How well is your media agency performing? How competitive is their fee? Are they providing best practice service? The way to answer these questions would be to go to market. But pitches are so disruptive and come with increasing risk to the brand the advertiser. Find out a better way to get these answers here in Media Minutes.
DARREN: Welcome to Media Minutes. I am Darren Woolley STEPHEN: And I am Stephen Wright DARREN: In the next few minutes we will share with you our view on ways to compare your media agency to market without going to pitch. Stephen? STEPHEN: Well, Darren, it appears that many advertisers have been told by their procurement and legal teams that the only way they can renew a contract with their media agency is by taking them to market with an open tender. DARREN: But Stephen, a tender is so time consuming and disruptive. And besides, the incumbent has little chance of retaining the business. STEPHEN: Yes, I know Darren. While many advertisers think the incumbents has the best chance of retaining the business, the numbers do not support this. Data from global research firm COMvergence shows that incumbents are inclined to retain accounts one in five times. DARREN: A 20% chance of keeping the client. Does not sound like an advantage to me, Stephen. STEPHEN: It is not. And having a high performing relationship with the client is no advantage either. I have had many media agency CMOs tell me that even with TRR scores of nine or better out of ten, their clients have still taken them to market tender based on company policy. DARREN: Rather than due diligence, it sounds flawed. Those facts make me think the strategy is inclined to drive a regular turnover of suppliers than drive long term high-performing relationships. STEPHEN: Very true, Darren. But there is an alternative. One of the dangers with going to market is you are relying on the agencies putting their best but most achievable proposal forward. But in their desire to win, often they will make offers and provide proposals that are at best unsustainable and worst undeliverable. DARREN: So, how can we overcome this, Stephen? STEPHEN: We recommend, rather than going to tender, you go to a Commercial Review of your media agency. DARREN: A commercial review? What is that. Stephen? STEPHEN: A commercial review is an independent assessment and evaluation of all aspects of the commercial arrangement between the advertiser and the media agency and is based on the current best practice available in the marketplace. DARREN: Okay, sounds impressive, Stephen. But what exactly is it? STEPHEN: It is having independent industry media experts go beyond the relationship performance to evaluate and quantify the commercial performance including media value, agency fees, contract suitability and process efficacy to validate current performance to market and identify opportunities for optimising performance for both the advertising and the agency. DARREN: So, it is not just a relationship survey then, Stephen? STEPHEN: Darren, relationships are important. But what is being tested here is the commercial realities, including cost, but more importantly the delivery of value. This means looking at all aspects of the commercial relationship and comparing this to what could be reasonably expected in the market based on like for like analysis. DARREN: So, it this provide the due diligence of a pitch? STEPHEN: In many ways, yes Darren. It focuses on the delivery of value in the context of an existing performing commercial relationship. While a pitch is making an evaluation of what could be based on what is promised, without out proof of what can be delivered. DARREN: Less risk then for the advertiser, Stephen. STEPHEN: That’s right, Darren. It provides advertiser, finance, legal and others in the organisation a complete commercially based assessment of the value in current media agency relationship, plus identifies ways to improve that value in the immediate future. DARREN: Something an advertiser in a pitch can only hope for? STEPHEN: Of course, there are times when a pitch is completely justified Darren. But if you have a high performing relationship with your media agency, there is no need to put that at risk to have certainty on value. DARREN: Thank you Stephen. And for more value like this, make sure you subscribe to Media Minutes. A weekly snack on all things media. Until then. I’m Darren Woolley, and he’s STEPHEN: Stephen Wright TOGETHER: And this is Media Minutes.