Yes, advertising agencies exaggerate their award entries – Poll result

Recent reports in the trade media have raised questions over the accuracy of the award entries of a particular multi-award winning agency. In fact it appears that this agency has continued to win awards overseas with questionable and inaccurate claims. Now the agency CEO has stepped aside it is time to discuss the implications this has for agencies, the industry and their clients. Accusations of behaviour like this undermines trust, not only in the agency involved, but the award process and the industry at large.Excerpts are optional hand-crafted summaries of your content that can be used in your theme. Learn more about manual excerpts. Continue reading

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Marketing Performance measurement – Become an instant expert

One of the greatest challenges for marketers is to prove that the activity is actually making a financial impact. So as a key influencer, you are in a great position to challenge your leaders with questions such as: What are the real objectives of this activity? And, is it driving brand value, or aiming to deliver business and financial growth? Continue reading

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Warning Signs Your Agency Relationship Is Heading For The Rocks

While many agency relationships have their own natural rhythm and their tide of satisfaction ebbs and flows a little, sometimes rocks can appear seemingly out of nowhere. In most cases, the rocks should be navigable – providing you know they’re ahead and providing there’s a clear chart to course to avoid them.  And while agency relationships don’t necessarily have lighthouses to warn of danger, there are some common warning signs that your client / agency relationship isn’t as strong as it needs to be. Continue reading

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Managing Marketing: The impact of science and technology on media and marketing

Ori Gold is the CEO of programmatic platform Bench, and here discusses the impact of science and technology innovation and the best way for marketers to deal with this rapid and constant change. Embracing complexity and applying the scientific approach of test and learn is central to thriving in the changing world of marketing and business. Continue reading

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If your marketing function is not driving growth you’re not doing it right

One of the big issues facing marketing is the perception, commonly held in businesses, that it is nothing more than the ‘colouring in department’. It is a demeaning phrase and one I heard earlier this year when I was invited to participate in a CEO Forum in the City by one of the accounting firms. Continue reading

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When is the right time to set an Engagement Agreement? Three case studies

Engagement Agreements are an effective way of defining the ways of working between advertisers and their agencies. One of the best times to undertake the process of defining the relationship and the expectations of both parties is at the beginning of the relationship, rather than waiting for things to either go wrong or for poor practices and misalignments to become major issues. Continue reading

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Madison Avenue Makeover: How Can Advertisers use Agencies to Restore Growth and Profitability for their Lackluster Brands?

Who is suffering the most from Madison Avenue’s manslaughter? Agencies, who see declining fees and growing workloads, and have been downsizing to generate holding company margins — while slowly destroying their capabilities? Or advertisers, whose brands are languishing, putting CMO tenure at risk?
Relationships look like speed-dating matchups that end up as one-night stands with disappointing sex. Something needs to change. Madison Avenue needs a makeover. Advertisers need to kick-start their brands’ performance. Continue reading

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Managing Marketing: The incredibly complex choices facing marketers

Liam Walsh, Managing Director of Amobee talks with Darren on the increased choice facing marketers today with technology companies, management consultants and agencies all competing for the marketing budget and why marketers are increasingly challenged in making these choices in the face of increasing complexity. Continue reading

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How TrinityP3 helps measure the performance of marketing – 3 case studies

After more than 15 years of downward pressure on marketing costs, the majority of traditional businesses are struggling to deliver growth and yet marketing provides one of the most successful drivers of business growth and performance when properly invested and measured against performance. The problem is that in many organisations marketing is treated as a cost of business with little or no focus on the return on that marketing investment. No wonder the strategy of cost cutting to profit has had such a major impact on marketing and subsequently the marketing agencies and suppliers. Continue reading

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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

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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

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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

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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

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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

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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

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