This post is by Darren Woolley, Founder of TrinityP3. With 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.
In benchmarking the cost of agency resources, you generally find that the rate is commensurate with the experience or seniority of the resource position. But the question of value goes beyond simply cost to determining the return on the investment. So in considering the value we need to balance the cost of the resources against their contribution to the return on the investment.
All roles play an essential part
It is important to acknowledge for the development of advertising, all parties make a contribution to the outcomes. Media, creative and digital are all responsible for completing their part of the process to deliver the desired outcome. There is no point running media if you have no content and likewise a great idea is worthless if no one ever sees or hears about it.
So putting these to one side, (collective responsibility and increase in cost associated with seniority) if we look at each of the individual functions, their roles and responsibilities and the cost we can appreciate if any one area offers greater value than anyone else in the advertising process.
To assist with interpretation we are applying a Value Index purely to provide a numeric comparison between each and to further the discussion on agency value. In this case value is defined by the level of investment managed by the cost of the resources managing that investment. While not perfect (few are perfect) hopefully this is useful in furthering the discussion on agency value.
Starting with Account Management, this is seen as the linchpin of the process, liaising between client and the agency and managing the outputs of the relationship. The more strategic the account manager, the more value and insight they can add. But at the most basic role and responsibility the value they add is in quality control and the efficient running of the account.
Value Index. 5/10.
The Strategy Planner is responsible for developing the communications strategy, important in ensuring you have the right message to achieve the marketing and business objective. But quality strategists are in short supply and high demand commanding significantly higher rates than their Account Management colleagues and even some of their Creative colleagues.
Value Index. 7/10.
There is a lot of focus on Creative rates and fees and it is true that at the top end, a handful of creative talent in Creative Director and Executive Creative Director roles are charged out at significantly higher rates based on industry reputation. While much of the industry is focused on creativity and especially awards, many successful advertisers are not relying on Award-Winning work to drive their business success.
Value Index. 6/10.
Most agencies are increasingly integrating Digital, but where they offer specialist digital resources (excluding off-shoring development to lower cost markets) there is still often a premium over their non-digital equivalents. This is often blamed on the shortage of experienced digital talent. In the face of no obvious increased effectiveness or results this continued premium impacts the potential value of the resources.
Value Index. 7/10.
Media is still the largest investment area for most advertisers, both digital and traditional media. Yet media agency staff, except at the highest levels are inclined to be charged at a discount to their creative and digital agency equivalent.
Media Planners are often overlooked in the whole scheme of the advertising process, but they have the ability to ensure that the advertising message is delivered to the right audience in the best environment against the campaign requirements. Of course they have significant research and insights to inform and justify their strategy. But they also have the most significant financial investment as their responsibility, while paid comparatively less.
Value Index. 9/10.
Media Buyers on the other hand get to spend the significant media budget using the media plan provided. In the process a good media buyer can negotiate additional discounts and added value to increase the delivered media value for the plan. In some cases, and with enough time, a media plan could have an additional 40% in value or more delivered. That is a significant return on the media investment and a huge return on the relatively small cost of the media buyer’s salary. But just delivering more value of the wrong media is no value at all.
Value Index. 9/10.
So there you have it, the hidden value in the ad agency is in the media agency. They are paid comparatively less than their creative and digital agency colleagues, but they have the ability to deliver significant real and strategic value to the advertiser through their management of the media budget.
But we said, all parties have a role to play and value to add.
Some more than others.
This article first ran in Mumbrella Asia on August 6, 2014. Check out the comments.