Changing agencies is changing more than just a supplier

Changing agencies

Too often we hear of marketers who have gone through a tender process to select a new agency only to find that after the initial ‘honeymoon’ period they find themselves with as many issues as they had before the tender. Sometimes these issues are the same as before and other times they can be a whole new set of problems.

When the same issues arise again it is usually because of underlying issues within the marketing team, which end up being replicated with the new agency. In this case it is important to get to the underlying causes and address these, otherwise the same problems will arise again, no matter what agency is chosen.

But more importantly is when new issues arise, as this is often reflective of the fact that the agency has been appointed without consideration to the rest of the roster. In a world where marketers will have multiple agencies across a roster and an expectation that these agencies will work together, there is a responsibility on the marketer to ensure that the selection of the new agency integrates into the roster.

Consider the roster

The decision to go to market and review a particular agency could be due to contractual obligations, poor performance or changes in requirements. But in the conversations we have with marketers, many see the process in isolation and do not consider the impact on the overall roster.

Sure, the existing agencies will happily say they will work with anyone, but in actual fact the new agency poses a potential threat to the other rostered agencies.

Depending on the role of the agency, the new agency could disrupt the ‘pecking’ order. It could also lead to significant changes in roles and responsibilities, not just for the new agency, but for the other agencies on the roster.

One of our clients had decided to change from their global agency network arrangement to appoint a local lead agency and the incumbent global network would take on the role of implementing the global brand work from the new agency on a market by market basis.

This appeared fairly straight forward to the marketer and the consultant they appointed. But two years later we are still managing the transition that, if undertaken at the time of the review, would have saved millions of dollars and months of time.

Align the responsibilities

This was actually a significant change in business strategy, rather then just the selection of a new agency. While we were not involved in the process at the time, it is clear in hindsight that the CMO at the time and the consultant were single-mindedly focused on the selection of the new agency, rather then the impact of the new agency and integrating the changes required across the roster.

The new agency was taking on the lead role, complicated by the fact that the incumbent was staying on in a new implementation role. Complicated even further by the fact that the media agency and the incumbent were both part of the same agency network.

This is why when you are considering changing an agency or agencies; you should also consider how the new agency and their role will impact on the other agencies in the roster. In defining the role of the new agency, you should also take into consideration the roles of the other agencies in the roster in planning the tender process.

This has become increasingly important as the range of capabilities of the various agency types continues to expand and converge at the same time. Media agencies are offering concept and creation of content. PR agencies are offering social media management, events and experiential. Creative agencies are offering a wider range of services including media planning and buying.

Managing change and transition

Change is hard. Some marketers go into the agency tender process thinking it will be easy, only to discover at the most basic level it is incredibly time consuming. But reviewing and changing agencies by tender is an increasingly complex procurement process that requires a significant level of due diligence and governance to ensure the process and outcome is fair and effective.

But beyond the outcome is managing the changes that occur as you transition a new agency into the roster. In the case of our global client, they believed the transition of the new lead brand agency was fairly straightforward. And in many ways it was for the specific agency they had appointed. But what they had not identified, planned or considered were the ramifications for the incumbent, who was now playing second fiddle to the new lead agency and the media agency that was aligned to the incumbent agency.

Following the appointment of the lead brand agency, the marketers found that the incumbent, responsible for implementing the new brand work on a market by market basis globally was in fact continuing to create new work in each market with the support of the media agency and local marketing teams in each market.

What should have occurred, either prior to the tender process, or at the latest, prior to the appointment of the new lead agency, was that the changes to the incumbent agency’s contract and remuneration should have been adjusted and then the roster informed of the new way of working.

It eventually all worked out.

On the first anniversary of appointing the new lead brand agency, the new CMO who had inherited this situation decided to engage TrinityP3 to review and benchmark the current agency roster.

It was clear that the relationship between the lead brand agency and the global implementation agency and media agency was not working efficiently, with significant duplication in work across each market resulting in high fees for the implementation agency.

It was decided with the marketing team that we would not immediately negotiate the agency contracts to the benchmark levels as this represented a significant reduction for the global implementation agency. Instead we planned a stepped approach.

Through the implementation of an output based remuneration model and negotiating new scope of work and roles and responsibilities in the agency contracts we delivered a significant multimillion dollar reduction in agency fees and costs over two years.

Of course, if the implications of the new agency roster strategy had been considered up front and planned and implemented as part of the tender process for the new brand agency, then the costs would possibly have been adjusted up front.

TrinityP3’s Strategic Supplier Alignment service helps you to untangle your supplier roster, understand its strengths and weaknesses, and develop an optimal structure to improve your performance. Details here