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.

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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?

Nathan:

I always understand why because there’s a – God I hate this word – holistic way of thinking that everybody wants to kind of access.  It would be wonderful if marketing and comms challenges were so simple that you could solve them under one roof with one set of expertise. That would be great because you can be the one point of contact, the one way to think about things in the room in a lateral way in a client’s organisation.

That would be a terrific thing to do, I can see why people yearn for it, but I just don’t think it’s possible anymore.  Agencies have got to do the uncomfortable bit.  They’ve actually got to work with other agencies and this holy grail of collaboration has got to happen and they’ve got to do it without trying to eat each other’s lunch or maximise or protect their revenue and all of those horrible things that no one, no human likes to do naturally.

Darren:

But you gave a strategic answer there.  I mean, I’m probably a little bit more cynical.

Nathan:

Oh yeah, yeah you are.

The convenience of a single agency roster

Darren:

I think marketers want a full service agency because it is just damn convenient, and agencies want to be a full service agency because they maximise their control and revenue streams out of the client’s budget.  It’s as simple as that.

Nathan:

Okay, so the second bit, I think there’s a lot of truth in that.  It’s a much simpler way to report up to your head office if you’ve got all of the client’s revenue streams running through your books, that’s great.  What did you say marketers want it to be?

Darren:

Convenient, like if I’ve just got one throat to choke, rather than having five or six or three or ten different agencies and they all end up pointing the finger at someone else when something goes wrong, it’s just too hard.  If I’ve got one agency and I can go down and go, “It went wrong and it’s your fault and you’ll fix it”, isn’t that much easier?

Nathan:

For some marketers that is what they want.  I think they’re few and far between because more important for a lot of the marketers that we deal with is that they get, you know, one throat to choke versus all your eggs in one basket.  They get scared about that.

They don’t ever believe that any one agency or one holding company could actually provide the level of expertise in every single sphere that they need.  There’s that.  There’s also that fear that if you’ve got one agency that looks after all of your marketing output, then as soon as you drop the ball or you delay or you obfuscate or you don’t make decisions in the right way, then that agency knows everything that you’re doing.

You’ve got somebody actually looking at how well you do your job as a team and that’s not always what people want but perhaps I’m getting a bit cynical there, I don’t know.  I’ve seen that kind of thing.

Darren:

Maybe I’m rubbing off on you.

Nathan:

Yeah, maybe.

The challenges of agency collaboration

Darren:

Now you raise the other ‘c’ word, which is collaboration.

Nathan:

Oh that one, yes.

Darren:

Now, do you think it’s possible when you’ve got a group of agencies all competing for their client’s budget, that they truly can collaborate?

Nathan:

I think it’s possible because I always like to see the best in people, I always like to be the eternal optimist about these things and I think it’s a great thing to strive for.  I think it’s only possible if you’re very, very smart about the way that the money flows around that roster and it’s always about the money.  It’s always about the money.

From the money comes security, a tenure, confidence, the ability to resource up, to put specialist resources in, to pay your best thinkers to take the time to think about stuff, all of those good things, it comes from the money.

The worst thing I think that ever happens is that clients go, “Oh well, I think you lot should collaborate”, and they throw an agency or two or three agencies rather, into a room or onto a brief and go, “You guys work together and come back to me when you think you’ve got something that you’ve collaborated on”.

There are no rules attached to that, there are no protocols attached to that, there are no roles or responsibilities, they just ask people to go and pretty much tear each other’s throats out because that’s what I used to do when I was on the agency side.

I’ve been involved in things that were labelled, “collaboration” that were actually the hugest dog fights in the world.  So I’ve seen it so many times on the other side of the fence. There’s a whole bunch of stories we could tell there.

Darren:

But we won’t for fear of litigation.

Nathan:

No we won’t.  But the point here is that, and I’ve ranted about this before Darren, I’ve ranted about this before on a podcast.  The client’s that say, “Go away and collaborate” and then are disappointed when three agencies go away to collaborate and they come back with three answers.  It’s no one’s fault but the client’s fault.

To do that and not expect to have to put rules and roles and roster models in or ways of working and all those hard yards is just irresponsible.  It drives me mad when I see it.  You stop all these really creative people from being really creative.  It becomes an account man’s battlefield and it’s just nuts!  It’s why a lot of people just get disillusioned with the way things are going.

Darren:

Yeah.  But I mean, the account man’s role is really trying to make this work at the same time protecting the agency’s revenue streams and profitability, isn’t it?

Nathan:

An account man’s role always was when I was doing it, it always is now, it’s every single thing possible isn’t it?  I mean, it’s all of that plus all of the other things they have to do. But how much cleaner and more exciting is it when that isn’t an account man’s role and you’ve actually got people who are motivated and remunerated in order to work, and the best people for the task, in order to work on the best parts of a client’s business?

I mean, that’s the dream.  When you and I have developed roster models that include strategic panels and creative panels within them, cross-disciplinary ones, ones that even get outside the agency network and into you know, contributions from places like Google and outside the industry and technical stuff as well, those are the dream teams that really tend to revolutionise a client’s business, especially these days where ideas come from any sphere at all.

Darren:

But also, our models are inclined to incentivise people based on the performance of that work rather than just paying them for turning up.

Nathan:

Well we love to put those things in place and again, they tend to be the braver clients that adopt that from us aren’t they?

Darren:

Yeah of course.  Because it’s complex.

Nathan:

It’s complex and also, at the end of it, somebody’s got to pay somebody something based on a set of criteria that were developed and who wants to be the person who rocks that particular boat?

I mean, if an agency is incredibly successful, you’ve got to pay them two million bucks extra at the end of the year. You don’t want to be that person, do you in most big organisations?

Darren:

Well successful only because the business has been successful.  I think that’s the secret is performance is not about how well an agency does its job.  Performance is about how well they contribute to the organisation achieving their goals.

Nathan:

Yeah and I think at TrinityP3 we’ve got a bunch of schemes that will enable that kind of relationship to take route and to blossom.  But you and I know they’re hard sells because it’s not an accepted way of doing business here.  It is outside this country, but not yet here. But we continue fighting the good fight.

The difficulties dealing with complexity

Darren:

So the next ‘c’ is complexity because sometimes complexity has just made it all too hard because digital complexity, technology complexity, market complexity, this is why we’ve seen this rise, this phenomenal rise of agency specialists.

I mean, there are now more agency options out there than at any time in the past, right?

Nathan:

Yep, absolutely.

Darren: 

So why are marketers struggling with what is the right combination or right number of agencies.  Why do they seem to have an additive effect rather than a strategic effect to their roster?

Nathan:

That’s a great question.  Well, the first point to make is that I think it’s an incredibly exciting time to be in the agency world because there’s great work to be done and great insight to be generated by being niche and being specialist and you can do really well.  And that’s to be applauded.

The trouble with it is that a lot of marketing teams haven’t got anywhere near the level of specialist knowledge that they need in order to evaluate what is being offered to them.

So there’s two things there; firstly, they don’t ever reach a conclusion about what good really looks like in some of these specialist fields so they’ll buy something off the existing agency who says, “Oh, we’ve got a shopper marketing guy in.  We hired him last week.  You should meet him, I’m sure he can do some projects for you”.

Or they get bowled over by the latest,I don’t know, mobile tech agency that rocks up and offers something, whatever it happens to be.

They don’t have the level of specialist knowledge to be able to to judge what good looks like.  So they just tend to hire and hire and hire.  Because they’re small projects and it’s niche, there doesn’t seem to be a lot of safeguard or governance around that.

How many times have you and I rocked up at reasonable size advertisers, ten million plus, and asked them what their roster composition is and they go, “Oh well you know, we’ve got it under control, it’s fine.  We’ve probably got maybe ten to twelve agencies working with us in total”.

You actually go through the roster and find there are fifty, sixty, seventy, a hundred.  What was it, two and a half thousand that we counted last week with that one client?  Geez!

Darren:

But that’s what I’m saying, there is not a requirement for two and a half thousand suppliers or agencies.  There is certainly a requirement for some specialists, but what is it that causes this growth?

I think I did that video where I equate agencies and the agency roster to coat hangers. It’s like the wired coat hangers you get from the dry cleaner.  Every time I open the wardrobe, there seems to be more of them and the agency rosters seem to be the same thing.

Nathan:

But they’re put together by nobody.  They’re put together by everybody and nobody.

Darren:

Yes.

Nathan:

There’s hardly ever a model or a strategy or a set of roles and responsibilities until it’s too bloody late and you’ve suddenly got thirty agencies or twenty agencies all fighting over a five or six-million-dollar budget.  Cutting that to death until there’s nothing left to sustain anybody.

But time after time, you find that a: it’s a surprise when they find out how many agencies there are and b: if you look for any kind of model or rules of engagement or guidelines or anything for the agencies that are actually there, there’s nothing!

It gets even worse when clients run multi-agency, multi-disciplinary pitches without a roster model and we saw that last year. We saw that a couple of times last year where, without naming names, I’ve walked away from those pieces of business, those pitches, because we’ve said there needs to be a set of rules and a roster model behind this otherwise you’re going to end up in the same pile of crap, but even deeper and tied in there for three years.

I think that’s what’s happened on both of those occasions as far as we can see, I don’t know, we’re out of it.  So what am I saying? I think the reason this happens is that nobody ever stops to think about it.

Darren:

So there’s some short-termism of, “I’ve got a need, I’ll get someone to fill it and whoever happens to be standing in front of me at the time gets the gig”.

Nathan:

Yeah, what do you always say?  It’s the current agency, it’s the previous agency and the one they met over coffee some time, that is all the ones they know.

Now across TrinityP3, we always have that conversation where clients ring us and get us in and say, “Look, we’ve got a problem with the agency, we need to pitch”, and you go, “Well, what really is the problem? Is the problem with the agency?  Is the problem because you’re asking the right agency the wrong question? The wrong agency the right question? What’s the roster model? Who else are they working with?”, and on and on it goes.

You often find, it’s not an agency problem, it’s a roster problem and it’s actually a marketing team problem and a marketing team structure problem and a process problem, because there are no rules and there is no method or strategy around how you are put together. And it’s hard.

It’s not an easy thing to do, to get an engagement model that works across say, fifteen, twenty different specialist agencies. It’s really tough. But it’s even tougher for those agencies to work it out themselves and try to make money.  No wonder they’re trying to go at each others throats.

Darren:

And the number of times we’ve seen or I’ve heard of marketers leaving it to the agency to work it out.  It’s almost like going into a group of beggars and saying, “Here’s a pile of cash, you work out who gets what”.

Nathan:

Yeah.  So that’s a dreadful way to go when they do that.  The other default and this is when you need to be very careful about whether you get involved in the marketing team or not I suppose, is where there’s a culture of pitching.

If you can actually get the client team to admit that they have got a culture of pitching and it’s not working for them, then that’s a great start.  But we worked with a client, a very large client a couple of years ago where they actually admitted they had a culture of pitching and it was no good and they’ve moved away from that.

That’s the most poisonous thing of all, to have to pitch for everything.

Darren:

Yeah.

Nathan:

But there are large clients in Sydney with large rosters who go like a pendulum in between having appointed agencies versus a whole plethora, a massive roster of agencies and then they get everybody to pitch against each other and then the winner comes out of that and they appoint them again and it’s just like a pendulum, it just goes back and forth, back and forth.

A strategic approach to roster rationalisation

Darren:

So I’m interested in this idea of calling agencies suppliers because often I find that when I ask a marketer how many agencies they have and they think, media, creative and maybe digital.

But then suppliers is a totally different sort of category for them and I remember years ago Rob Morgan from Clemenger Group really objected publicly to me calling agencies suppliers because he said, “We’re not suppliers, we’re partners with our clients”.

I said, “No, no, you’re suppliers because you’re paid for a service, as a supplier is.  You’re not actually sharing in the risks and rewards of the relationship.”  But do you think that marketers still think that there’s some sort of segmented difference between an agency and what procurement would call a supplier or a vendor?

Nathan:

Yeah I think that might be right, that’s quite a good point Darren because that would explain why they tell us they’ve got three or four key agencies and then you find that they’ve got a list of forty or fifty communications suppliers who are all as far as we’re concerned, being paid on the same basis, either project or retainer, as the agency is.

Maybe that’s part of why these rosters just grow toxic because it’s okay to have lots of suppliers isn’t it? But it’s a bit sillier to have lots and lots of agencies. I mean, most marketers would agree with you, “Well we shouldn’t have too many agencies because that would be confusing” and then they’ve got a list of suppliers for shopper marketing, for digital, for search, for mobile, for apps, for you name it, events and on it goes.

So maybe that’s it you see.

Darren:

Because the procurement process for supplier rationalisation is to define buckets of capabilities or services and then to basically run a tender to populate those buckets, either with one or more suppliers responsible for that particular skill set. This is the classical procurement supply rationalisation.

Nathan:

Yeah.

Darren:

Right? But what you find is that it actually doesn’t achieve very much because all you end up with is buckets of multiple suppliers. So if you’ve got five buckets and you’ve got four suppliers in each bucket, you’ve still got twenty suppliers, you’ve potentially got twenty agencies.

Whether you want to call them suppliers or agencies is irrelevant. Irrational and irrelevant. Because it doesn’t actually get to the point which is, “I want to align my suppliers to my specific requirements. I want to build capability and understanding of my business through my supply channel”.

Nathan:

This is always where we find we can add value working with procurement. Not to tar the entire procurement profession with the same brush, but there are good procurement people and bad procurement people and I’ve spoken about that before and written about it.

But the kind of procurement you’re talking about there where you can legitimately get six suppliers of widgets, different kinds of widgets into six different buckets and maybe have two or three in one, that assumes that there’s no requirement for those suppliers to work together in order to produce one thing across the whole piece.

Of course this is nearly always the case in any kind of marketing roster arrangement and so we end up fighting against that quite a lot don’t we?

Because the vital thing is that actually they have some basis upon which to work together or to work across those pieces or indeed, one supplier can actually manage two or three of those buckets and make something else of it, and then the buckets are changing all the time anyway according to what the marketing requirement is.

But the end result of what you’re talking about is that you end up with six disciplines in your roster and you ask the roster for an answer on a brief and you get six different discipline related answers, none of which actually fit together.

We worked on an automotive client a couple of years ago where they had exactly that; they had a roster of eleven agencies and they used to get eleven different answers depending on which discipline that particular agency came from.

Until we made some sense out of it for them, they spent most of their time trying to cobble together something that didn’t kind of compromise too much between the eleven different ways of doing things and trying to persuade people to play ball.

So you get that a lot. Where did we come in on that?  We meandered down that particular field like a procurement person meandering down a particular supply chain.

Darren:

There has to be a more strategic approach and when I get into this discussion around the roster of agencies/suppliers, I always get asked the same question – what is the ideal number?

What’s your standard response to that?

Nathan:

Well, we’ve got science and we’ve got benchmarks that help us with that and so what we do is take a look at the entire client’s scope of work, so what the marketing requirements are, what that means in terms of a scope of work and then look at that by discipline, look at that by spend and activity level and the nature of that activity and we’ve got benchmarks that we can apply to that.

We can show that to the client, “Guess what Mr. Client, your digital scope of work here is actually the work of two agencies”, or, “It’s the work of three agencies”, and that’s going to be the sweet spot for you to go and get this executed and here’s what the different discipline backgrounds look like for those three agencies.

But we’ve gone through entire rosters like that just looking at what the spend is and it doesn’t matter how big the spend is, you just break it down going, “Don’t dump your whole 150 million dollars through this one particular agency because you’ll find it all gets clogged.

But do it through this number of agencies, you don’t need five hundred agencies to run your 150 million dollar spend, but you might need six here and then three in this particular discipline in order to make this run in an optimal way”. So there is some science here.

Consolidation or diversification?

Darren:

There’s some classic examples of very large advertisers in most markets that will consolidate all their work to the convenience of one agency only to have the agency completely bogged down.

Nathan:

Yeah, haven’t we seen that.

Darren:

We’ve seen it time and time again.

Nathan:

Seeing it at the moment!

Darren:

And then on the other side, there’s the marketers that sprinkle it like chicken feed across the chicken coop and have everyone fighting for it because they think that builds competition and that type of competition is anti-collaboration because if you’re competing with each other, you can’t trust each other.

So I think a good rule of thumb for a marketer is, “What’s the minimum number of agencies to strategically deliver your requirements, your scope of work?”

I think it’s a really important question and it’s not a simple question because what it goes down to is, “What is your specific strategic requirements based on your marketing strategy and who was fulfilling them now, how well they’re fulfilling them, and where are the gaps or the duplications?”

Because this is the interesting thing; I would defy any marketer listening in on this to tell me that their marketing strategy today is the same as it was five years ago.

Nathan:

Yeah.

Darren:

Yet their roster will have the core that’s the same as it was five years ago and will have all these Band-Aids of specialist agencies stuck onto it to try and make up for the gaps.

Nathan:

Or even to reiterate that, so how many client teams in all honesty to any of our marketers listening to this, if you can put your hand on your heart and say that actually next week you could deliver on paper exactly what your specific marketing requirements are for the next twelve months, and what the scope of work will therefore look like.

The trouble is that that’s absolutely set and it changes every year and it’s absolutely central to what your roster looks like.  It needs to be optimised one to the other but if you don’t even know what that looks like, then you may as well just pick almost any roster out of the air and just hope that it kind of helps you grope towards some kind of strategic direction over the year.

Darren:

So Nathan, as you know, I’m not doing a lot of pitching anymore, right?  The rest of the team are managing pitches.

Nathan:

Lucky you Darren.

Darren:

Here’s a question for you. Why do marketers often come and ask to pitch a media agency or creative agency, either because the relationship is under performing or they’re not sure it’s the right one to have, and they rarely do it in the context of the changes that will have to the overall dynamics of the roster.

Because in many ways, when you and I started, let’s say in advertising twenty years ago or more, there was a single full service agency.

Now, I think most marketers will acknowledge that they may have four, five or more suppliers and yet, they still go to a pitch on the basis of, it’s like a piece of Lego, “I’ll just take this piece out and stick another one in and the integrity of that roster will be maintained.”

Nathan:

I don’t know the answer to that because it drives us mad, doesn’t it?

It drives us mad all the time that you take away one part of it and you expect the whole thing to have changed. And yet, you know, again, as I was saying earlier, you put no rules or roles or responsibilities against that. Or sometimes in the pitch process don’t even introduce the new potential agencies to the existing ones.

How many times do we try at the very least, to get media agencies to sit in on some of the strategic sessions that we run when we run pitches just so you can find out how that new roster is going to mould together and work.

Creating a collaborative environment

Darren:

But this is coming from the same marketers that go, “Collaboration, collaboration, collaboration”, and yet treat rosters as very segmented things. I mean, there’s no acknowledgement that if you want to create collaboration, you need to build the roster or what’s that other term that’s floating around? Oh, the village, the village of agencies, you need to build it so that it actually is a functional unit in its own right.

Nathan:

Well that’s right.  And the village is a term that we’ve come to hate isn’t it? Because every village has an idiot I think is what we said. But I think this might be Darren why we’re less involved these days as a proportion of our business in pitching, and much more involved in roster realignment and then structural and process alignment on the marketing side because the problems are hardly ever solved by a pitch.

It doesn’t take an idiot to even see this. It’s hardly ever as water tight as saying “This pitch will solve the problems because you’ve got such a clear cut problem”.

There’s always stuff that the client side needs to learn. Unless you’ve got a smaller advertiser, there’s nearly always roster role and roster model problems to sort out. There’s nearly always alignment between marketing requirements and the executional skill set in the roster.

There’s always those things to sort out and just changing who sat on that particular chair that’s going to flip over like something out of Sweeney Todd the Barber, I mean, it doesn’t make any difference.

It’s still going to flip over, the guys are going to go backwards and get their throats cut and I won’t extend that analogy anymore because it’s horrible and I haven’t gotten down that particular rabbit hole either but this is probably why we’ve ended up with a business that’s far less focused on that.

I think the game has moved on. I don’t think that’s necessarily just a strategic decision by ourselves, it’s also because increasing complexity in this market in rosters and in channel and in disciplines means that we’re not going to be the only people who have spotted that it’s harder to answer every single question with the answer of pitching.

But there’ll always be pitching, agencies will always try and pitch against each other and they’ll try to force the pitch and they’ll try and do speculative work.

Darren:

And look, don’t get me wrong, there is a place for pitching, tendering, selecting suppliers.

Nathan:

Yes.

Darren:

Selecting the right suppliers to fit the right part of the roster.

Nathan:

But that’s different, that’s different. See, that’s not just pitching, that’s selecting the right suppliers to fit the right part of the roster. That’s a proper question. That’s a proper task.

Darren:

That’s a strategic process. It’s not just a supply chain process. It’s actually a strategic procurement issue. It’s a strategic marketing issue.

Nathan:

Absolutely. I wouldn’t like to sit here and say, “I wish you’d never handle another pitch”, because that would be crazy. There’d be a lot of people that we couldn’t help. And yeah, we’ve often actually recommended that the best solution is sometimes to pitch part of the roster, I mean, of course we have.

Darren:

Or not to pitch and actually realign.

Nathan:

Well most of the time not to pitch and realign, yeah.

Darren:

If you realign the people already in the roster so they know specifically their roles and responsibilities and then find a way to reward them, then you can get increased performance and effectiveness out of what is already the existing roster.

Nathan:

So the classic little dance that we see here, and this seems to be happening all the time at the moment, is you go to a client and they say, “Well, we think we need to pitch”, or whatever it is and either in the pitch or before the pitch or avoiding the pitch, you have a look at the scope of work and you realise that really what they’re doing is they’re asking a tier one agency, their lead agency to handle a lot of what really is tier two or tier three work because their scope of work is fragmented.

So they still love the strategic creative leadership of that agency, but actually what they need to do is a lot more fragmented and specialised than it perhaps was five years ago.

So they’re going, “We’ll change the agency”, and we go, “No, why not actually keep this agency with all of this strategic and creative knowledge and background in your business and all the expertise, but let’s actually make sure that you’ve got suitable support around that, tier two levels and tier three levels”.

One of the ways we’ve done that is to look at an output- based cost model which is probably the subject of another podcast.

What typically happens then is that the lead agency goes, “Well, you’re just taking away a lot of our revenue”, and you go, “Well no, because you don’t have to do this tier two, tier three stuff.  I mean, we are taking away some of your revenue but we’re actually making you a lot more profitable”.

And what do they do? They say, “Well we can handle all that tier two, tier three stuff, it’s not a problem”, so they do it at less money, they become pissed off with it, they don’t do it very well, they do it too quickly, they don’t do it as well as a tier two, tier three agency can do it because their cost structure and their cost base and their entire raison d’etre is around that.

You get the same problems, then they pitch it a year later or six months later.  And then I kind of just think they deserve to be pitching then because if you can’t be smart about this stuff.

The custom made full service agency

Darren:

So I’ve just realised I overlooked the full service agency solution that is very popular, especially overseas, but it has been here and I’ve been involved in dismantling it on three occasions and that is where a holding company creates the single bespoke agency solution for a client so that the client comes along and says, “I need this, this, this and this”, and then the holding company puts it together and creates a new agency based on people from across their network, to create that new agency.

What do you think of those created agencies?

Nathan:

Look, as every consultant always says, “It depends”, doesn’t it?

Darren:

Yeah.

Nathan:

Sometimes it works well. We’ve recommended it a few times. And I think it works really well where you’ve got a transactional bias to your marketing communications where you’ve actually got to get a lot of knitting done and your strategic leaps and your creative leaps need to happen occasionally but not regularly.  It works quite well for those guys.

But other times, it happens because the marketing team is often just too bloody overwhelmed by everything or its procurement driven and it’s a price. But the trouble with it is it’s like a black hole. It grabs everything and sucks all activity into it, it just becomes this great big bottomless mass at the bottom and eventually it has to explode.

I don’t know. Have you ever seen it work well? We’ve seen it work well for a short time.

Darren:

You’re absolutely on the money. Where the requirements of that agency are largely transactional it works well. But here’s where I think it’s fundamentally flawed, okay?

Nathan:

The requirements of the client you mean?

Darren:

Oh sorry, the requirements of the client are largely transactional.

Nathan:

Yeah.

Westfield is doing a great job of that at the moment.

Darren:

Whole other things I need to do right?  And just please work together to deliver it, right?

Nathan:

Yep.

Darren:

Where it goes wrong from my perspective is that I think in the creative process, there is natural tension. In fact, creativity requires tensions.

Nathan:

Oh yeah.

Darren:

What happens is this artificially created agency over, diverse groups of people across the network, the tension is all internal and is not seen, therefore cannot be managed from the client’s perspective.

Nathan: 

Right.

Darren:

I think in some of the ways, a lot of the complaints marketers have about managing a roster of agencies is actually they’re not realising that the healthy tension within a roster, even the best operating rosters have healthy tension, is actually the source of innovation and creativity.

If I have five specialists in their area in a room, I am hoping that they’ll disagree with each other because out of that process of disagreement and tension will hopefully come the innovation or idea that’s going to move this forward.

But I think this idea, this falsehood that we have as an industry and we have as human beings that we just want everyone to get along. We want everyone to be polite and just agree with each other, actually it is counter-creative, it’s counter-innovation because every time you look at innovation, it comes from the tension of necessity.

Nathan:

Yeah, the future belongs to unreasonable people.

Darren:

Yeah.

Nathan:

Yeah, see that might be right. That’s probably absolutely right. The depressing thing here is that the answers to all of these questions are, it kind of depends and there is no best solution, there’s no best practice, there’s only best fit practice and if you’ve got a roster structure but you haven’t put any rules or roles or anything around it, then it’s very likely you can produce an enormous improvement in a very short time.

Can you get to this creative strategic collaborative nirvana or as a client of mine used to say, “To this state of Nevada”, which always made me laugh. Can you get to that point? No, of course you can’t. Should I be asking any more rhetorical questions? Probably not.

So there isn’t ever a perfect state but again, that’s not rocket science because it’s a people business so of course it’s going to be messy. Maybe we should do a whole model based on nearer scientific observations of how marketing and advertising agencies work together? Maybe we should do that.

Darren:

Well I’ve probably got a more important question.

Nathan:

Get Rory Sutherland to help us out with that.  Go on.

The strategic importance of roster alignment

Darren:

I’ve got a more important question; why should marketers care about their roster and how it’s structured and how it works?

Nathan:

Because if they knew the amount of money and FDEs and hours and the amount of money, and the amount of money, and the amount of money that they were throwing away, notice I stressed the money there, then they would attend to it straight away.

We’ve got very clear benchmarks based on our experience about the percentage of your marketing budget that you lose every time you add an agency to the roster because there is a time taken.

Darren:

Duplication, cost of on-boarding.

Nathan:

You’ve got to brief them, you’ve got to have a contract, you’ve got to have a terms and conditions with them. You’ve got to greet, you’ve got to debrief them.

Darren:

Bring them up to speed.

Nathan:

Yeah, all of that stuff, you’ve got to meet and have lunch with their Managing Director and all of the other things that you have to do.

Darren:

So it’s a business imperative for marketers who are much more interested rightly in executing, developing and executing their marketing strategy. It often feels like this is onerous but in actual fact, what you’re saying is that it is imperative from a business perspective?

Nathan:

It is. But as with every problem in business, if people can see it that it persists, that means that somewhere along the line, people are benefiting from that problem and how many times do you get to the top of a very large organisation?

How many further education outfits have we been dealing with where people have sat at the top of that and said, “I don’t see why it takes all of these people and all of these agencies to do all of this stuff when we’ve only got three, four, five million dollars being spent here”.

The answer is that everyone is having a lovely time, having a great creative conversation and marketing and strategic conversation but the insertion of commercial reality into that just hasn’t happened.

So FE as a sector tends to suffer from that quite a bit but it’s certainly there across the entire marketing sector and it can’t be because you’ve got really, really well structured competitive outfits coming out of Asia and all over the world, they’re coming out of China at the moment and Europe at the moment that will just kill what those rosters are trying to do and what those marketing organisations are trying to do unless they innovate.

You’ve got to do this, you’ve got to grip it. So yeah, why should they? Because you would not believe the amount of money and inefficiency and time and spinning of wheels and bureaucracy and debates that is being caused by just having all of this stuff.

Darren:

Look, time’s got away from us but one last question and it’s been a great conversation but one last question.

So, if a marketer comes to you and says, “What’s the right number of agencies for my roster?” you’d say?

TrinityP3’s Strategic Supplier Alignment service helps you to untangle your supplier roster, understand its strengths and weaknesses, and develop an optimal structure to improve your performance.

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About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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