This post is by David Little, who has been working in Procurement Category Management for 12 years within FMCG, Telecoms and Consulting. He has a special interest in Marketing categories, Procurement Leadership and helping others develop their Procurement skills.
Is this a familiar picture? Would your CMO or Marketing Director recognise this situation?
How do rosters get like this?
It’s common for a marketing agency roster to expand according to the ad hoc requirements of the marketing team. Marketing personnel come and go, budgets expand and shrink, and the unique challenges your brands face change too. But the task of tidying up regularly is seldom a scheduled activity.
In addition to this, short-term, tactical opportunities crop up like new promotional campaigns, events or sponsorships, or even colleagues who have a ‘great contact’, leading to (whoops!) another agency creeping onto your payroll.
Other mitigating factors affecting your choice of agency could be:
- As illustrated above, your company acquires new brands from mergers or acquisitions, inheriting new agencies.
- A mix of local and global brands; I’ve worked in FMCG where a local brand is the biggest seller, but barely exists elsewhere in the world.
- Global brand affiliations, where head office directs you to a global agency or subsidiary.
- Unique local brand positioning: I’ve also experienced a global big-hitting brand which was niche on the local scene. It didn’t have the same funds to execute on a grand scale and had a very different demographic to HQ’s ideal.
- No-competition guidelines, where you may not be able to use the same agencies as your direct competitors.
The end result is often a roster that isn’t aligned to your needs and is hard to manage.
If we use the Situation, Target, Proposal model, we can break this complex transformation into more manageable chunks, as follows…
The first task is to research and document a detailed analysis of the current situation. As well as mapping your ‘dog’s dinner’, you should cover headlines like agency’s parent companies, agency services (including those not used), contract duration, outputs/outcomes, annual spend, contract management, transactions and recent performance reviews.
Promo personnel, print production companies, media owners and sponsorship owners are your 2nd-tier partners. Mapping your relationships with them (and documenting how your investments with them perform) will reveal potential opportunities like consolidation or decoupling production.
Now it’s time to draw insight from this information. What does it mean? What is its impact? The implications of a messy agency roster are often far-reaching:
- Resource drain: how much time is being consumed on the most basic daily, weekly or monthly tasks of managing an external partner? Everything from Accounts Payable having another ‘vendor’ to pay, to brand managers having more account managers to catch by phone, to the management of several contracts (which take months to negotiate in the first place)… it all amounts to many duplicated tasks.
- Apples and pears: the varied contracts, remuneration structures, reviews and templates for scopes of work will mean you’re probably not comparing like for like in how you measure your investments.
- ‘Diluted enthusiasm’: like it or not, it is a sad fact that a small account often means more hassle to an agency; in contrast a bigger scope of work (and the concomitant bigger fees) is more attractive to an agency, and an attractive account attracts talent. Many advertisers try to brass-neck their way out of this, relying on the brand’s attractiveness or a favour to be repaid in the future. But you are buying the services of human beings, and the humans in an agency aren’t motivated by something just because the advertiser argues they should be.
If you ask your CMO what the roster would look like if he/she had a clean sheet, the answer would inevitably be something radically different to the situation you see today. Moreover, the end-goal should be an agency roster fully aligned to delivering his/her department’s strategy for the coming 1-5 years. (A good example of this would be the changing needs of digital media.)
One detail of mapping future needs may even be deciding which agencies are engaged on scopes of work and which will be engaged on temporary missions (like sponsorship agencies used to research the marketplace and establish contacts).
If Procurement can accept an end-goal of a high-performing roster and then get deeply involved in supporting the transformation, you will have demonstrated an example of successful cross-functional teamwork. N.B. Cost reduction is nothing more than a potential side effect, not an end in itself. I’ll cover shared KPIs in a future article.
Staging an agency pitch can be exciting, radical and can reap serious rewards, but it is also very resource-consuming and stressful for all concerned. It’s an important option, but ultimately only a means to an end rather than the end itself. As a cross-functional team, you should use the insights of the ‘Situation’ section above to identify and assess the relative risks and rewards of several improvement activities as part of your arsenal. Activities such as:
- Aligning performance measurement, remuneration and contract frameworks
- Identifying economies of scale in agency networks
- Consolidating scope to ‘core competency’ agencies
- Mapping scope gaps and agency competencies not being exploited
- Stopping unnecessary retainers
- Phasing out agencies that no longer fulfill your needs
- Seeking help from a consultant to make your roster more effective
Researching, assessing and prioritising which strategies to implement should not be done unilaterally, however; involve both the people who will sponsor it and those who will live with the consequences (ref. RASCI model). If you do this early and in detail, these stakeholders will feel a joint responsibility for the roster’s future success. A CMO sign-off would be a great illustration of this.
A final few words on Procurement involvement
One tenet of Procurement Category Management is to take a narrow (but deep) project scope to start with: effect change on a restricted scope of work (like one brand, or one campaign, or one set of measures) and you won’t spread yourselves too thinly.
Another is to demonstrate early Quick Wins, like negotiating contract gaps, requesting pricing in a standard format, small process improvements or the removal of ‘pain points’ like unnecessary admin and payment issues. These will help energise the team involved and advertise success internally in your organisation, paving the way for longer-term strategies.
If Procurement is involved in re-aligning your roster you should also expect a raft of ‘hygiene’ measures to help keep agency spend where you want it, and prevent scope creeping again. ERP/spend system tidy-ups, e-catalogues, price lists or preferred suppliers can all drive contract compliance, and remove the day-to-day guesswork from Marketing’s workload. Your Strategic Procurement colleague may have an Operational team to help deliver these.
As always, good luck and have fun!