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Managing Marketing: The Missed Opportunities For Agency Efficiency

Kylie_Sandercock

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.

Kylie Sandercock is an entrepreneur, accountant and now a Senior Financial Consultant at TrinityP3 Marketing Management Consultants. She shares her experience working with agencies and tech companies and highlights the opportunities for advertising and media agencies to improve their efficiency and productivity. Opportunities are often overlooked or rejected because of the requirement to change their culture, structure and processes to deliver improved outcomes for their clients.

You can listen to the podcast here:

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Transcription:

Darren:

Welcome to Managing Marketing, a weekly podcast, where we discuss the issues and opportunities facing marketing, media, and advertising with industry thought leaders and practitioners.

Today, I’m sitting down with Kylie Sandercock, entrepreneur, accounting guru, and now, a Senior Finance Consultant with TrinityP3. Welcome, Kylie.

Kylie:

Thank you for having me.

Darren:

Well, and also, welcome to the company. It’s great to have you on board. And I’m sorry it’s taken so long for us to actually sit down and have this conversation. But thanks for taking the time.

Kylie:

Thank you.

Darren:

I’m really impressed by quite a number of things when I look through your career. One of them is something that you’re doing now. In fact, it feels almost like it’s a COVID innovation and that is you’ve started your own skincare business.

Kylie:

Yes, yes. I had created a platform through … I was doing what a lot of other people did and started creating an online shop with Shopify, and I’ve realised actually, why am I selling other people’s stuff when I can go and create my own? So, I’ve now started creating my own skincare range, which will be launched very soon.

Darren:

Well, look, I think that’s fantastic because one of the things … I think words like “entrepreneur,” which is how I introduced you is a word that gets bandied around. But I think in your case, it’s really quite worthwhile because you are starting a business literally from scratch, aren’t you?

Kylie:

From scratch, yes. And it was a huge amount of research into how and what you need to do to create skincare ranges and having a point of difference. So, for me, it’s about having Australian botanicals.

Darren:

So, this is quite interesting because the rest of your career is really very finance, accounting-focused.

Kylie:

Yes.

Darren:

And from my perspective, in my experience, I find the old saying, there are two types of people in the world ─ I think there are two types of accountants that I have struck.

There’s those that have very much been in the audit compliance world, they’re all about recording and analysing. And then there are the accountants that use accountancy for innovation and identifying opportunity.

Looking through your career, it seems that that’s the path of accounting that you’ve really bloomed in, isn’t it?

Kylie:

Yeah. Look, you can be the traditional bean counter, which is all well and good. We all start that way. But then you soon realise which path you want to go. You either want to be completely financial and analytical, or you want to go down more of that commercial path. And I chose that one, I found it far more rewarding and fulfilling, and you get to be a part of something then.

Darren:

So, is that something that happened reasonably early in your career? Or is it something that’s evolved over time?

Kylie:

No, it took me like nine years to realise, because I started in banking and finance.

Darren:

Oh, that’s right. You started at JP. Morgan and the Macquarie Group, which was nicknamed the “Millionaire’s Factory.”

Kylie:

Millionaire’s Factory, with the holey dollar.

Darren:

Yeah. And so in those days, you were really, I guess, honing the core accountancy skills, were you?

Kylie:

Yes, very much all about that financial accounting side of it – very corporate and very boring. It was pretty boring.

Darren:

Well, that’s something that’s sort of levelled at accountancy. In fact, I think there’s a whole TikTok meme where people that have careers that they don’t really want to go into, just say, “I’m in accounting” because they say no one ever asks you further questions about what you do.

Kylie:

Very rarely.

Darren:

Yeah, but then you made a change. So, JPMorgan, Macquarie Group, and then you jumped across to Adshel, the media company.

Kylie:

Yeah, media, they were the first ones to give me the break into media, ended up being outdoors. And it was a really great experience. And now, also a part of ─ with that bigger group with Clear Channel and APN as well.

So, it was different. You got to see the production side of it, as well as the standard media side, where they’d have their relationships with the likes of the other agencies, like OMD and WPP and all of those ones. And they do all of that, but it was good.

Darren:

It must have been a big cultural change to go from the heavy world of investment and finance into media.

Kylie:

Oh, it’s completely different. I was a person and I had a face and I was allowed to have a personality. So, it was a culture shock.

Darren:

Liberating?

Kylie:

Yes. It was that point where you were allowed to give your own opinion on everything. It wasn’t just analysing the numbers that were there.

Darren:

Yeah. You could actually then interpret and offer that forward as an informed opinion. Not just an opinion.

Kylie:

Exactly.

Darren:

Because yeah, you’ve already mentioned OMD, Havas, Dentsu, Publicis Media ─ you have then had quite a career in the agency world.

Kylie:

Yeah, look, I’ve been very fortunate to be able to go to most of the bigger holding groups and they’re eye-openers. They all work in some ways very similar and then otherwise very, very different. And I think I’ve just been very lucky that I’ve had some great people to work with and had the opportunity to work in all of those.

And you realise that in media, whilst it’s very forefront for everything else, there are parts where it’s just so behind.

Darren:

Behind as in development?

Kylie:

Yeah, in technology in particular.

Darren:

Well, that’s really interesting because especially in the last 20 years, with the rise of digital, one of the things all of the media agencies and media groups have said is that their investment in technology has been exponential. And look, there’s always been a significant cost of entry.

Even before digital maybe your agencies had to subscribe to things like Asteroid at Nielsen and Roy Morgan. There were some big costs, but it was really just to access the database. Now, there’s everything from programmatic trading, data analytics ─ there’s a lot of technology that the agencies are having to invest in.

Kylie:

Yeah, and I mean, they still do. And I guess the side of it is, it’s the actual systems that they use that is where they fall short. Not so much the tools that they use for their data or their programmatic platforms, their trading platforms or anything like that. So, it’s more about the other systems that they use to actually ingest all of that.

Darren:

Okay. Well, that’s really interesting because one of the things that impress, well, media agencies more than any other agency are very keen to do what I call the tool show, and that sounds much worse than it is. But they want to showcase all of these amazing tools or the technology they have.

Kylie:

They do. And they do have some amazing tools, but a lot of those are all for client or customer-facing, and that’s to make reporting back to them. It’s about making that life easier, but it’s more about the tools that they use in the long-forgotten back office, which is where I’ve always been.

Darren:

And when you say back office, are you just talking about the financial reporting or is it back office as in once you get away from the client-facing, then-

Kylie:

It’s all the way through, so yeah. So, once you get away from the client-facing, it’s all of those steps from there, and it’s all of the … I can’t think of the word.

Darren:

Well, Kylie, the vision I’m getting here is these big shiny technology platforms at the front, and then a whole lot of band-aids gaffer-type, and behind the scenes, labour-intensive processes just to hold the facade together.

Kylie:

Yes, oh yeah. It’s exactly that. So, you’ll have all of these amazing tools that they use, beautiful planning tools, anything that will make that life easier. But then after that process, it’s band-aid solutions. It makes it very, very time consuming and labour-intensive. And it’s creating a whole heap of additional headcounts too because you need more and more people to be able to do half of those things.

Darren:

It’s unbelievable, isn’t it? Because a lot of the reasons given by the big holding companies; the WPPs, the IPGs, the Omnicoms, the Dentsus of this consolidation, is that they can actually consolidate the backend and get huge amounts of efficiency. But the feeling I’ve always had is when I talked about backing down, pretty much meaning their accounts department and their invoices and-

Kylie:

Yes, they would be. And even then, it’s one of those things ─ it’s yes, you can consolidate and you’ll get a huge amount of data. And with that huge amount of data, with very old systems or software, like the tech that they use, it takes a lot of time to then extract that data and make it usable.

Darren:

Wow. No, seriously, wow, because clearly, having seen behind the façade, you’ve actually seen the inefficiencies that are built into it. And this is not an uncommon situation. Not just media agencies, a lot of organisations have legacy systems that just become too expensive and too complex to change, don’t they?

Kylie:

Oh, totally. Even when I was in banking, they were obviously very banking-centric, but they were still really quite old and archaic, and they would take a lot of time. And there was still a lot of manual reconciliations at one point. If I was looking up to the cash hub, that’s a huge … like the transactions in that was huge. And you would have to literally extract that data and reconcile it. That’s thousands and thousands of transactions.

Darren:

I just had a vision of you with one of those big old leather-bound ledgers and a pot of ink and a quill, and having to write in thousands of transactions. Not quite, huh?

Kylie:

Like the old chicken flicks, but yeah. So, it’s not just to media ─ they all do have it.

Darren:

It’s interesting because you would wonder why. I mean, we sort of touched on it a minute ago, which is legacy systems and the cost, but what are the other impediments to media agencies actually being able to break down these inefficient practices and inefficient technology platforms?

Kylie:

I think with a lot of them, it’s being that they are from a holding group, in particular, it’s that control, relinquishing control. They’ve still got some sense of control when it’s using this legacy system, that you then have to do a whole heap of other manual reconciliations on top, and then fill in another report and send that through.

Whereas I think if they were to implement other technology that they could possibly-

Darren:

Automate it.

Kylie:

Automate it. There’s plenty of those solutions out there that can ingest all that data and then put that into your own … like the accounting-speak, the general ledger system. And it means that you’re getting really good, accurate numbers and data that’s coming out of that.

Darren:

But there’s something you said earlier, which is a lot of these inefficient processes actually drive headcount.

So, is there also perhaps a concern that if they become more efficient and didn’t need as many people that their clients would quickly turn around, and especially with procurement departments and go, “That’s great. You’re more efficient. We’re going to pay you less because you’re more efficient.”

Kylie:

Well, I would say the headcount would be mostly in the backend. So, your back-office headcount.

Darren:

So, that’s overhead.

Kylie:

It’s an absolute overhead, which is to me, it’s like a no brainer, is invest in that back office. If you can reduce your headcount, you know that goes straight back to your bottom line because that’s one less cost. And yes, the investment into that technology, it’s expensive. Let’s be honest, it is. But it’s something that can be written down over time.

Darren:

Well, it’s CapEx, isn’t it?

Kylie:

Yes. Most of them would have a CapEx budget.

Darren:

Yeah. And as CapEx, it would be depreciable. So, you could depreciate and get a tax break on that.

Kylie:

Absolutely.

Darren:

And at the same time, if you’re reducing your backend office cost, your overhead cost, you can then stay more competitive with the marketplace and not be getting squeezed. Because I know there are procurement people who would say things like, “Oh, 70% overhead, 80% overhead, even a hundred per cent overhead; why are agencies expensive to run their businesses?”

And in media, it has been the story about, well, it’s expensive to license all this data and it’s expensive to … so, it seemed to make sense, but is there more opportunity, you’re saying?

Kylie:

Well, the subscription costs and everything is right up there. They are, it is expensive. And then having your other planning tools or any of those other ones, they’re expensive as well. But I think for media, your biggest expenses are the back office where you have these terrible inefficiencies and people spending hours trying to do the task. It’ll be just one task and it can take hours.

Darren:

So, when you’re talking about the back office, the overhead is often finance and accounts.

Kylie:

Finance, HR, all of those, they’re all back office. And they all cost.

Darren:

But I also imagine this technology is impacting the … what I’d call the operational team as well because I was having a conversation with a CEO of a media agency, and he said on one client, they have four or five FTEs just producing reports.

Now, that seems ridiculous to me that there are so many people, but then he said, “Well, you’ve got to collect the data, you’ve got to collate the data, you’ve got to interpret the data. And then you’ve got to write your recommendation. And when you’re producing this many reports, it takes a lot of time.”

But I’m wondering whether it’s because they’re doing it all manually because the collecting the data and collating the data seems to me to be … I know even interpreting the data to a certain extent, could be automated, couldn’t it?

Kylie:

Absolutely. I mean, data collection and the use of that, should be automated. There is no reason why … although the systems have improved, but they’re still quite old fashioned. And when you’ve got ─ and especially in a media agency, you’ve got a lot of transactions within that. And if it’s something that’s traditional or one of the other ones where it’s spot buying or anything, there’s a lot of information that’s recorded.

And then just to extract that can take … well, in my experience when I’ve had to try and extract data with regards to just one client and I’ve had to do all of their spend, things can take up to two hours. It used to take me two hours to just run one-

Darren:

One client.

Kylie:

Yeah.

Darren:

And yet agencies are regularly talking about how we can build you a dashboard that will give you real-time updates. How can you possibly do that?

Kylie:

You can have real-time updates on certain things, yes. But when it comes to then actually making sure numbers are correct and reconciling all of that, it won’t be because it is so labour-intensive. That’s why they have media reconcilers and all of these because of those types of roles because the core media reconciler has to deal with the media suppliers’ invoices and go through all of that. It’s not even automated.

Darren:

It’s interesting because there used to be a big issue with media billing and the huge amounts of money that used to be because the agency would bill the client because they’d placed the order. And the media would run, but many of the media proprietors had systems where they wouldn’t actually bill for it. So, suddenly, the agency’s holding cash reserves-

Kylie:

Yeah, media holds.

Darren:

Yeah, the media holds that they would-

Kylie:

It’s a whole transparency issue.

Darren:

Well, and then that becomes, especially, I believe with SOX compliance in the US there is a limitation to how much money you can hold across financial years. Is that true or not? Or is that just a story that was spun to me by a CFO, from an agency?

He was complaining about the huge amounts of money he was holding almost like in treasury and having to declare for SOX purposes, but not declare to the clients because it looked like they were ripping them off.

Kylie:

Yes. You would have to declare it. And media holds were a huge thing. I dare say it’s not as prevalent now.

Darren:

It’s significantly reduced.

Kylie:

Because the systems have got better with the spot buying and it’s not as manual as it once was. So, those errors … because a lot of it would come from errors. So, if for example, you’ve got a client, the media supply will send the invoice through to the media, the agency’s accounts team and the reconciler will go through all of that and find any differences. They would then go and put those on hold and not pay for them.

Darren:

Right. Until they were reconciled.

Kylie:

Yeah, until it was all resolved. And this is the thing; these back-office inefficiencies actually do impact your front office or your client-facing and your client because you have to go back and then ask questions.

Darren:

Oh my God. Your experience at Adshel as a media proprietor, and then an agency gives you an incredible sort of 180-360 view of that financial marketplace, doesn’t it?

Kylie:

It does. Yeah. And being at Havas, I also got to see some of that creative side as well, which was really interesting. And having to do … really looking at how that production billing side worked, so I’m lucky.

Darren:

A bit different to financial accounting back at the banks.

Kylie:

Very different.

Darren:

Hey, you mentioned before some of the old systems that agencies are running on. I’d also been told a story about when COVID first hit and suddenly everyone went from working in the office to working at home and needed to access a lot of these systems remotely.

Someone told me that one of the major media purchasing platforms (and I won’t name them in case the story is not true) ─ but actually, it went down because it was not used to having so many people accessing it from so many areas that the servers just … yeah.

Kylie:

They would have shutdown.

Darren:

Yeah. Have you heard similar stories?

Kylie:

Yes, I would know who you’re talking about as well. I mean, it used to crash even at the best of times.

Darren:

Bizarre, isn’t it? I think globally it’s almost a trillion dollars’ worth of money gets spent on media and we’re using systems that at the best of time are reputed to go down. I mean, this is not a great endorsement for technology in an industry that is building its credentials on being a tech and digital and data industry.

Kylie:

Yeah, you know that whole digital transformation.

Darren:

Transform what?

Kylie:

Look, it’s one of those things unfortunately, within the industry, especially in media planning and buying. It’s one of those ones that’s very …. there’s not a lot of players for that. And they get stuck and… even if they get stuck, if you can invest in technology in that backend, you can fix that front and you’d get a holistic approach on everything.

Darren:

Because I imagine, Kylie, one of the big risks for media agencies is that the big tech players, Facebook and Google and TikTok, and all of these technology companies. Almost all of them have built quite robust and straightforward techniques for taking orders, placing orders, and fulfilling invoices.

The danger for agencies is that they get further and further squeezed out of the mix because unless they become more efficient, unless they can improve their productivity, you can’t rely on big rooms full of people going through paper or electronic invoices.

Kylie:

No, you can’t. And I think investing in something where you can … there are so many amazing AI pieces out there and they can learn and adapt. If they can ingest the information, they can do a lot with it.

I think it also stems from the interpretation of contracts. There’s some that they can actually take in a contract and scan through it and pick out what needs to be done with it. Because when you’re setting up clients, it’s your interpretation of what that says.

Darren:

Oh, look, I’ve got a great story about that. I had a client… not in media, it was on the creative side. I had a client phone up and they said, “Something’s happened with our agency. All our production costs have dropped by about 15%.” And I said, “So what’s the problem?” And they said, “Well, we’re just wondering if we’ve been overpaying in the past.” And I said, “Well, just collect all your estimates and invoices and let’s just monitor it over a month.”

And they phone me about three or four weeks later, and they go, “They’ve gone back up again.” So, we bundled it all together and I could see that it was a service fee that was being added. And so, we went in and talked to the agency CEO and CFO, and we said, “Well, look, this is what happened.” And then suddenly the light dropped.

They’d had a production manager who had gone on annual leave and the new freelance production manager, the first thing they did was go to the CFO and get the contract to find out what was build and what wasn’t.

The existing one, when they came back, just went back to their old habits of adding the 15% service fee back on. So, the reason that it had dropped for that period was that the freelance production manager-

Kylie:

Actually, looked at the contract.

Darren:

Did their job.

Kylie:

Yeah, and this is another issue and this is why things take so long. And that’s that whole labour-intensive from setup to everything. From setting up the clients, setting up the parameters around how it needs to be built or has it got a service fee? Has it got commission? Has it got these? No. Or does it use TV, radio, any of those, setting up all of the channels; it’s a lot of time and someone has to do it.

Darren:

Now, you’ve gone from banking and finance into media proprietors, media agencies, you’ve started your own business. And now, you’re also consulting with us here at TrinityP3. Some would say poacher turned gamekeeper. Is that how it feels?

Kylie:

I kind of feel like I have the inside edge on parts of it. It’s like, oh yeah, I know the nitty-gritty.

Darren:

I know where to look.

Kylie:

Yeah. If you want me to go in and have a look, I know where I can find that stuff. But no, I don’t know. I kind of feel like it just rounds out everything. And I’m very lucky that I just have that inside knowledge of what goes on.

Darren:

Except that one of the things that I got through our conversation right now, is that you have the right attitude, which is that if things are happening that are not right, it’s more likely to be due to mistakes or problems with the process than it is sort of nefarious motivations by individuals. I mean, there wouldn’t be many agencies that you worked with that wake up every day and go, “How can we rip off our client today,” is there?

Kylie:

No, I would dare say none. No, there wouldn’t be.

Darren:

I mean, that’s my own experience.

Kylie:

Back in the day maybe. There might have been once upon a time, but not now.

Darren:

Yeah, I think most people are genuinely trying to do the best job they can. What you seem to be telling me is that the tools that the agencies often highlight is just the facade and behind the scenes, they’re actually left with quite a difficult challenge.

Kylie:

Yeah, they are. I think it’s one of those things. If you can get them to work harmoniously, then they always want to be agile and be able to respond and innovate. But if you can’t get that right in the backend, it’s not going to be able to support that agility and your innovation then falls flat, which no one wants.

Darren:

Because it also makes sense that if you can be more productive, if the people that you’re hiring are doing less of the sort of drudge work, that must free them up to actually spend more time thinking about creating value.

Kylie:

Absolutely. They’re allowing them to then be insightful and actually give you meaningful information, which you could be given a piece of paper with numbers on it, and anyone can do that.

Darren:

I suddenly saw a connection – you called accountants bean counters. And for a long in the industry, media people were called box tickers. So, the spots that they bought would be-

Kylie:

The spots they were buying.

Darren:

And it infers for both a sort of drudgery and a lack of value creation when in actual fact, in both cases, there’s a huge amount of value that can be contributed if only people are given the resources to do it.

Kylie:

Absolutely. The juniors are the ones that do a lot of the spot buying and ticking. And a lot of the juniors do the reconciliations in the backend in finance.

Darren:

It’s interesting you say juniors because that’s one of the things we have noticed with agency profiles in that when you look … there was a time when agencies, the sort of senior management, senior teams, midweight and juniors were quite a robust pyramid, where there was a good balance. And there were enough senior and middle-level resources to actually coach, mentor and train those junior people. But over time, and it’s often been said because of cost pressures, it’s got very thin.

Kylie:

Yes, very lean on the top.

Darren:

On the top, and then very broad at that junior level, where some agencies would have 50%, half their staff with less than three or five years’ experience.

Kylie:

Yeah, so they’d just throw more people at it instead of allowing them to develop and then go up to the next level. They keep adding more just to get the job done.

Darren:

Another media agency CEO said, “Well, that’s our selection process. If they survive the first three to five years, they’ve got a chance of staying on.” And I said, “But what if they already left to go somewhere else?” And he goes, “Well, that’s bad luck.” It was a bit of a cavalier attitude considering your people are your value.

Kylie:

Yeah. There’s that one thing that a lot of agencies are talking about, is your people and the culture and that we value our people. That’s not really valuing them. It goes against that.

Darren:

Not that particular one, but I can say that they’re no longer working in the industry so people could work out who that was. Because clearly, what you’re saying and what you do are two entirely different things.

Kylie:

Yes.

Darren:

So, do you have a piece of advice for either marketers or agencies on where they should start if they want to find ways of improving their productivity and efficiencies?

Kylie:

I think my advice is that don’t be scared to take the step. It is time-consuming. Any time that you need to implement change, it’s scary and it’s time-consuming, but it’s about putting in that plan and having that … like not just having it there for the short, thinking short term, it’s a long-term investment. And it’s something that you’ll reap the benefits of later.

Maybe not necessarily straight away, because you still need people to drive it and get that change happening. But it’s talking to the right people. Talk to your CFO, talk to your CTO, ask them where the pain points are. And you’ll find that there are some really quick wins.

Darren:

Right. And what about advice for the CFO on how to actually fund this? Because I’m yet to find either a marketing department or an agency that says they’re flushed with cash.

Kylie:

That’s the hardest part. I think if they are going to, it is something that they have to really put a very strong case, a business case for, and get that into the CapEx. I mean, you may have to put a halt on hiring in that and put some project teams together. But it probably has to be based on a business case that they’d have to put a really strong one forward.

Darren:

Of course, the other way of looking at it is eventually, this has to happen. And if you’re the agency network that has not embraced it, you’re going to be the laggard.

Kylie:

You will be, and then it’s probably going to cost you three times as much just to catch up. So, it’s either get on board and get these improved, this new tech in and get the efficiencies happening. I mean, you become more productive. Or lag behind and then suffer the consequences when you get a bigger bill.

Darren:

Exactly. Well, look, it’s been a great conversation. Thanks, Kylie.

Kylie:

Thank you.

Darren:

For taking the time and coming and sitting down.

Kylie:

Thank you very much.

Darren:

Now, just on the skincare before you go, I’ve got a combination of Oily T, will there be something for men in this range that you’re putting together?

Ideal for marketers, advertisers, media, and commercial communications professionals, Managing Marketing is a podcast hosted by Darren Woolley and special guests. Find all the episodes here

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    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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