Why your agencies cannot collaborate when they are competing for your budget

Agencies cannot collaborate when competing for your budget

One of the main complaints we hear from marketers who are managing a diverse roster of agencies is that it is difficult to get the various agencies to collaborate, or even simply to work together. This is a huge frustration for marketers as they are already time poor, and having to manage multiple agency relationships and then to additionally intervene in turf wars and disputes becomes simply too much.

Recently David Morgan, while Executive Director, Corporate Affairs and Marketing of Nestle Oceania, made the comment “Marketers can’t do their jobs properly because they’ve become bogged down in “process management”, coordinating an ever-increasing number of agency relationships“.

Here I share one of the primary reasons agencies are unable to work collaboratively together: because they are set up to compete for the marketer’s share of the budget. This means you need an incredibly high level of trust between all parties to make this work.


Why your agencies cannot collaborate when they are competing for your budget

While a lot of marketers complain that their agencies will not collaborate, the core of the problem is the very compensation models, currently in place.

Think of your marketing budget as this pie.

From the agency’s perspective, for them to be financially successful, they need to get a bigger and bigger slice of this pie.

Here is the media slice.
Plus a much smaller media agency fee.
Then the creative agency.
The digital agency.
Etcetera, etcetera, etcetera

But then the creative agency starts offering media or channel planning.

The media agency brings forward their digital content agency
And everyone is trying to steal everyone else’s slice of pie.

Or more insidious, the agency’s advice is based on getting a bigger slice of the pie.

Now wasn’t the reason for the marketing budget in the first place, to bake a bigger pie for the company?

Imagine if rather than having the agencies competing for their increased share of the pie, you reward them for helping to bake a bigger pie?

Rather than simply paying for the volume of what goes in, you pay for success in the size of the outcome.

Makes sense. Doesn’t it?

This is the basis of Value Based Remuneration.

So if you want your agencies to collaborate in helping to bake a bigger pie, let us know.
We have the recipe.

Are you having issues with agency collaboration? Or have you made this work? Let us know by leaving a comment here.