How to define an agency scope of work to deliver increased value

This post is by Darren Woolley, Founder of TrinityP3With 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.

This is the first in a series of articles on agency scope of work management. Managing the scope of work for your agency is possibly the easiest and fastest way to increase the buying power of your marketing budget by removing the duplication and uncertainty as much as possible from the agency work. In this way you are able to get more for your agency budget without simply driving down the rates and prices.

Agency scope of work

But why is specificity so important? Anyone that is involved in manufacturing, construction or technology knows, by clearly defining and specifying the actual requirements upfront you are better able to plan and execute the construction/manufacturing process more efficiently and effectively.

What is required for a high quality scope or work

While in a dynamic market it may be difficult to specify all of the marketing requirements for the year ahead, that does not mean you should not specify the requirements that are known and even include those requirements that are most probable.

It is too easy to say that it is not 100% definite and postpone the process, but this comes at the expense of either having the agency allow for, in their retainer and fees, what ever you may throw at them later, at a premium cost.

This is why marketers need to prepare agency scopes of work that are detailed, defined and specific in a way that allows the agency to be able to estimate resource requirements, scheduling and costs. It also allows marketers to review and manage their requirements in a more strategic way with a scope of work providing the basis of the plan.

Outputs can be tangible and intangible

We use a process of defining output as the marketing communications plan will usually specify outputs based on budget and strategy. We have found that outputs encourage greater specificity compared to simply a list of agency roles and responsibilities.

But in a world of increasing channel options and executional outputs it can be a challenge defining the specific outputs required. But the first step is to convert your marketing communications plan into an outputs plan that includes both the tangible and intangible requirements.

Tangible outputs are those that are clearly definable and are usually the product of a production or manufacturing process such as advertising (e.g. Television spots, press and magazine ads, print materials, radio spots, outdoor, webpages, apps, etc.) While what we term intangible are the processes that underpin and support the tangible processes (e,g. Brand Strategy and Planning, Communications Strategy and Planning, Research etc).

Then by channel

This process can be managed across the whole organisation or by brand or by business unit. If there is only one brand and one marketing communications stream then the process is undertaken for the whole business at once. But if there are either multiple brands or multiple business units then defining the scope for each can be done individually and then bought together and reviewed.

So once you have sorted requirements by tangible and intangible it is then time to organise the tangible requirements by brand or business unit. This is usually done by channels and can be a specific as including durations, sizes and quantities (e.g. 30 second TV, 15 sec TV, Full page press, Radio campaign 3 x 30 second, Microsite 4 html pages etc).

The objective is to be a specific as possible, but as you will see in later articles in this series, this specificity assists with making changes later and creating agility and flexibility in the scope of work.

Then by week, month or quarter

We have written previously about the difference between a scope of work and a schedule of work. The issue here is managing the peaks and troughs of the workload for the agency. This is particularly important where there are multiple brands or business units all with their own scope of work.

Most advertisers are able to apportion their various requirements by the quarter and in fact some projects will fall across multiple quarters, but knowing when the briefing, conceptualisation, approvals and production fall on the calendar helps the agency ensure they have the right level of resources available to manage the project.

In cases where the advertiser requirements go into the thousands of outputs, and this is increasingly common with content, social media and digital marketing, then we encourage the schedule of work to be structured monthly or even weekly if at all possible.

Interestingly retailers have no problem as the requirements are driven by the retail calendar and consumer goods companies are very good at scheduling activities for their brands. It is usually other categories such as financial services, telcos and the like, being high volume and often reactive to the market, rather then having a specific or visible plan.

Beyond the output, what is actually required

Many marketers will stop by now in developing and defining their scope of work. But it fails to embrace the biggest opportunity for delivering decreased complexity, waste and cost. This is because it would be natural to assume that every output in the scope of work is a new piece of work to be originated.

Certainly from an agency perspective it is more desirable to create a new piece of work rather then reuse or recycle existing work either previously developed by the agency or in the case of a multinational brand, developed overseas.

We have defined three requirement distinctions for the requirements and a number of sub-distinctions. The distinctions are:

  1. Origination – This is the creation of a new piece of work from scratch. It is the total origination from a new communications strategy.
  2. Refresh / Extend – This is where there is an existing communications strategy and creative expression and there is a refresh of the creative concept or a creative refresh of that strategy.
  3. Adaptation – This is where there is existing creative work and this is to be changed to adapt to a change in the brief or even a change in the strategy. The sub-distinction here is the work could be complex or simple with very specific definitions of each.

The important function here is it challenges the default mechanism of making everything an origination and encourages marketers and their agencies to look for and specifically manage the process of refreshing and adapting existing strategy and creative work, leaving more budget for other marketing activities.

Bringing brand value to the process

You could stop here and many marketers and advertisers do. But there is an increasing move for many organisations to embrace Zero Based Budgeting (ZBB) for their marketing budget setting. The corner stone of ZBB is aligning marketing investment to the return on that investment. This means sorting the scope of work against the strategic importance and the level of investment.

This is because at the moment the task is only output defined and has no alignment to the importance, either strategically for financially for the client. Without this two identical outputs would logically require the same amount of time, resource and therefore cost, even though there may not be the strategic or financial justification for this.

Take this example of a brand who make one brand television ad and run it on and off over two years and also make a promotional television ad that will run for 6 weeks only and never be used again. Is it justified that the two are the same output and therefore have the same agency resource requirement and the same cost?

This is strategic importance and it goes to defining the specific strategic role of each output and values this role accordingly.

The second consideration is the financial value, which should be reflected in the budget, but often is not due to historical, legacy or other influences. An example would be a house of brands or a branded house with either multiple brands or multiple products and services under one brand.

If one brand generates more revenue and profit than the other, should you be investing as much in the promotion of that brand? Yet the agency would logically argue that the resources and the cost for the outputs on a valuable brand or product would be the same for a lesser quality brand or product.

This is the basis of value-based remuneration, which you can read more about here.

Definition and specification are essential

Without a defined and detailed scope of work, the default position requires the agency to build contingencies. It also means you have no ability to be able to review and restructure the requirements to maximise efficiencies and reduce costs and optimise the resource utilisation of the agency.

It is definitely worth the effort as in our experience this process can deliver significant savings in agency fees and improves the agency’s ability to deliver the outcomes to the quality level required. This is a win / win for both parties.

Read the second post in this series, The impact of economies of scale on scope of work cost

Or download your free White Paper on Agency Scope of Work Management

TrinityP3’s Scope of Work Management service evaluates your current agency scope of work and recommends the best approach, calibrated to your needs and benchmarked against the industry.

Why do you need this service? Learn more here

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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