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.
There is an on-going industry discussion about agency rosters. What is the best size? Is it better to consolidate and reduce the number of agencies or diversify the agencies to ensure you have all requirements covered?
When you look at the industry it could appear that there is a trend here as marketers add in agencies to the roster and then react to the size and complexity of the roster and then start to consolidate and shed the agencies they believe they no longer need as they consolidate the supposed full service agency.
In these discussions it is common for someone to ask what is the ideal agency roster, or more like what is best practice for the agency roster and the fact is that the answer to this depends.
So I thought it may be worthwhile exploring some of the things that this depends on, because while this is no longer a best practice agency roster model that will suit all advertisers, there are certainly some best practice specific principles that allow you to custom build the ideal agency roster for yourself.
Consolidate or diversify?
Lets address this first issue which is the idea that there are only two options; being to either consolidate or to diversify the roster structure. There are actually many different roster structures, most based on some tried and true structures, but then there are an infinite number of variations on this theme.
This means the decision is not really if you should consolidate or diversify, but what is the right roster structure for you and what is the best way to populate it.
Of course, if you have way too many agencies and suppliers then it is certainly common sense to look at rationalising these to a more managable number. But likewise, if you have only one or two and they are stretched and under delivering in some core capabilities then it also makes sense to add agencies that extend these capabilities of the roster.
The core principle here is “what ever the roster structure, you need as many agencies to deliver the capabilities you need delivered to the standard required in a roster with as few agencies required as possible”.
It is more important to actually decide what is the roster structure you need and then consider how you are going to populate it.
Needs and requirements
The starting point is your marketing strategy and the requirement to deliver the implementation of the same. This is easy to say but there is a level of complexity and nuance in actually getting this right because there are a multitude of considerations in determining these needs and requirements.
One of the key considerations is the geographic spread that this roster is required to operate across. Is it a single market, or a regional market or global? What is the diversity or the requirements across not just the core or hub for the advertiser, but how does it vary across the other markets? Are there some markets that require more specialist capabilities in a particular area than others?
These all have to be considered up front.
Next is the category that brand operates as many categories have their own requirements that require specialist agencies on the roster such as Motor Shows for Automotive Advertisers, On and off premise expertise for Alcoholic Beverages clients and specific channel marketing skills for Insurance advertisers.
Next is the maturity of the market and the company or brand’s position in that market. Is the brand a challenger, second in the market or market leader? Is the market growing, plateaued or shrinking? This has a substantial influence on the marketing strategy of course, but also on the way the marketing strategy will be executed in the markets.
Once you have a list of the capabilities required to deliver the marketing strategy then the next consideration is to prioritise each capability based on strategic importance and the level of investment in each because this will inform the importance of that capability in the roster.
We recommend using both strategic importance and investment because while you may think the two go hand in hand the fact is that often a capability may be strategically important but has a low investment level because of an expected low return on investment in that year, especially if the marketers are using a Zero Based Budgeting model for investment allocation.
Level of complexity
The area you need to consider is the complexity of the marketing requirements, not just across a specific brand, but also across the whole marketing portfolio of the company.
Earlier we considered the complexity of marketing across a number of markets and the variations across each of those markets. Here we are considering the variations across either multiple brands being marketed within the organisation, or multiple products within one brand and the complexity this brings, or perhaps multiple categories or it could even be the consideration of the complexity of all of these.
In considering the agency roster model you need to be able to assess the requirements and needs from a micro level on an individual brand, product or service, category and market, but also be able to scale this up to a macro view of the requirements of the whole organisation as it is here where the biggest rewards come from getting this right.
The biggest issue we see in this process is often marketers will only really see the areas of requirement that are either core or high profile and overlook some important requirements that are low profile but essential in delivering the marketing plan.
The irony is that it is these low profile requirements that often collectively have significant investment of the marketing budget and therefore are impacted by the poor roster structure.
Before you even consider making any changes to the roster it is vitally important that you ensure you intimately understand the current roster. By this I do not mean which agencies make the roster, although this is important and many smaller ones are often overlooked, but also where the budget is being spent and what is being delivered in both cost and quality to understand where value is being delivered, lost and wasted.
It is only by having a detailed model of the current roster that you can clearly identify the areas with the biggest issues and therefore the greatest opportunity to deliver improvements.
We have been called in too late, often when the marketer is in the middle of a number of pitches, when they realise that what they are trying to achieve may not be delivered. The problem being that they have no current state against which to compare the future roster state they were working towards.
The fact is that once you have the current state of the roster clearly agreed with all of the stakeholders, you can then explore various future states and evaluate the benefits of each proposed future model.
We would caution people to not just evaluate the roster models on the number of agencies or any projected cost saving, but also consider the level of disruption that will be incurred in making the transition from the current state to the agreed future state.
Too often identified savings are completely eroded by the cost, both direct and indirect, of massive transition or change programs across a roster, without even considering the lost intellectual property and brand knowledge that leave with the agency you replace. Therefore we recommend firstly always looking for ways to utilise existing agencies within the new roster as a way of minimising disruption and maximising the value.
This is certainly a process that any marketer can undertake or could do with their procurement partners. To be honest we have found that many of the companies we have worked with engage us in this process because they want a fresh and independent perspective on the process and one that is not going to make wholesale changes to the roster simply to justify the cost.
So sorry to say there is no one roster structure or model we can recommend that represents best practice, but we do have some tried and proven principles to assist you in creating the perfect roster for your needs.
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