How to define an agency scope of work to deliver increased value

This is the first in a series of agency scope of work management articles. Managing the scope of work for your agency is possibly the easiest and fastest way to increase the buying power of your marketing budget by removing duplication and uncertainty as much as possible from the agency’s work. This way, you can get more for your agency budget without lowering the rates and prices.

This applies to all types of agencies: creative agency scope of work, media agency scope of work, marketing agency scope of work, and more.

But why is specificity so important? Anyone who is involved in manufacturing, construction or technology knows by clearly defining and specifying the actual requirements upfront, you are better able to plan and execute the construction/manufacturing process more efficiently and effectively.

What is required for a high-quality scope of work

While in a dynamic market, it may be difficult to specify all of the marketing requirements for the year ahead, that does not mean you should not specify the known requirements and even include those most probable ones.

It is too easy to say that it is not 100% definite and postpone the process, but this comes at the expense of either having the agency allow for, in their retainer and fees, whatever you may throw at them later, at a premium cost.

This is why marketers need to prepare agency scopes of work that are detailed, defined and specific in a way that allows the agency to be able to estimate resource requirements, scheduling and costs. It also allows marketers to review and manage their requirements in a more strategic way with a scope of work providing the basis of the plan.

Outputs can be tangible and intangible

We use a process of defining output, as the marketing communications plan will usually specify outputs based on budget and strategy. We have found that outputs encourage greater specificity than simply a list of agency roles and responsibilities.

But in a world of increasing channel options and executional outputs, defining the specific outputs can be challenging. But the first step is to convert your marketing communications plan into an outputs plan that includes tangible and intangible requirements.

Tangible outputs are clearly definable and are usually the product of a production or manufacturing process such as advertising (e.g. Television spots, press and magazine ads, print materials, radio spots, outdoor, webpages, apps, etc.) What we term intangible are the processes that underpin and support the tangible processes (e.g. Brand Strategy and Planning, Communications Strategy and Planning, Research, etc.).

Then by channel

This process can be managed across the whole organisation by brand or by business unit. If there is only one brand and one marketing communications stream, then the process is undertaken for the whole business at once. But if there are multiple brands or business units, then defining the scope for each can be done individually and then bought together and reviewed.

So once you have sorted requirements by tangible and intangible, it is then time to organise the tangible requirements by brand or business unit. This is usually done by channels and can be specific as including durations, sizes and quantities (e.g. 30-second TV, 15-second TV, Full page press, Radio campaign 3 x 30 seconds, Microsite 4 HTML pages, etc.).

The objective is to be as specific as possible. Still, as you will see in later articles in this series, this specificity assists with making changes later and creating agility and flexibility in the scope of work.

Then, by week, month or quarter

We have previously written about the difference between a scope of work and a work schedule. The issue here is managing the peaks and troughs of the workload for the agency. This is particularly important where there are multiple brands or business units, all with their own scope of work.

Most advertisers can apportion their various requirements by the quarter. Some projects will fall across multiple quarters, but knowing when the briefing, conceptualisation, approvals and production fall on the calendar helps the agency ensure they have the right level of resources available to manage the project.

In cases where the advertiser requirements go into the thousands of outputs, and this is increasingly common with content, social media and digital marketing. We encourage the schedule of work to be structured monthly or even weekly if at all possible.

Interestingly, retailers have no problem as the requirements are driven by the retail calendar and consumer goods companies are very good at scheduling activities for their brands. It is usually other categories, such as financial services, telcos and the like, being high volume and often reactive to the market rather than having a specific or visible plan.

Beyond the output, what is required

Many marketers will stop by now, in developing and defining their scope of work. But it fails to embrace the biggest opportunity for delivering decreased complexity, waste and cost. This is because it would be natural to assume that every output in the scope of work is a new piece of work to be originated.

Certainly, from an agency perspective, it is more desirable to create a new piece of work rather than reuse or recycle existing work either previously developed by the agency or, in the case of a multinational brand, developed overseas.

We have defined three requirement distinctions for the requirements and several sub-distinctions. The distinctions are:

  1. Origination – This is creating a new piece of work from scratch. It is the total origination of a new communications strategy.
  2. Refresh / Extend – This is where there is an existing communications strategy and creative expression, and there is a refresh of the creative concept or a creative refresh of that strategy.
  3. Adaptation – This is where there is existing creative work, and this is to be changed to adapt to a change in the brief or even a change in the strategy. The sub-distinction here is that the work could be complex or simple, with specific definitions of each.

The important function here is it challenges the default mechanism of making everything an origination and encourages marketers and their agencies to look for and specifically manage the process of refreshing and adapting existing strategy and creative work, leaving more budget for other marketing activities.

Bringing brand value to the process

You could stop here, and many marketers and advertisers do. But there is an increasing move for many organisations to embrace Zero Based Budgeting (ZBB) for their marketing budget setting. The cornerstone of ZBB is aligning marketing investment to the return on that investment. This means sorting the scope of work against the strategic importance and the level of investment.

This is because, at the moment, the task is only output-defined and has no alignment to the importance, either strategically or financially, for the client. Without this, two identical outputs would logically require the same amount of time, resources and cost, even though there may not be a strategic or financial justification.

Take this example of a brand that makes one television ad and runs it on and off over two years and also makes a promotional television ad that will run for six weeks only and never be used again. Is it justified that the two have the same output and, therefore, have the exact agency resource requirement and the same cost?

This is strategic importance and it goes to defining the specific strategic role of each output and values this role accordingly.

The second consideration is the financial value, which should be reflected in the budget but often is not due to historical, legacy or other influences. An example would be a house of brands or a branded house with multiple brands or products and services under one brand.

If one brand generates more revenue and profit than the other, should you invest as much in promoting that brand? Yet the agency would logically argue that the resources and the cost for the outputs on a valuable brand or product would be the same for a lesser quality brand or product.

This is the basis of value-based remuneration, which you can read more about here.

Definition and specification are essential

Without a defined and detailed scope of work, the default position requires the agency to build contingencies. It also means you cannot review and restructure the requirements to maximise efficiencies, reduce costs, and optimise the resource utilisation of the agency.

It is worth the effort as, in our experience, this process can deliver significant savings in agency fees and improves the agency’s ability to deliver the outcomes to the quality level required. This is a win/win for both parties.

Read the second post in this series, The impact of economies of scale on scope of work cost

TrinityP3’s Scope of Work Management service evaluates your current agency’s scope of work and recommends the best approach, calibrated to your needs and benchmarked against the industry as part of our Agency Commercial Evaluation Service.