What happens when the best agencies are no longer interested in pitching for your business?

Recently we have read reports from the CEO of WPP, Sir Martin Sorell and even our own Executive Chairman, Michael Farmer, talking about the almost irrational motivation of agencies to pitch for and win business at any cost. Certainly, with so many agencies in the market, you would think there is no shortage of candidates to pitch for an advertisers business. But the fact is that not all agencies are equal, yes, some are more equal, or perhaps more desirable than others. In any market there are a handful of agencies that are considered outstanding and then there are the others and behind them the ‘also-rans’. Continue reading

Posted in agency remuneration / compensation, agency search & selection, industry news & trends, marketing procurement | Comments Off on What happens when the best agencies are no longer interested in pitching for your business?

Can management consultants teach ‘value’ to the advertising agencies?

It is interesting to see how the advertising industry has reacted to the recent acquisition play of the management consultant firms like Accenture and PWC. Some people embrace the trend while others are sceptical as to the efficacy of the strategy. Will Accenture be able to leverage the value of their investment in Karmarama and Monkeys on opposite sides of the world? Or will what is seen as fundamental cultural differences cause it to fail? Time will tell. Continue reading

Posted in agency remuneration / compensation, industry news & trends, marketing procurement, return on investment, strategic management | Comments Off on Can management consultants teach ‘value’ to the advertising agencies?

Why working / non-working ratios no longer work for advertising

As an industry we love our terms. Usually they are TLA (Three Letter Acronyms) like ATL, BTL and TTL. Or RFP, RFT and RFIs. And marketing technology digital buzz words are making this even crazier.

But there is a concept which has recently made a prominent return to the industry and yet it is totally outdated and no longer relevant. That is Working and Non-Working Spend. The reason for the sudden resurgence is a combination of management consultants who are pushing Zero Based Budgeting, not so much to drive marketing performance and return on investment, but more as a marketing investment framework to reduce the marketing investment and therefore budget.

The second source is the increased activity in investments in traditional consumer package goods brand companies by private equity and venture capital, and their use of the term to inform the market that they have magically discovered the investment strategy to turn the flagging performance of these entities around by simply reducing non-working spend and improving the working to non-working ratio.

In fact, as I write this, it seems so self-evident that you wonder why the schmucks that owned the business before it was bought by these clever investors had not done this already. Why wouldn’t you reduce non-working spend. After all, if it is non-working why are you spending anything on it anyway? Continue reading

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing process optimisation, marketing procurement, return on investment | Comments Off on Why working / non-working ratios no longer work for advertising

The dangers of pitching your agency on a regular basis

Do you work for a company that routinely has you take your contracted agencies to pitch every three years? Is this mandated by finance or procurement? Or is this something that the marketing team believe is the best option? We know that many organisations have a habit of going to pitch every three years, just as we know that in every switched on agency there is a new business person who marks down the date of your last pitch with a note to call you in two years and six months hoping to get on your next pitch.

But here is the thing you are missing. It is highly likely that while you have justified this practice as being good governance and due diligence, it is possible that you are wasting significant amounts of money and possibly doing damage to your corporate reputation, along with the performance of your brand and business. Now you may think this is counterintuitive advice coming from a company that you may associate with pitching, but the fact is pitches are less than 10% of the strategic management consulting we do and secondly it is the other 90% of work on marketing and agency roster performance that has informed this opinion. But let me explain as to what we have observed. Continue reading

Posted in agency search & selection, interesting observations, marketing procurement, return on investment, strategic management | Comments Off on The dangers of pitching your agency on a regular basis

How TrinityP3 is helping optimise marketing performance through technology – 3 case studies

Technology platforms, both martech and adtech, provide marketers with the opportunity to be more effective and efficient in their marketing. But technology is said to be moving at click speed and the investment is significant. It is important when investing in marketing technology solutions that the marketer has defined objectives and has a clear view of what success looks like. But, more than this, it is important to take into consideration the current processes that the technology is intended to support and the cultural appetite for change.

We have been involved in helping companies select new technology platforms and tender for new vendors, but we have also worked with organisations that have legacy systems and platforms that are under-performing or not performing at all, and have provided a diagnosis and options for consideration. Also, we have reviewed our clients’ current technology stack to identify optimisation opportunities and assess the organisation’s technology transformation. Each time we bring a totally independent and expert perspective to the process. Here are three case studies of the work we have undertaken providing solutions to marketers’ technology challenges. Continue reading

Posted in agency search & selection, case studies, customer relationship management, data & direct marketing, industry news & trends, marketing process optimisation, marketing procurement, media planning & buying, social media & digital marketing | Comments Off on How TrinityP3 is helping optimise marketing performance through technology – 3 case studies

Don’t Count Out the Holding Companies – At Least Not Yet

The latest holding company news, gleefully reported in the trade press, shows a shortfall in WPP’s first half 2017 growth rates, with forecasts of lower long-term growth in coming years.  WPP’s share price took a dive.  Campaign U.S. headlined “Sorrell under pressure to streamline WPP as FMCG clients cut back on marketing.”  Panic!  WPP is not the only holding company affected by advertiser spend cutbacks, but Sir Martin is highly visible, and he takes most of the industry flack.  How concerned should investors be?  Don’t count out the holding companies yet.  They have not played all the potential cards in their hands.

Holding companies have been visibly with us for the past 30 years, and during that time they have pursued Three Big Growth Strategies:

1) Acquiring marketing communications and research companies;
2) Setting and enforcing aggressive portfolio company budgets, requiring agency revenue and margin growth through business development, cost reductions, and other efficiencies; and
3) Selling “holding company relationships” to give clients a broad range of agency services across media disciplines – required because their individual agencies did not integrate across disciplines.

There are other holding company initiatives, of course, like providing back-office services for portfolio companies (travel, accounting, IT, etc.) but the Three Big Growth Strategies have dominated their activities. Continue reading

Posted in agency solutions, industry news & trends, marketing procurement, return on investment, strategic management | Comments Off on Don’t Count Out the Holding Companies – At Least Not Yet

Managing Marketing: The importance and the difference in marketing to women

Kylie Rogers, Managing Director of Mamamia Women’s Network, and Lauren Joyce, Head of Broad, their strategic consultancy, talk with Darren on how women are driving commerce today, and why marketers may be missing out on this dominant audience by not marketing specifically to them in the way they want to be engaged.
Transcription:

Darren:

Welcome to Managing Marketing and today I’m here at the Mamma Mia Women’s Network with Kylie Rogers, Managing Director and Lauren Joyce, who’s Head of Broad, which is the strategic consultancy here at Mamamia. Welcome.

Kylie:

Thank you so much for having us, Darren.

Darren:

In actual fact, I should be saying thank you for having me because coming here to Mamamia, as soon as the lift doors open and I saw all of the pictures on the wall and all of the people and the energy I could tell that this was a very different place to work.

Kylie:

I appreciate your saying that. Sometimes in the furore of your working week you forget the energy that really does exist in this place; it’s very progressive. It’s almost tangible.

Darren:

It’s palpable when the doors open. I think that’s why I walked in a bit confused; it was like being hit with this energy and noise. There are workplaces where there are people screaming but it was just this energy that is happening here. It was very exciting. Continue reading

Posted in agency search & selection, industry news & trends, marketing process optimisation, marketing procurement, Podcasts, return on investment, social media & digital marketing, strategic management | Comments Off on Managing Marketing: The importance and the difference in marketing to women

Are you benchmarking or butchering your agency fees?

Benchmarking has quite rightly earned a poor reputation. Recently Michael Farmer, Executive Chairman of TrinityP3, expressed this opinion in an article in Media Village republished here. This poor reputation is primarily because it is used by many in the industry to simply reduce agency fees and not as a way of obtaining a reference point for comparison, which was the original purpose of a benchmark.

I have shared this opinion with him and the industry way back in 2011 when it became obvious that many in the industry (including many competitors) were simply using benchmarking to reduce advertising agencies to the lowest common denominator. This is because many are simply benchmarking one dimension of agency being costs, such as hourly rates or day rates. In this case, they are relying on titles and position descriptions as a measure of quality, or ignoring value completely, then simply butcher the fees paid for those resources to the lowest in the market. It can certainly deliver cost reductions, but usually at the expense of the quality of those resources.

Very early on we acknowledged that the rate or fee per resource was flawed and often criticised those who used cost per FTE resources as a benchmark for being the same type of people who would buy books by weight or choose a movie based on the length expecting it to represent better value. Instead, we set about developing benchmarks that better represented a benchmark of value rather than cost.

It is not benchmarking, but the misuse of benchmarking that is the issue.

Misapplication of agency remuneration benchmarks

I participated in a meeting of a Marketing Leadership Team (MLT) and was presenting the results of the agency benchmarking we had undertaken on a number of their agencies. The various agencies had different roles in the roster of agencies in regards to the type and quality of work they were expected to produce. They also had different specialist knowledge and skills that made the roster complimentary to the capabilities required by the marketing team.

Using low, medium, and high benchmarks, and benchmarks specific to the category in which they operated, we were able to provide significant insights into the current remuneration models and how well they were performing for both the marketers and the agencies. It was not a surprise for the MLT that the lead agency was at premium to the market overall, even though the organisations procurement team had achieved a significant reduction in the agency hourly rate at the contract negotiations three years earlier, the agency was effectively working at the high benchmark because of the additional hours, particularly in creative, they were investing in delivering the scope of work.

While the procurement team had reduced the premium agency to midlevel benchmark fees the agency had managed to recover by inflating the resources required for the scope of work to make up the shortfall that would have resulted in the retainer. The marketers were comfortable with this and were also happy to know that they were getting what they were paying.

On the other hand, a second tier agency who worked on project fees were priced on an hourly rate card similar to the lead creative agency (clearly the benchmark provided at the time) and slightly higher than their market position and expertise, but were managing on a project by project basis to add incremental margin to each project quote as a way to improve profitability. Interestingly it was this second tier agency that was perceived as more cost-effective even though they were effectively more expensive overall for delivering the scope of work.

The reason for the difference in perception turned out to be that being on a project fee and being able to incrementally increase margin the second tier agency were more attentive and more available than the retained creative lead agency.

If the purpose of the original agency negotiations was to reduce cost to the organisation, the procurement team had used a common benchmark across all agencies, but in a very one dimensional manner, being rate or resource cost. In the process they had encouraged or at least allowed the agencies to game the system procurement had created by increasing resource hours in the retainer to make up for the shortfall, or allow a project system were the agency could incrementally increase costs without anyone noticing. In both cases the cookie cutter approach to benchmarking failed. Continue reading

Posted in agency remuneration / compensation, agency search & selection, interesting observations, marketing procurement, resource rate calculator, return on investment | Comments Off on Are you benchmarking or butchering your agency fees?

Six reasons why you may have many more agencies and suppliers than you need

We provide a very popular solution called Agency Roster Alignment where we analyse and map the current roster against the advertiser’s strategic needs, spend and satisfaction with the incumbents. Some of the really common responses when we report back on the current rosters is, first, many are surprised at the number of agencies and marketing vendors on the roster and, second, how they could have ended up in this situation with so many agencies and suppliers. Let me deal with the first response and then expand on the second in the observation points below.

First off, when we take about rosters we are not simply talking about the major agencies such as creative, media and digital, plus perhaps a PR company, a design studio, and that sales promotion firm you use occasionally. We are talking about all of the agencies, suppliers and vendors that you spend your budget with, including market research firms, event companies, mail houses, technology solutions providers, and everyone in between.

Just as marketing has become more complex, the number of vendors, agencies and suppliers has grown too. But the fact is there are some very solid reasons as to why you may have more agencies and suppliers than you need. And that is not a good thing, as each extra one on your roster is consuming time and money by just being there. Continue reading

Posted in agency solutions, interesting observations, marketing process optimisation, marketing procurement, return on investment, strategic management | Comments Off on Six reasons why you may have many more agencies and suppliers than you need

17 ways advertisers can make their advertising production more transparent

In light of the recent ANA Production Transparency Report in the US, and the growing trend for the ‘Big 6’ Networks to establish separate brands for production services, here is a list of key considerations for your current agency contracts. TrinityP3 believes terms and conditions should be transparent, and not support hidden agendas, especially where an agency may engage a related production supplier. So here are our seventeen areas or principles when reviewing your agency and production contracts:

Review your agency contracts regularly – The contract should contain transparent terms, which are clearly understood by both parties, and reviewed at least every third-year due to technological advancements and process efficiency within industry practices. Do you know exactly what the terms and conditions are of your agreement? If not, you should, transparency is paramount.

Be clear on the type of relationship your contract defines

Contracts are generally one of two formats. This is either one of Principal and Agent, or alternatively Principal and Contractor. Where the Agency is acting as an Agent, the Agency has a fiduciary responsibility to act in the best interests of the client, and procure production at the best possible price. However, where the contract engages the agency as a Principal and Independent Contractor, often terms allow for the agency to mark-up or provide less disclosure and transparency over the sourcing of external production services.

There has been a recent shift towards these agreements where the Agency acts as the Principal with production suppliers, to limit the ‘risk’ of audit and potential compensation in the case of a breach of terms of the agreement. The Agency engages suppliers, which are often deemed external 3rd parties (although often related), which are not subject to the terms and conditions of any Master Services Agreement.

Investigate contracting third party production companies directly

A direct Production Services Agreement with the related 3rd party production house is always recommended, which should include the same transparent terms as the Agency agreement, and especially include the right to audit. This supports the move away from ‘fixed price’ and ‘non-auditable’ external production agreements, which are common within the industry. Continue reading

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing process optimisation, marketing procurement, television & electronic production | Comments Off on 17 ways advertisers can make their advertising production more transparent

Why performance based payments need to be an incentive not a disincentive

How do you create high-performance teams? Well if you look at what often passes as performance based compensation, you would think it is about taking money away from the agency before then setting an unreasonable and unrealistic performance metric, and then asking the agency to work at getting their money back. Talk about all stick and no carrot. Is it any wonder that so many marketers report that their agency performance remuneration efforts failed? Let’s be honest for a minute and admit that most of these performance models were really about reducing the agency fee and had very little to do with truly wanting to encourage performance. The technique would be applied usually as a way to get the agency to reduce their overall fee by 10% to 15% by placing it ‘at risk’ for an opportunity of earning back perhaps a maximum of 20%.  Continue reading

Posted in agency remuneration / compensation, industry news & trends, marketing procurement, return on investment, strategic management | Comments Off on Why performance based payments need to be an incentive not a disincentive

How long payment terms impact client / agency relationships

Let me be completely up-front here, this is not just an issue for advertising agencies, it is also an issue for consulting companies like mine. There are many major companies who will put you through a detailed and protracted procurement process, negotiate your tendered price down and then inform you that they have payment terms of 90 days or more.

Others are less obnoxious in that they state their payment terms up front, which, depending on the type and size of the project being tendered, allows us the opportunity to politely withdraw from the process because there are plenty of other more reasonable companies willing to pay for our services on 30 days and sometimes less so that we do not need to waste our time on companies who basically expect their smaller vendors and suppliers to act as their source of free cash. Continue reading

Posted in agency remuneration / compensation, industry news & trends, marketing procurement, return on investment | Comments Off on How long payment terms impact client / agency relationships

The challenges facing Automotive marketers in selecting new agencies – Three case studies

Share59 Tweet72 +1 Share10Shares 141The automotive industry is being disrupted globally. Electric motor vehicles like the Tesla are providing a viable and desirable alternative to the fossil fuels of the past. Diesel technology has been shown not to be as … Continue reading

Posted in agency search & selection, agency solutions, case studies, interesting observations, marketing procurement | Comments Off on The challenges facing Automotive marketers in selecting new agencies – Three case studies

The Ad Industry at War with Itself

This month marks the one-year anniversary of the publication of ANA’s “media transparency” recommendations, which followed a major investigation of media agency practices. Lest we forget how central media transparency is to ANA, Bob Liodice (President and CEO of ANA) and Doug Wood (outside legal counsel) published a MediaVillage article in mid-July reminding us that “if the allegations against the [media] agencies are true, the behaviour is reminiscent of past high-profile financial scandals.” Continue reading

Posted in agency remuneration / compensation, agency solutions, industry news & trends, marketing procurement | Comments Off on The Ad Industry at War with Itself

The danger of confusing best practice with common practice

Many of the challenges marketers are facing are new. Digital technology has had major impact in disrupting all aspects of business and particularly marketing because it has disrupted consumer behaviour too. Therefore, while we agree that the foundations of marketing and marketing strategy are still essential, there are new challenges arising in the implementation because of the increased complexity and constant change. In the face of these new challenges and complexity, many of the old tried and true solutions no longer work. Yet it is human nature to stick with what you know or what has been tried and tested, rather than trying something new. Continue reading

Posted in agency remuneration / compensation, agency search & selection, Evalu8ing - Relationship Performance Monitoring, interesting observations, marketing procurement | Comments Off on The danger of confusing best practice with common practice