuneration wrong

Posted on April 2, 2012 by Darren Woolley

Had a phone call the other day from an agency CEO. It seems that they are in negotiations with a potential client and another consultant (a competitor) is managing the process.

The consultant has proposed annual billable hours of 2000 hours per year. The agency queried the consultant and said that they believed that the industry standard in Australia was 1600 – 1650 hours a year.

The consultant replied, in front of the client: “…we didn’t realise staff at your agency only worked part time…” Ouch!

Now if our competitor had downloaded our free business iPhone app the TrinityP3 Resource Rate Calculator they would be able to see their mistake.

Billable hours is the number of hours a full time FTE can work in a particular market. This is calculated based on:

Number of hours worked per week – 37.5 hours is a standard in Australia, but can also be up to 40 hours.
Number of public holidays per year – Including State and National holidays this is ten per year
Number of days annual leave per year – 4 weeks leave or 20 days is the standard
Number of days sick leave per year – 10 days sick leave is allowed. It may be sometimes less, but generally 10 days.
Of course there is also a percentage of time given to staff training, professional development and agency administration etc, but lets leave this at zero.

The TrinityP3 Resource Rate Calculator shows that this adds up to 1650 hours per year.

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Posted in agency remuneration / compensation, agency search & selection, industry news & trends, iPhone business app, resource rate calculator | Tagged agency remuneration, agency search, agency selection, agency solutions, billable hours, Darren Woolley, iphone business app, marketing pitch, pitch consultants, resource rate, TrinityP3 | Leave a comment

Strategically aligning your media suppliers to your overall communications requirements

Posted on March 30, 2012 by Darren Woolley

Recently, one of Australia’s larger media agencies announced its intention to revamp its management structure with the objective of expanding its strategic planning expertise and building some ‘centres of excellence’ around the various and ever expanding media disciplines.

This highlights the very broad base of disciplines now encompassed by the term ‘Media Agency’ and the complex matrix of specialities, specialists and players now plying their trades in the market.

Generalists or Generally Specialists?  

Most of the bigger media agencies have developed varying levels of expertise and silos of specialisation to suit the changing face of the market. Research, Analytics, Channel Planning, Technology, Consumer Insights, Sponsorship, Online, are just some of the relatively newer areas of proficiency and sit alongside developments of some of the older functions like ‘Strategic Planner’, ‘Trading Director’ or ‘Business Manager’. One could be forgiven for assuming that some of the latter are merely re-badged versions of more traditional roles.

Breaking It Down  

Along with internal specialisation, there are the specialist ‘consultancies’ that concentrate in very specific disciplines and work alongside the more traditional media agency structure.   The most obvious perhaps is the media strategic and analytics agencies that sit apart from the implementation and buying agency in order to provide their clients with advice ‘untainted’ by any suggestion that they are not ‘media neutral’.

They are ‘arms length’ from the media and their remuneration is in no way dependent on media channel selection so they can claim the high ground in this area. This view conveniently ignores the fact that many ‘full service’ media agencies are now also remunerated in such a way as to make the media selection process totally separate from the way they make their money.
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Posted in agency solutions, marketing process optimisation, media planning & buying, social media & digital marketing, strategic management | Tagged benchmarking agencies, Darren Woolley, marketing optimisation, media buying, media planning, strategic alignment, strategic management, strategic planning, supplier alignment, TrinityP3 | Leave a comment

Why your low advertising print cost does not necessarily mean great value

Posted on March 28, 2012 by Darren Woolley

When talking with many procurement and sourcing professionals about marketing procurement, one the the first areas they review is Business Printing, which includes advertising and marketing related printing. It is seen as the low hanging fruit and an area for significant cost reductions.

The fact is that the print industry has undergone many years of competitive cost reduction with advertisers negotiating low prices on their printing costs. The problem is that most people associate printing prices with the cost of putting ink (or toner) on paper. Yet this is only a fraction of the real cost of business printing to any organization.

The cost is not in the print

The most tangible cost associated with printing is the cost from the printer. It often appears in one lump sum making it visible and often easy to benchmark and compare. But consider that the print process does not begin and end with the printer, but commences when you identify the need to communicate using print, and continues beyond when that printed item is delivered to the intended target audience.

In 1997, CAP Ventures looked at the costs associated with business print communications in the USA and identified that less than 15% of the total print cost is spent on placing ink on paper.
Continue reading “Why your low advertising print cost does not necessarily mean great value”

Posted in agency solutions, industry news & trends, interesting observations, print production | Tagged advertising and marketing, advertising print cost, agency solutions, business printing, cost benchmarking, Darren Woolley, marketing procurement, print production, strategic management, TrinityP3 | Leave a comment

Why at a time of massive marketing change you need to consider alternative strategies

Posted on March 26, 2012 by Darren Woolley

Every marketer is coming to grips with the current rapid advances in technology and associated social changes. But does the statement, “We’ve always done it that way” ring any bells?

Here is a story about how this philosophy or approach can impact even the most basic or the most sophisticated strategies.

The US standard railroad gauge (distance between the rails) is 4 feet, 8.5 inches.  That’s an exceedingly odd number.

Why was that gauge used?

Because that’s the way they built them in England, and English expatriates built the US Railroads.

Why did the English build them like that?

Because the first rail lines were built by the same people who built the pre-railroad  tramways, and that’s the gauge they used.

Why did “they” use that gauge then?

Because the people who built the tramways used the same jigs and tools that they used for building wagons, which used that wheel spacing.

Okay! Why did the wagons have that particular odd wheel spacing?

Well, if they tried to use any other spacing, the wagon wheels would break on some of the old, long distance roads in England, because that’s the spacing of the wheel ruts.

So who built those old rutted roads?

Imperial Rome built the first long distance roads in Europe (and England) for their legions. The roads have been used ever since.

And the ruts in the roads?

Roman war chariots formed the initial ruts, which everyone else had to match for fear of destroying their wagon wheels. Since the chariots were made for Imperial Rome, they were all alike in the matter of wheel spacing. The United States standard railroad gauge of 4 feet, 8.5 inches is derived from the original specifications for an Imperial Roman war chariot. And bureaucracies live forever.

So the next time you are handed a specification and wonder what horse’s ass came up with it, you may be exactly right, because the Imperial Roman army chariots were made just wide enough to accommodate the back ends of two war horses.

Now the twist to the story

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Posted in interesting observations, strategic management | Tagged Darren Woolley, marketing change, marketing process, marketing strategies, process optimisation, strategic management, strategic management of marketing, TrinityP3 | Leave a comment

How to calculate the agency head hours required to deliver your scope of work

Posted on March 23, 2012 by Darren Woolley

Many remuneration agreements, be they project fees or retainers, are based on the head hour resources required to undertake the task multiplied by an overhead and profit factor.

But one of the key issues is setting a realistic scope of work and then guessing, predicting or even better, accurately calculating the human resources required.

We developed this methodology and refined the process to create the TrinityP3 Scope Monitor and Scope Calculator. This has been picked by TBWA and developed specifically for their clients in a model they call the Scope Manager.

Setting the baseline

The most effective model for developing resources against a quantified scope of work is setting the previous year as the baseline. The number of projects for that year and the number and type of head hours and associated costs are a known quantity. Accepting that the head hours are correct, this becomes the baseline from which the following years’ scope of work is compared.

Setting the scope of work

Predicting the advertising activity for some advertisers is easy and part of their normal budget planning. But for other advertisers it is much more difficult, with the need to react to the market place or difficult trading conditions making predictions for the coming year largely inaccurate.

If you cannot accurately set the scope of work then you may be locked into a retainer that is too high or too low. Either way it becomes expensive with you paying too much or not paying enough to maintain the relationship with the agency.
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Posted in agency remuneration / compensation, marketing process optimisation, media planning & buying, print production, social media & digital marketing, television & electronic production | Tagged agency compensation, agency remuneration, agency solutions, Darren Woolley, head hours, media buying, media planning, process optimisation, scope of work, strategic management, TrinityP3 | Leave a comment

Adding procurement and purchasing rigour into television advertising production

Posted on March 21, 2012 by Darren Woolley

When the agency present “competitive” estimates for the latest television production, are you presented with the three quotes on one page, with the three costs all within 5% to 10% of each other?

Is this familiar?

Does this mean that the competitive tendering process is alive and well, or is it a construct to deliver the appearance of an open tender?

To answer this question, lets look at the underlying influences on the procurement procedure.

The agency producer represents the agency creatives  

The agency television producer is responsible for managing the procurement of the film company. But in almost every agency the agency producer reports directly to the creative director, not the account manager or the managing director or the finance director.

The ultimate measure of the agency producer’s ability is ensuring the creative department is happy by delivering the creative outcome, and this usually means the director they want.

The selection of film directors  

Why is a particular director / film company the preferred supplier? In most cases the agency creative team have reviewed many directors’ reels and concluded that this director is the right one for this job.

In some cases it is because the creative team or creative director want to work with a particular hot director, or even perhaps because the agency’s art director’s sister is married to one of the film company’s producers.

In a few isolated cases it is because the film company rebates 5% (more or less) back to the agency. But without transparency, one can never really be sure what the real reason is.

Continue reading “Adding procurement and purchasing rigour into television advertising production”

Posted in agency remuneration / compensation, agency solutions, strategic management, television & electronic production | Tagged agency creatives, agency producer, agency solutions, Darren Woolley, Procurement, strategic management, television advertising production, Television production, tender process, TrinityP3, tv production | Leave a comment

Creativity is a skill and not magic, genetically inherited, or a blessing from God

Posted on March 19, 2012 by Darren Woolley

Marketers will often tell me that they do not care where the big idea comes from. Well it seems it truly can come from anywhere. My colleague and the co-founder of the Marketing FIRST Forum, Dan Hestbaek sent me this article from The Wall Street Journal by Jonah Lehrer titled “How to be creative”

It is well worth reading as it explains the skills that scientists have identified everyone has to be creative.

I found particularly interesting the 10 creative “hacks” as Jonah called them, which are the ways to help unleash your creativity. (How many of these do you see in your agency creative department? Or more importantly how many do you not see in many marketing departments?)

1. Color Me Blue

A 2009 study found that subjects solved twice as many insight puzzles when surrounded by the color blue, since it leads to more relaxed and associative thinking. Red, on other hand, makes people more alert and aware, so it is a better backdrop for solving analytic problems.

2. Get Groggy

According to a study published last month, people at their least alert time of day—think of a night person early in the morning—performed far better on various creative puzzles, sometimes improving their success rate by 50%. Grogginess has creative perks.

3. Daydream Away

Research led by Jonathan Schooler at the University of California, Santa Barbara, has found that people who daydream more score higher on various tests of creativity.

4. Think Like A Child

When subjects are told to imagine themselves as 7-year-olds, they score significantly higher on tests of divergent thinking, such as trying to invent alternative uses for an old car tire.

5. Laugh It Up

When people are exposed to a short video of stand-up comedy, they solve about 20% more insight puzzles.

Continue reading “Creativity is a skill and not magic, genetically inherited, or a blessing from God”

Posted in agency solutions, interesting observations | Tagged agency creative department, agency solutions, creative ideas, dan hestbaek, Darren Woolley, how to be creative, jonah lehrer, marketing first forum, TrinityP3, wall street journal | Leave a comment

Shooting your next television commercial off-shore has never been more affordable

Posted on March 16, 2012 by Darren Woolley

Increasingly more Australian film companies and agencies are looking off-shore for cost effective shooting locations, such as Eastern Europe, South America, South Africa, Asia and closer to home, New Zealand. But why?

Exchange Rates

While the Australian dollar is high against the major currencies such as the US Dollar, the Pound and the Euro, the cost of producing televisions commercials is more affordable.

The issue for Australian advertisers is that many agencies and film companies will include a contingency for exchange rate fluctuations within their estimates to ensure that they are not exposed to changes during the production.

But likewise, it is important to ensure that either positive change will lead to a refund or the cost is locked in at the time of approval and that the contingency is removed.

Cost Advantages

Many of these markets offer excellent value in two key areas:
1. Crew costs - film crews are consistently lower in cost than local crews and they work longer standard days before overtime is incurred.
2. Talent costs - Both markets have access to a huge pool of talent due to population size. The combination of the current exchange rate and the higher competition means that rates are typically lower than Australian talent (and even New Zealand).
Continue reading “Shooting your next television commercial off-shore has never been more affordable”

Posted in industry news & trends, interesting observations, television & electronic production | Tagged Australia, Darren Woolley, exchange rates, marketing first forum, production costs, television advertising, television commercials, Television production, TrinityP3, tv production | Leave a comment

The real business cost of all of those back-to-back meetings

Posted on March 14, 2012 by Darren Woolley

Over the summer (Southern hemisphere) I was checking out apps similar to the TrinityP3 Resource Rate Calculator Business App on the iTune App Store and came across this beauty from LBi, one of the hot digital shops (who in late 2011 opened an office in Sydney)

It is called COMA – Cost Of Meeting App.

THE TEST

I finally got a chance to give it a real life test in a client meeting recently. We were discussing agency remuneration negotiations between the agency and the marketing and procurement team.

There were five people from the client (3 marketers and 2 procurement), eight from the agency (The CEO, CFO, General Manager, Group Account Director and four account management staff). And of course me. 14 in total.

I opened the COMA on my iPhone prior to the meeting, while I was waiting for everyone to arrive (Amazing how it is almost impossible for everyone to get to a meeting on time) and set the parameters. I took a guess at the average hourly rate but with the heavy hitters in the room I think I erred on the low side.

THE RESULTS

When the meeting finally commenced 20 minutes late (I am not telling who was last to arrive, but there was lots of conversation between the account team and procurement. I set the calculator running and an hour and almost five minutes later stopped it as the meeting was winding up.

One meeting. One hour. 14 people. The cost was almost $3,400. Excluding Tax.

Now before you argue that the marketing and procurement team should not be included in the calculation because the only people charging to be there are the agency and me, the consultant, consider this – All of those people in that room are employed to provide a service to the company. All of those people receive a salary and cost the company overhead and contribute to profit.

Therefore the total cost of that meeting is $3,400 + Tax. Excluding travel and waiting time.

THE CHALLENGE

I would recommend everyone go an download the LBi iPhone COMA App from iTune and put your meeting to the test. Work in progress. Internal review meetings. Strategy planning days. Etc. Etc. Etc.

Lets have a competition for the most expensive meeting?

Let me know your COMA results.

Anonymously if you like by direct message on Twitter @trinityp3 and hashtag #COMA

Posted in agency remuneration / compensation, case studies, industry news & trends, interesting observations, iPhone business app, marketing process optimisation | Tagged agency compensation, agency remuneration, business cost, case studies, coma app, Darren Woolley, iphone business app, process optimisation, Procurement, TrinityP3 | 2 Comments

8 reasons for Evalu8ing your advertising agencies, rather than just survey them

Posted on March 12, 2012 by Darren Woolley

Eight Reasons For Evalu8ing Your Agencies (rather than just survey them)

With more and more agencies and suppliers on most marketer’s rosters, having a fast, effective and easy way to be able to measure, manage and maximise these relationships is becoming increasingly important.

Evalu8ing is an online performance, relationship and collaboration measurement system that unlike other “survey systems” allows you to map the complex relationships within your marketing process and identify where these relationships are performing well and where they need to be improved and managed.

This document provides you with the eight key benefits of the Evalu8ing system.

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