Have marketers forgotten the Golden Rule for agency performance?

In China they have the Golden Rule:

The man with the gold makes the rules.

This is an interesting principle as a buyer of services. The fact is that as the buyer you get to set the terms. Therefore if you are unhappy with the terms of the purchase then you only have yourself to blame.

This especially applies to marketers complaining about their agencies and their performance. Because, as the buyer, you get to set the terms of the engagement between the two parties.

Let me demonstrate.

Case Study 1: I just assumed…

“My agency is not performing to my expectations”

I wish I had a dollar for every time I have heard this from a frustrated marketer. Invariably, this is because everyone involved is relying on the power of mind reading. We usually find that these expectations are not usually articulated in a clear and consistent manner.

I have written previously about the need for going beyond service level agreements and KPIs and the use of TrinityP3 Engagement Agreements. But the question of who is responsible for either initiating the clear articulation of expectations is a valid one. You see, too many marketers believe they have a process for managing their agencies, but in actual fact few actually have one that is rigorous or disciplined.

The problem is that agencies will work across a multitude of organisations and marketers. Therefore, if the marketer does not articulate their expectations the agency will naturally simply default to the general process of the agency. Therefore as the ‘buyer’ of the agency services it is incumbent on the marketer to define the operational and performance expectations of the relationship and to measure and manage these to ensure delivery.

Case Study 2: Follow the money trail

Complaints about the agency recommending the same thing over and over again are nothing new. In media it is “all they present is television”, in creative “every presentation starts with a television commercial” and digital “it is always a phone app”.

Now there can be completely legitimate reasons for a narrow strategic recommendation. But there can be other influences on the recommendations. While the industry talks about media neutral advice, in most cases where strategic recommendations and implementation are provided by the same company it is difficult to maintain this neutrality.

It could be that the agency is making greater margin on those services, or they could be providing those services in-house or through a wholly owned subsidiary or affiliate increasing their revenue or it could be that the agency is building specific capabilities and is using their clients to pay for this.

No matter the cause, it is important for marketers to understand the underlying arrangements as part of the transparency for establishing an open and trusting business relationship. By understanding the agency’s business model you are better able to assess the agency’s recommendations.

Case Study 3: Share and share alike

“My agencies can never work together. I spend all my time sorting them out” says the long suffering marketer. Little does the marketer realise they have set up their agencies in competition with each other. It is hard to collaborate or work together when you are competing with each other for budget.

Collaboration requires trust. Some marketers will create competitive tension and distrust between agencies, as a way to encourage agency performance, yet also want the agencies to work together. The reward for the agency is winning a greater share of the marketer’s budget at the expense of the other agencies.

In these circumstances it becomes difficult for agencies to work together. The reward of collaboration is a happy client, but the bigger and more tangible reward is a greater share of the marketing spend and therefore greater influence.

Using the Golden Rule

While marketers would find it easier if they could simply leave it to the agencies to manage for them, this is ineffective. The fragmentation of media channels and the rise of diverse category and channels specialists means that one agency is usually not in a position to manage this without having undue influence.

Instead marketers need to take leadership and ownership of not only the brand strategy but also the implementation of that strategy. The most powerful influence they have is the Golden Rule. By structuring your supplier roster, clearly defining roles, responsibilities and expectations of those suppliers and then rewarding (or penalising) performance, marketers have significant influence over the performance of their agencies.

While it may feel better complaining about your agencies, the truth is that agencies will perform to the level they are allowed or encouraged to achieve. The saying is that all marketers get the agencies they deserve. But the fact is they get the agency performance they allow.

If your agencies are not performing to expectations, the first place to look would be the way you manage them. Especially how you pay them and what you pay them for.

Don’t you agree?