Retained AOR or project fees? Which one is best?

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.

I received an email today from my friend and industry colleague, Francisco Escobar, who said

“Just looked through your newsletter and blog posts for the past 18 months or so and did not see anything on comparing AOR/Retainer versus Project-based.  Have you opined on this subject with any pros and cons?”

While I have previously shared thoughts on comparing rate cards with retainers in 2008, ways to improve retainers in 2009 and most recently the considerations before moving from retainers to project fees in 2016 , I have not actually provided a comparison of pros and cons for advertisers and agencies.

Yet in the past five years we have had an avalanche of advertisers asking us for help moving their agency remuneration from retainers to project fees.

So based on all of those projects and all of those discussions with marketers, procurement and agencies regarding retainers or project fees, here is the current state of play from a TrinityP3 perspective:

Why marketers are considering project fees

The downward pressure on marketing costs and the introduction of Zero Based Budgeting as a way of achieving cost reductions are significant factors in the move from agency retainers to project fees. These trends have been quoted several times by Sir Martin Sorrell as the drivers for the falls in revenue seen at WPP.

But beyond these financial trends there are significant operational trends impacting the way marketers work with their agencies that have bought project fees into consideration. The first is the relative inflexibility with the retainer model, which is typically set either on an annual basis or by a contract period to retain a particular level and mix of agency resources.

Marketers are increasingly finding themselves having to react to their competitors and the market and respond to changes in business strategy not on an annual basis but on a weekly basis making it difficult to commit to an annual retainer. This is exacerbated by the increasingly common cuts in marketing budget that occur in response to poor sales performance and the shift of marketing budget in some organisations away from marketing to the business, who dictate the marketing needs.

Marketers are also finding themselves not working with one Agency of Record (AoR) but at its most basic two, with media separated from the creative agency. Then you add on a digital specialist, perhaps PR, a trade or B2B specialist and brand activation agency and suddenly there is a roster of 6 – 8 core agencies or marketing suppliers.

Most of these specialists beyond creative and media do not have a retainer and instead work on a project basis. This means that the AoR is not on retainer then the marketer could move projects to these specialist agencies with little or no financial impact.

Finally, marketers struggle with understanding and therefore justifying the value of the AoR retainer when challenged by the CFO or procurement. As the retainer is based on retaining a number of agency resources of a particular mix, then they are challenged to justify the cost of the number and mix of those resources, particularly if procurement takes the contract to market there will be an agency competitor or even the incumbent that will take on the task for less money and less resources to win or keep the business.

The various project fee models

Just as there are various configurations of agency retainers (full service retainer, account management and strategy only, etc) there are various ways of calculating and managing project fees. The difference is that while retainers are usually calculated the same way (cost of resources by overhead by profit margin), project fees are calculated a variety of ways. It is worth reviewing these project fee models to understand that not all models are equal.

Continue reading “Retained AOR or project fees? Which one is best?”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing process optimisation, marketing procurement, return on investment | Comments Off on Retained AOR or project fees? Which one is best?

We’re Like Collaborating, Right?

This post is by Stephan Argent, President of Agency Search and Media Management Consultancy Le Riche Argent and a member of the Marketing FIRST Forum, the global consulting collective co-founded by TrinityP3

Is it just me, or is the word “collaboration” being as overused as the word “like”.  Or am I like wrong here…?

Like, I’m not sure.

Marketers often tell us they’re a “collaborative” organisation or they’re a “collaborative” team. Agencies tell us they’re “collaborative” working with other agencies. But when it comes down to it, I’m not sure either marketers or agencies really understand what being “collaborative” really means or how to apply the term to their respective activities.

Collaborating

Unfortunately, the reality is that collaboration is being bandied as a term that’s a polite way of actually saying something quite different. A couple of variations of this might be:

“Better include everyone we can think of to cover our collective asses…” OR

“No idea – why don’t we get a bunch of people in a room to see if we can figure out what to do…” OR

“Don’t care – get [parties concerned] in a room and make them sort it out…” OR

“Better meet with these guys or it’ll look like we don’t value their opinion…” OR

“I’m not going to risk making a decision – if it’s a collective decision then I / we can’t be blamed for it…” OR

“Lots of people in a room will make us look good…”

Call it what you will. Defined like any of this and the idea of collaboration is a gong show.

So what is collaboration supposed to be? Continue reading “We’re Like Collaborating, Right?”

Posted in Evalu8ing - Relationship Performance Monitoring, interesting observations, marketing process optimisation, strategic management | Comments Off on We’re Like Collaborating, Right?

Ten common problems with agency retainers

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.

Reading the trade media on the trend towards agency project fees, you would think that the agency retainer is dead, (along with the Agency of Record). And while the ANA Agency Compensation Survey shows that the retainer is not as common as it once was, it still accounts for a significant proportion of major agency remuneration models and is well and truly alive and well.

But lets be honest, while the agency retainer is often set and forget, it has a few problems especially with the way many of these retainers are set up and managed. In fact while many advertisers and their agencies often default to the retainer model it has more problems then most are willing to recognise. Makes you wonder why it became so popular in the first place.

Trying to make sense of the agency timesheets against the retained agency resources

But then again it is simply a matter of working out the resources you need, the base salary cost and then multiplying this by the overhead and profit margin to get the annual fee and dividing this by 12 to get the monthly retainer. What could go wrong? Well here are a few problems marketers have with retainers. Can you think of any we may have missed?

1. Retainers are inflexible

While annual marketing plans are important, marketing implementation is becoming more agile and responsive to the customer and the competitive set. This means marketers are looking for agency arrangements that are able to flex and provide the agility they need in their go to market plans.

Yet retainers are, by their nature, locked in with retaining specific agency resources for a year or more. So that when the marketing needs change it is difficult to flex the retained agency resources. This is not just the level or resources, but also the mix of capabilities and mix of seniority and experience, unless you are willing to pay more.

2. Retainers encourage unpaid overtime

When you retain 100% of an agency resource, while it should mean that they only work on your account, the fact is that it means all of the billable annual hours. This could be 1600 hours, or 1800 hours or more. But what happens when agency staff work excessive overtime beyond these annual billable hours?

Well firstly the agency staff members do not receive overtime payments, so this is effectively free. Secondly in some cases the agency will use these hours to claim additional fees or use the resources to work on other business even though they are supposedly dedicated to one account. Either way the agency profits at their employee’s expense.

3. Retainers do not secure key agency staff to your account

Many advertisers mistakenly believe that the retainer guarantees specific agency resources working on their account. While specific agency staff members will be promised to win the business, agency personnel will either move accounts within the agency or change agencies.

This is a fact of the business with some agencies having a 30% churn in staff. Retainers cannot stop this. Even if you have the names of the agency personnel specified in the contract, it would always have an allowance for this to change by mutual agreement. Continue reading “Ten common problems with agency retainers”

Posted in agency remuneration / compensation, interesting observations, marketing procurement, resource rate calculator | Comments Off on Ten common problems with agency retainers

Who are the real victims in the lack of transparency in advertising production?

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.

Last year the ANA responded to the investigation by the Department of Justice into Agency production practices and included this in their call for greater transparency in advertiser and agency relationships.

The concern was that agencies and especially the Holding Companies that own the agency groups, were competitively tendering for advertiser commercial productions against the independent production companies in an unfair and biased manner.

Effectively it was claimed that the agencies were lining their own coffers by under cutting the independent production companies by having them tender and then providing competitive services at a lower price, effectively and unfairly squeezing them in the market.

But from our perspective of more than 30 years of industry experience, this lack of transparency exists at every level of the production process in some form and in fact all parties, from the advertiser whales down to the smallest minnows could be more transparent in the process.

The sad fact is that the people that end up ultimately suffering in this process are the smallest such as the crews that subcontract to the production companies.

Lack of transparency in advertising production

Advertisers and their agencies

Lets start at the beginning and follow the money trail. The whole process starts with an advertiser wanting to produce a television commercial (or these days some video or film content).

This starts with the brief and becomes the first point where lack of transparency impacts the process. It is because very few advertisers feel comfortable providing the agency or the production company (if they are working directly with them) with a budget.

The perception is that if they provide a budget then the agency or production company will use the whole budget and perhaps then some. But here is the kicker for the lack of transparency, it can end up being incredibly inefficient and costing you a lot more by not providing it.

The budget should represent your level of investment or the value of the project. There are many ways to calculate this and we have helped many advertisers create customised methodologies to do this.

But without the budget the agency and production company have no idea how much they can spend and it is in their interest to make the creative idea as outstanding as possible (read as expensive as possible) to build their reputations. So they come back with ideas and you fall in love with one of them only to find out that when it is quoted it is going to cost you ten times more than you had budgeted.

At this stage you should drop the idea and get the agency to do the work again, this time with a budget in mind. But because the clock is often ticking and because the advertiser has fallen in love with a concept they cannot afford, the way forward is to try and get the concept delivered for a cost closer to the budget. The problem is that if these cost reductions are substantial it leads to corner cutting and compromises in the production and the quality of the final product.

Continue reading “Who are the real victims in the lack of transparency in advertising production?”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing procurement, resource rate calculator, television & electronic production | Comments Off on Who are the real victims in the lack of transparency in advertising production?

What Happens When the Magic of Creativity No Longer Works?

This post is by Michael Farmer, Chairman of TrinityP3 USA and author of Madison Avenue Manslaughter: an inside view of fee-cutting clients, profit-hungry owners and declining ad agencies, which won the Axiom Gold Business Book Award for the best marketing / advertising book of 2016.

In barbaric and prehistoric times, before primitive man invented religion and prayed to gods for intercessions, man was isolated and alone, facing an uncertain and terrifying world that worked by its own logic.

Would the sun rise every day?  Would winter fade and spring follow in its stead? Would there be fish to catch, prey to hunt, rain for water and crops, bountiful harvests, cures for disease, pregnancy and babies, victory in war?  Would the tribe flourish?  Tribes were like advertisers today, looking for certainties and prosperity in a hostile world.

Inevitably, magicians came into being, and the magicians developed rites — sorcery practiced for the benefit of the tribe.  They interceded with nature, imitating its processes. They shook their feathers, beat their drums and sweated it out.

They rose to positions of influence and repute, achieving honor, wealth and power.  They brought or held back the rains, controlled the sun, directed the wind, healed the sick and brought fertility to women and herds — when their magic worked, which was not always the case.  The tribe, though, depended on their powers and rites.  Without these, darkness and death might descend.

The price of the magicians’ failure was death. No tribe could afford a magician whose magic did not work. Sorcerers were killed, not only when they failed but also when they weakened and lost their powers. Should they break a tooth, have their hairs turn grey, fracture an arm, suffer a disease or simply grow old — they were quickly dispatched, either through combat with a potential successor or by the murderous hands of the tribe.

Such was the experience of the first advertising man.
Continue reading “What Happens When the Magic of Creativity No Longer Works?”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing process optimisation, marketing procurement, return on investment, strategic management | Comments Off on What Happens When the Magic of Creativity No Longer Works?

Top 5 dumb ways to use data in marketing

This post is by Anton Buchner, a senior consultant with TrinityP3. Anton is one of Australia’s leaders in data-driven marketing. Helping navigate through the bells, whistles and hype to identify genuine marketing value when it comes to technology, digital activity, and the resulting data footprint.

Do you remember Metro Trains Melbourne’s public service campaign around rail safety, Dumb Ways to Die?

I’d love you to hum the little ditty as you read this post on five dumb ways to use data.

With the implementation of the EU’s General Data Protection Regulation (GDPR), and the Facebook / Cambridge Analytica data scandal, data privacy and usage is a pretty hot topic.

So strap yourself in. Here we go.

#5 – dumb way to use tax data

Continue reading “Top 5 dumb ways to use data in marketing”

Posted in agency remuneration / compensation, customer relationship management, data & direct marketing, industry news & trends, interesting observations, iPhone business app, marketing process optimisation, media planning & buying, social media & digital marketing | Comments Off on Top 5 dumb ways to use data in marketing

The Ad Industry in 2018 – The Year of Magical Thinking

This post is by Michael Farmer, Chairman of TrinityP3 USA and author of Madison Avenue Manslaughter: an inside view of fee-cutting clients, profit-hungry owners and declining ad agencies, which won the Axiom Gold Business Book Award for the best marketing / advertising book of 2016.

Ad industry in 2018

Sir Martin Sorrell, the industry’s most prominent agency spokesman, now has the difficult job of explaining, on behalf of WPP and of the industry in general, why revenue growth has been so difficult to achieve and what can be done about it.

Since its peak in 2015, WPP shares have fallen 28% in value. In the main, Sorrell points his finger at “major customers”, who are holding back ad spending to cut costs, and the long-term impact of technological disruption and the short-term focus of zero-based budgeters, activist investors and private equity.”

“We feel the machine slipping from our hands,
as if someone else were steering.
If we see a light at the end of the tunnel,
It’s the light of an oncoming train.” — Robert Lowell

Marc Pritchard, Chief Brand Officer of Procter & Gamble, is equally outspoken on the advertiser’s side.  “We’ve outsourced too much of our work,” he says.  “2018 is the year we take back control to transform the industry … stripping away anything that doesn’t add to creative output.”

P&G has slashed the number of agencies it works with by 60% and cut agency and production costs by $750 million.  By 2020, it expects to have cut another $400 million on top of that.

WPP’s plan, Sorrell says, is “greater cost efficiency” — breaking down silos among its various creative, ad buying, strategy and public relations businesses to draw on top talent and seamlessly serve clients. “In this environment, the most successful agency groups will be those who offer simplicity and flexibility of structure to deliver efficient, effective solutions — and therefore growth — for their clients.”

Brian Wieser, the industry’s leading security analyst, reports from the sidelines: “It should never be all doom and gloom for agencies.  They continue to contain vast networks of entrepreneurial individuals, most of whom are capable of continuously finding new ways to generate revenue.”

There we have it — representative thinking across the industry to deal with two related growth problems: Continue reading “The Ad Industry in 2018 – The Year of Magical Thinking”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing procurement, return on investment, strategic management | Comments Off on The Ad Industry in 2018 – The Year of Magical Thinking

How Ready Are You For Agency Pay For Performance?

This post is by Stephan Argent, President of Agency Search and Media Management Consultancy Le Riche Argent and a member of the Marketing FIRST Forum, the global consulting collective co-founded by TrinityP3

When it comes to assessing, reassessing or creating new agency contracts, most marketers now ask us about structuring some kind of pay for performance terms as part of their overall agreement.

But coming up with a pay for performance model is actually the easy part. The hard part is ensuring our clients are corporately prepared for what pay for performance really means, the implications for managing such agreements and how they need to be administered.

Once you’ve reached the ‘yes, we want something like that in our agreement’ stage, there are some tough questions to ask of your own organisation before attempting to craft pay for performance terms.

agency pay for performance

 

In our experience, there are typically six key questions marketers should be asking themselves:

Do your have executive level buy-in?

Pay for performance is a commitment from your organisation to do just that – pay for an agreed level or standard of performance across a number of pre-defined metrics. Generally speaking, other executive functions are going to want to know, understand and agree on those metrics – even if it’s only as far as the CFO. What you don’t want is your CFO (or anyone else for that matter), baulking at terms after you have an agreement in place.

Do you have sufficient budget?

Any marketer that enters into a pay for performance agreement needs to be prepared to pay for the maximum upside that’s contemplated in an agreement. Sufficient budget needs to be set aside in the event your agency(s) hit it out of the proverbial park, so that you can pay them within the time period specified.

Can you define meaningful, measurable metrics?

Yes, this is the tricky part. Most pay for performance terms stand or fall on marketers and their agencies being able to agree on specific, measurable and meaningful metrics that can be clearly tied to performance of the agencies concerned. Marketers must look at a balanced mix of agency behaviours, marketing activity developed by their agencies and tangible business results tied to those activities. Continue reading “How Ready Are You For Agency Pay For Performance?”

Posted in agency remuneration / compensation, interesting observations, marketing procurement, return on investment, strategic management | Comments Off on How Ready Are You For Agency Pay For Performance?

Marketers. Are there any leaders left? (Why we need The Marketing Academy)

This post is by Lucio Ribeiro, Managing Director of Online Circle Digital, a full-service advertising agency with digital DNA.

Along with managing an agency and teaching at University, I mentor a few young marketing students at RMIT. One day one of these young marketing students told me a story about her worst boss.

She told me that her boss would constantly give her direction on what to do, pass by her desk, tap her shoulder and tell her “What a great job” she was doing, give information on what to do next, and move on. I asked her what was wrong then and in a heart-beat she said she didn’t want to work for her – there’s no inspiration, there’s no charisma, vision, or sense of sincerity. Oops.

marketing academy

The Marketing Academy Cohort 2018 – Marketing Leaders

That moment opened my eyes. Have I been acting like that?

In an industry that relies heavily on people was I uninspiring for my team? At the beginning I felt myself trying to shut down the thoughts, trying to justify to myself every decision I had made, trying to surrender myself to the calm and easiness of ignorance; but I couldn’t.

I knew at that moment (this was 2016) that I had to face my own thoughts, weaknesses, fears and vulnerabilities if I wanted to excel and to start developing new leaders in my way. And I did want to.

Leadership is a tough gig; Google it and you will find hundreds of thousands of articles, it’s the most prevalent topic at HBR with over 24,000 articles and many books written about it.

It’s confusing and daunting. That set me on a personal journey to discover my own truth about leadership, the elements that together would allow me to be a better person, better marketer and a better citizen.

The most pernicious tall tale of leadership is if you have charisma and vision you are a leader – either you are born or not born with it. The reality is that leadership skills are not inate. The characteristics can be learned, acquired, exercised and honed.

I was lucky enough (my simplification of hard-work) to join another 29 brilliant minds in Australia and to be chosen as part of the Marketing Academy 2018 co-hort.

The 30 of us have now embarked on a journey of discovery, learning, camaraderie, and paying-forward.

This is my story.

The Marketing Academy – Getting Accepted

The Marketing Academy was created by Sherilyn Shackell as a non-profit and voluntary organisation.

Their reason to exist is to develop leadership capability in talented marketers from the Marketing, Media, Advertising and Communications industries through mentoring, coaching and experiential learning. All of The Marketing Academy programmes are provided free of charge.

Continue reading “Marketers. Are there any leaders left? (Why we need The Marketing Academy)”

Posted in industry news & trends, return on investment, strategic management | Comments Off on Marketers. Are there any leaders left? (Why we need The Marketing Academy)

Lower Cost Does Not Mean Higher Quality in the Ad Industry

This post is by Michael Farmer, Chairman of TrinityP3 USA and author of Madison Avenue Manslaughter: an inside view of fee-cutting clients, profit-hungry owners and declining ad agencies, which won the Axiom Gold Business Book Award for the best marketing / advertising book of 2016.

ad industry

If we were on a guided tour of the advertising industry, here are the points of interest that ought to be on every sightseer’s list.

1) The Advertisers.  “Lower cost” is their strategy du jour, with reductions in media spend, cuts in agency fees, continued use of cost benchmarks and investments in less expensive internal agencies.  Amazing!  Increased shareholder value — marketing with the stroke of a pen, crossing out columns of unnecessary figures.

2) The Holding Companies.  Restructuring and cost reduction is their response du jour.  Only the restructuring is new — they’ve been reducing costs every year for more than two decades, imposing tough budgets on their agencies, who react to the chronic fee cuts foisted on them by their procurement-led clients.

3) The Media and Creative Agencies.  Downsizing is their annual modus operandi, shedding senior people, leaving themselves with staffs that are significantly more junior and stretched.  Add to this hiring freezes, depressed salaries (see Glassdoor.com) and high employee turnover.

4) The Agency Scopes of Work.  They’re not so easy to see since they hardly exist.  In my consulting work, I gather and analyse Scopes of Work to figure out “how much work are agencies doing at the request of their clients.”  In 25 years, I’ve had to reconstruct these SOWs from interviews, incomplete Word documents, PowerPoint slides, e-mail communications and job jackets.  Thus far, we’ve had to reconstruct 977 Scopes of Work.

Continue reading “Lower Cost Does Not Mean Higher Quality in the Ad Industry”

Posted in agency remuneration / compensation, agency solutions, interesting observations, marketing process optimisation, marketing procurement | Comments Off on Lower Cost Does Not Mean Higher Quality in the Ad Industry

Managing Marketing: The changing role and challenges facing media agencies

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.

David Angell is the General Manager and Head of Media at TrinityP3 and here he chats with Darren on the increasingly complex role played by media agencies and the challenges they face in meeting the needs and demands of their advertiser clients. As intermediaries between advertisers and the media providers they are increasingly challenged with not just managing this complex relationship but also contributing to overall marketing performance too.

You can listen to the podcast here:

Follow Managing Marketing on Soundcloud or iTunes

Transcription:

Darren:

Welcome to Managing Marketing and today I’m sitting in a car in one of the many famous lanes of Melbourne, having a chat with David Angell, who is General Manager of TrinityP3 and head of Media. Welcome, David.

David:

Thank you, nice to be here.

Darren:

I should say, ‘welcome Darren’ because we’re in your car. You’re hosting me.

David:

But technically your city, my city too.

Darren:

Your town, your paper.

David:

I’m hosting you in this lovely car in this lovely avenue so it’s nice.

Darren:

It’s been a hot topic. You joined TrinityP3 about three years ago.

David:

Just over three years.

Media from a advertiser and agency perspective

Darren:

But before that you’ve had quite an extensive career in media from both an advertiser’s perspective and an agency’s perspective. I wanted to start off getting your reflections on that; the different perspectives. We’ve had a lot of discussions about the relationships between agencies and advertisers.

What do you see as the biggest difference between sitting on one side of the table with the budget and, on the other side of the table, talking to your client?

David:

That’s an interesting question and I would add that my experience with Trinity P3 has also been a very valuable client-side experience because I’m effectively sitting with those clients when we are talking to agencies.

I think the challenge with media agencies has been to view the world in quite a myopic way. Sometimes that’s because they’re driven by the client to think like that and sometimes it’s because they haven’t got the skill sets to think more broadly.

But the difference is where they are thinking of media as being a major component of marketing, the marketer is thinking of media being one of many, many channels that he or she has to navigate.

And the agencies that are winning at the moment are the ones that are able to translate what is effectively media strategy into a broader commercial marketing and business approach. And that’s something that continues to challenge agencies even today. Continue reading “Managing Marketing: The changing role and challenges facing media agencies”

Posted in agency search & selection, agency solutions, industry news & trends, media planning & buying, Podcasts, social media & digital marketing | Comments Off on Managing Marketing: The changing role and challenges facing media agencies

Marketers and Procurement Who Want to Talk Turkey With Their Agencies Can Learn A Lot From Chickens

This post is by Stephan Argent, President of Agency Search and Media Management Consultancy Le Riche Argent and a member of the Marketing FIRST Forum, the global consulting collective co-founded by TrinityP3

marketers and procurement

OK, what the heck have chickens got to do with marketing and procurement teams negotiating with their agencies?

The answer is: Everything.

It goes like this: If you’d been craving some Kentucky Fried Chicken in the United Kingdom a few weeks ago you’d have been out of luck and perhaps crossing the street to Burger King instead. Why? Because at the end of last year, KFC chose to change to DHL, a lower cost distributor, which, as it turned out, provided a poorer quality of service with little or no contingency planning.

An unfortunate road accident next to DHL’s single depot caused an epic delay in deliveries which resulted in KFC having to close more than 600 of its restaurants as a result of depleted chicken supplies. If you’re intrigued and want more on the whole story – here it is.

Burger King, also lured by similarly enticing lower costs, had apparently fallen into the same trap several years prior and subsequently switched back to their previously trusted supplier, Bidvest Logistics. Continue reading “Marketers and Procurement Who Want to Talk Turkey With Their Agencies Can Learn A Lot From Chickens”

Posted in agency remuneration / compensation, industry news & trends, marketing procurement | Comments Off on Marketers and Procurement Who Want to Talk Turkey With Their Agencies Can Learn A Lot From Chickens

Managing Marketing: Talking digital, innovation and CX for business

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.

Erik Ingvoldstad, the CEO and Founder of Acoustic Group talks with Darren about their focus on helping companies manage their digital transformation from a cultural foundation, discover innovation within the organisation and manage the customer experience as a way of building brand. He brings a unique perspective with experience in the Army, business school and years in digital and direct marketing.

 

You can listen to the podcast here:

Follow Managing Marketing on Soundcloud or iTunes

Transcription:

Darren:

Welcome to Managing Marketing and today I get a chance to sit down with Erik Ingvoldstad who is the CEO and founder of the Acoustic Group, here in Singapore, welcome Erik.

Erik:

Thanks, happy to be here.

Darren:

Well it’s interesting because you and I both have history as being creative people; creative writers and creative directors but today we are doing very similar things. I believe the Acoustic Group, most of the work you are doing is really helping people with the digital transformation and dealing with the digital disruption that is happening with marketing and in the market place.

Erik:

That’s right. Basically, we work in three areas. One is digital transformation (and I hate the word digital transformation as many do, because it doesn’t really capture what it’s all about) which for me is a cultural shift and is an ongoing process. It is not like a moment in time.

If you want to change yourself, you can’t just do it on a Wednesday, you have to do it on a Thursday and a Friday and years to come, right, and it is the same thing for businesses. They have to make digital changes to the way they operate. That’s a cultural issue not a technology issue.

So, we work with digital transformation from a cultural perspective: how can we make services and products that consumers or people out there think solve their daily problems? That’s what it is all about.

The second thing we do is work with innovation. A lot of companies are setting up innovation hubs and the challenge with that is that people tend to think innovation is someone else’s problem, you know the R&D department, the innovation lab, they are the ones to innovate, but innovation has to happen close to the customer.

So, we work with culture to see how innovation can work in a more efficient way inside a company. How can you identify problems? I don’t want to talk about internal problems. If you ask a client what’s your problem? They will start talking about their internal problems; getting their ROI’s and KPI’S and all of that, and I am like, I am not interested in those problems. Instead, I am interested in your customers problems. What are your customer’s problems and how are you going to solve them?

When we start asking those questions, people are much more creative and much more interested in finding solutions but you have to understand you have a problem first. In the corporate world, I am sure you’ve heard this, people say, we don’t call them problems, we call them challenges or opportunities or whatever and I am like ‘No, a challenge is something you can put off until next year, a problem is something you have to solve today’.

The last part of this offering and customer experience, and I am not talking about that fake customer experience where you do something for a video and then you put it on line where everyone talks about it. That is not customer experience. Customer experience is the real interaction with real customers.

It is like, take a brand like HSBC which have these inspiring ads all over the airports, but if you walk into the bank and you get treated poorly or the cashier is not doing a great job or they have an internet banking solution that’s like from 1998, then you have a problem. That’s the problem you have to solve, not the advertising part, not talking about it.

Placing people at the front of digital transformation

Darren:

The thing that resonates with me is that all three of those are based around people. It is all about solving people problems. Because the first one, even digital transformation, culture comes from the people within the organisation and it is actually about transforming that culture and the way people think about their role and what the business means.

Your second one innovation, the biggest thing that annoys me is that so many organisations are racing outside to get someone else to innovate them rather than knowing that it actually exists within their organisation, they have just forgotten how to do it.

Erik:

Maybe they need a little bit of help to recognise the problems and then find solutions to those problems, but they should have a focus on solving them internally.

Darren:

And the third one, customer experience, we have seen people that actually almost have like a check list of customer touch points and what the experience will be at each of those but it is trying to find a recipe to a situation which should be customised. The best customer experience is the one that is personalised to the needs of the customer.

Erik:

Absolutely, and it is interesting because that is where branding is moving to, and I think that is the most central part of branding today. It is not advertising, it is customer experience. Jeff Bezos once said, ‘a brand is what people say about you when you are not in the room’, which I think is a perfect way of looking at it. If people talk about your brand and they go ‘I went into this and this store and people treated me like this and this’ that was a negative experience then that brand is a negative value to that person or the opposite. Continue reading “Managing Marketing: Talking digital, innovation and CX for business”

Posted in agency solutions, customer relationship management, interesting observations, marketing process optimisation, Podcasts, social media & digital marketing, strategic management | Comments Off on Managing Marketing: Talking digital, innovation and CX for business

How “Broken” Is Marketing at Major Advertisers?

This post is by Michael Farmer, Chairman of TrinityP3 USA and author of Madison Avenue Manslaughter: an inside view of fee-cutting clients, profit-hungry owners and declining ad agencies, which won the Axiom Gold Business Book Award for the best marketing / advertising book of 2016.

major advertisers

Marketing is not fully represented by the career-stressed Chief Marketing Officer. Marketing is not the digital/social specialist or the advertising manager. Marketing is not the head of promotions or the brand manager.

Marketing is the network of corporate executives, loosely connected by money, expertise and objectives to achieve improvements in shareholder value, presumably from higher product growth rates. Marketing is the CMO, the heads of Business Profit Centers, the head of Indirect Procurement, the CFO, the CEO and their media, creative and other ad agencies.

Once upon a time, this marketing network operated like a fine Olympic crew, pulling on the oars in unison and winning competitive races, slicing through the water with nary a splash. This is no longer the case. The marketing team is broken.

Cost reductions have replaced investments in marketing, and there is a loss of confidence in how to effectively spend marketing dollars. Embarrassingly, CMOs brag about their muscular cost reductions, as if cutbacks in marketing spend were heroic accomplishments rather than symbols of failure in expertise and execution. Continue reading “How “Broken” Is Marketing at Major Advertisers?”

Posted in industry news & trends, return on investment, strategic management | Comments Off on How “Broken” Is Marketing at Major Advertisers?

Marc Prichard, the low creative ratio at your agencies is not their fault, it’s yours

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.

Marc-Prichard

Okay, perhaps not yours Marc, but when you recently stated that you would like three quarters of your agencies to be creative, it made me reflect on the literally hundreds of agency remuneration deals we have benchmarked, negotiated and managed over the past 18 years and the fact that in every case the agency resources required were directly related to the requirements and expectations of the marketers.

Not just the marketers currently in the marketing department, but also the generations of marketers that have added to the huge amount of complexity within marketing and their marketing departments. Because as you acknowledge, part of the problem Marc is that marketers often expect agencies to mirror or partner with the marketing teams, but it is worse than that.

In the increasingly complex and complicated world of corporate marketing, the number of agency resources required has been increasing for the past three decades and the number of account management people, or project managers as you refer to them, has been multiplying for some very specific reasons.

Interestingly the marketing department causes all of these reasons and the marketing department can directly manage all of them. But they do not. Let me explain.

The creative to account management ratio

In our work with advertisers and marketers on their agency remuneration, one of the important factors we consider is the creative FTE (Full Time Equivalents) to Account Management FTE ratio (C/AM).

Why? Because this provides an indication of the complexity or demands of the client on the agency. Let me explain.

As Michael Farmer discovered in his early projects on scope of work measurement with Ogilvy & Mather in the 1990s, the number of creative personnel to account management personnel was 1.5. (Michael has reported that that this has since dropped to 1 to 1 under client pressure for efficiencies and lower costs).

What this means is that if the creative work required takes one creative person full time to deliver that work then it would typically require 1.5 account management people to manage, administer and co-ordinate the other client, agency and supplier functions to complete the task.

A low C/AM means that there is less administration, management and co-ordination, so more of what Marc Pritchard says he wants. A high C/AM means more administration, management and co-ordination to the creative time spent.

We similarly use this as a measure of complexity and demand. We did call this a measure of account maintenance but some advertisers where offended by being labelled ‘High Maintenance’ so changed it to complexity. But findings go beyond an industry average and start to look at the C/AM by category of advertiser and by individual advertiser to determine a measure of efficiency.

You see, Marc Pritchard is right in saying that a higher level of account management to creative is a sign that the relationship is overly complex and therefore highly demanding of the agency from an administrative and management perspective.

What we found was there is a significant range in the C/AM from 1 to 1, as reported by Michael Farmer, right up to the highest ratio so far of 1 to 7.2. We have excluded relationships, which have had no creative requirements but included relationships where the bulk of the creative work was adaptations of the global creative in regional and local markets.

Measuring retained resources to actual resources used

One of the important issues to consider when measuring the C/AM is that you need to often look beyond the number of agency resources in the retainer and try to establish the actual resources used by the agency to deliver the scope of work. Increasingly we find that the actual agency resources required could be more than 40 or 50% of the resources actually retained.

But it is incredibly difficult for agencies to charge for these as often the resources are highly fragmented with up to 20 or 30 individuals contributing to a handful of FTEs. That is because while the advertiser may retain say 3 people or FTEs in creative, this could be delivered by many more individuals contributing fractions of their time to make up the 3 FTEs.

Revealing this to the client would indicate a lack of cohesion and consistency of work in the creative department and raise unwanted questions of the agency. Continue reading “Marc Prichard, the low creative ratio at your agencies is not their fault, it’s yours”

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing process optimisation, marketing procurement, strategic management | Comments Off on Marc Prichard, the low creative ratio at your agencies is not their fault, it’s yours