Made for Marketers is a webcast series, which explores marketing as a strategic pillar in driving business growth and fueling the customer journey. In each episode, they invite marketing masterminds to deep-dive and share their smarts in strategy and execution wins.
In this episode, Janine Pares, Founder and Managing Director at Thinksmart Marketing invited me to join her to discuss how to manage your agency relationships to get the results that matter. At a time when marketers and their budgets continue to be under downward pressure, what can marketers do to obtain greater value from their agencies? The secret is in the relationship. But a great relationship doesn’t just happen, it needs to be managed.
Hi everyone, and welcome to the latest episode of Made for Marketers. I’m here today joined with Darren Woolley, who is founder and global CEO of TrinityP3 Marketing Management Consultants. And today, we’re here to talk about the topic of how do you manage high-performing agency relationships.
And there’s no one better to talk about this topic than Darren himself as he spends a vast majority of his days working in that marketing management pace. So, supporting clients or agencies, getting the most efficiency and value from those relationships.
So, really excited to have Darren joining us here today and sharing his wisdom, to give us some really practical tips and tidbits on what we can do to drive high performance between those agencies and our marketing relationships. So, thanks for joining us, Darren, how are you?
I’m very well, Janine, thanks for having me.
No problem at all. And so, this is a bit of a curly topic, I suppose, in many ways, because we know every year on year, we find that there’s ongoing pressure from marketers to cut the budget, restrain budget, reduce resources, but constantly the pressure to do more with what we have is growing.
And so, of course, that creates a conundrum in terms of we’ve got more to do, but less to do that with. And of course, sometimes, that often trickles down to agency partners who are put under pressure to constantly deliver at a high quality and not always at the value that they might’ve once expected.
So, I mean, I’d love to just kind of start with that as context and get your point of view on that conundrum, I suppose, and how you think about that problem at the moment.
Sure. Look, we have to say that the global financial crisis – and there are people working today that don’t remember it because they were in high school. It’s a distant concept, but it had a huge impact because literally for the last 12 years, we’ve seen constant downward pressure on marketing budgets. And at the same time, we’ve seen exponential growth in the number of things that marketers need to do or feel they need to do, to actually fulfil their marketing strategy.
And a great example of that is my business partner in the US and I have been keeping a track of scopes of work from agencies.
Back in 2005, the average brand was producing 200 to 250 pieces of work a year for a creative agency. Today, we’re looking at 3,000 to 5,000 plus, and this is the explosion of social media;
the Facebooks, the TikToks, the Instagram updates.
And then on top of that, all the digital updates as well. So, something has to give.
So, what I like to talk about is the fact that marketers more than their agencies are responsible for maximising the value of their budgets. And the best way to do that is to actually manage your relationship with your agencies in a way that brings about improved productivity, not just reducing the fees that you pay them.
Yeah, and that’s a great point. I think that the point that you raise about value because that’s very different to cost. Those two terms are sometimes used interchangeably, but of course, they’re very different.
And I think you’re right, the way that you actually manage your relationship, the way you form a relationship and form a partnership with an agency, and the way that you build on that over time can have huge impacts in terms of the kind of output that you get from that relationship. And that essentially, that’s what creates the value and your ability to be able to kind of run at the speed that today’s digital environment expects.
I mean, I think one of the things as you were talking about the explosion in content that’s happened over the last few years, is, of course, that’s also seen in the range of different disciplines, that now live under marketing, under that marketing umbrella and the range of specialties that are required.
So, from a marketer’s perspective, being able to actually grow their own team or build a marketing department and structure gives them all of the skills and the resources that is needed in today’s environment.
That’s not practical for many marketers and for the resources that we have. And so, leveraging those resources and skills from external sources and agency partners is of course, what many are doing. So, do you see that building on to the kind of clutter that’s around and also the complexity in how you manage all those various relationships?
Look, absolutely. And we have an online database called the Agency Register. It’s got over three and a half thousand different types of agencies. We built that in 2005 because we got sick of agencies sending us reels and credentials documents. So, we put it all online so that they could keep it up to date.
But over that 15 years, we’ve had to extend and extend and extend the capabilities as agencies, specialist agencies, but also traditional agencies have added more and more services. And the interesting thing is when you analyse it, there is almost like a point of convergence because what we’re seeing today is most, if not all, media agencies have content capabilities.
Creative agencies are now talking about/and some of them are moving into media. PR companies don’t just do media relations, they also do social media, all sorts of managing relationships.
So, it’s really interesting, the explosion of different types and the complexity that brings. Because it’s interesting when you talk to marketers and as we do, they’ll say to us, “Oh, we need to find a new digital agency.” “What do you actually mean by a digital agency? What is it that you want them to do? And is there no one else in your current roster that could do what you want them to do?” “Oh, I hadn’t even thought of asking.” “Well, let’s do that.”
And it’s an interesting point actually because I know obviously now being on the other side of the fence — I kind of say, I grew up in client-side, in corporates, and then, of course, set up the agency a few years ago.
But now, being on this side of the fence, I take for granted sometimes, or I forget that clients don’t always know what we do. They know what we do for them, but not what our full suite of capabilities are. And so, you have to constantly yeah, I guess bring to the fore what your full capability is, where it’s appropriate for the client, of course, and what you can do for them.
And also, I think for clients to realise that it’s worth asking the question of your trusted partners and suppliers who you enjoy working with, they understand your brand, they understand your systems and your processes — it makes sense to go to them first, if not to deliver the service for you, but at least to kind of potentially recommend others who they trust to also kind of do that work on your behalf.
And it’s interesting because the complexity goes even further. We’ve had this huge trend (people say it’s a new trend, but it’s been around a while) of marketers building capabilities in-house, taking in-house many of the services that agencies do, especially around content. But we also have marketers that are now taking in more media planning if not trading.
The other thing is you shouldn’t overlook the relationships with the media owners. Your media sales team are often sitting on resources that are very good content makers in their own right. So, for marketers to sit and talk about agency relationships and only be looking at their creative agency, their media agency, maybe their digital (if they have a digital agency) is very myopic.
Because for any marketer, there is such a broad range of resources available to them that they can and should be tapping into for the right jobs. I know a lot of marketers wish they could wave some magic wand and have the one agency that could do everything, the idea of one throat to choke.
But the complexity that most marketers are dealing with
means that they’ll end up with a whole range,
and we call that a roster of suppliers or agencies.
And that’s where relationship management beyond just doing a survey every six months and to make sure we like each other, becomes so important.
And so, before we jump into that point because you’ve rightly pulled us back into the topic (thank you for that), I do want to take a moment because I didn’t do it at the very beginning to say, please, if anyone does have any questions, do submit them because we will be taking questions at the end. So, don’t feel like you have a burning question that you can’t get answered because we may not cover it in the session. So, please do ask any questions that you’ve got and we will get to those in the end.
But just to sort of tap on that point that you made there, that idea of, of course, managing relationships and whether you’ve got a roster of agencies, I guess, if you had to think about a framework and kind of a list of things for marketers to be thinking about in terms of managing agency relationships, what would those key elements be?
So, the first thing is to cast it as wide as possible and really map out all of the resources available to you in house, directly contracted, indirectly contracted, or available through other means like media owners and the like. And just really have an understanding of what that roster looks like and the ecosystem it looks like.
The reason I say that is because often, we’ll find that marketers will be going to look for a specialist when specialists could be already existing in what you already have. Take some time to go and talk to all those agencies about, “We’re using you for this service, but what other services can you provide?” And start to see where there’s untapped expertise within your existing roster before you go and add another person to it.
And then the next stage … and we had a financial services client who swore black and blue that they had less than 50 of these. And when we looked at who they were paying, there were over 2,000. We stopped counting at 2,000 because they would have 30 plus graphic design companies, but no visibility; very large marketing department distributed, decentralised across multiple departments, they had no idea.
So, from a CMO’s point of view, where’s all the money going? Well, 2,000 suppliers are all out there with their hands out. Do you need that many? What are they actually providing? Is there a better way of doing it? If we consolidated the work in that particular discipline with one or two suppliers, would we get better value for money? Would we get better quality work? Would it be turned around faster? Would it be more consistent to the brand? All of these things need to be answered.
And that is interesting, because when you kind of run through the criteria there because sometimes, I mean, consolidation makes sense for a lot of reasons. But to your point there around, I can see why sometimes that escalates, and maybe not to the degree that you explained there with that financial services company.
But sometimes, the need to get something out quickly means that a client or a marketer will go to a new supplier because they’re existing agencies under resource constraint, or they’ve got already so much more, where they’re not kind of being able to deliver to expectations; whether that’s kind of speed to delivery or whatever the criteria is.
How do you advise them to deal with that scenario? So, rather than saying, “Okay, you guys are really full, I’ll go and find someone else,” what other ways can we kind of think about managing that scenario?
Janine, that’s part of building capability into your existing roster. I was going to say the next thing after you map that out is to start to build them into tier one, two and three; gold, silver, bronze, strategic specialist and generalists. And then, so that you’re not having to manage all of them the same way. But who are the most strategically important suppliers and put them at the top of the apex.
So, they are the ones that you most rely on to deliver the strategic part of your marketing. And the next lot will be “The specialists”. And they’re the ones that have very specialist skills that are hard to find somewhere else.
And then there’s a very large proportion of even that 2,000 or 20 will be generalists. And knowing where look, if this group’s busy, can we do it in-house? Can we do it with this design company? Will the PR company be able to handle that social media project that the agency or the media agency can’t handle? That the media agency offered?
Start to think about these as resources available to you rather than individual relationships to be managed.
Yeah, no, that’s a great point. And then how do you think about in that context then, roles and responsibilities? How do you think about being able to manage those relationships in a consistent manner being really clear with each partner around what the agreement looks like and what those expectations are, how they should even be working together?
Look, I love this because so many times, there’ll be a conversation with the marketers and they’ll go, “Well, it’s a creative agency, the remit is to be a creative agency. And it’s a media agency, and our remit’s to be a media agency. So, why do we need to do this?”
Because agencies offer so many other services than what you may be appointing them for. And then procurement will say, “Well, we’re going to build it into the contract. That you will be responsible for A, B, C, D down to Z. And then A1, B1, C1 …” and whatever it is. It’s very mapped out.
We all know that once the contract gets signed, it goes to the CFO’s office and they put it in a filing cabinet, no one ever looks at it again.
So, what we recommend is that very early on in the relationship, or at any time, you go through a process of setting expectations of each other, so that you sit down with the agency and go, “This is what we expect of you. Now, what do you need from us to be able to deliver that? Media agency, this is what we expect of you, what do you need from us? Now, creative media or digital agency, knowing our expectations, how are you going to work together?”
And then capturing that in a format that everyone can share, it’s almost a way of working that’s so important because that way it becomes a living document rather than a dead contract that only gets pulled out when it’s either running out or there’s a problem.
And what I love about that is the transparency, quite frankly. The fact that it’s all out on the table, everyone has the opportunity to have their say and make the active commitments to, yes, we can do this, no, we can’t do that. This is reasonable, this is unreasonable, etc.
And I think also, the other important factor is particularly where there are a couple of key agencies that do cross over or they’re working on the same projects or on behalf of the client, but have different parts of that project, is understanding what each other’s roles in that picture are.
I think that’s really important because otherwise, there is a tendency to either step on each other’s toes or I sometimes feel that not intentionally necessarily, but it can create some disruption to the process if there isn’t a really clear direction given probably from the client around, “This is the expectation that I have of each of you and how you’re going to potentially work together as well.”
Well, and you’re absolutely right, Janine because we have been called into situations where the agencies are not working together. And when we’ve discussed with the clients where they’ve actually expressed to the agency their expectations; “We just thought they’d work it out themselves.”
It’s a bit like that scene of the Batman film where the joker breaks the queue and says, “I’ve got an opening for one person, whoever survives the fight can have the new job.” You can’t just expect competitive agencies to be able to work out unless you’ve set some expectations.
Like in Asia, we were working with an alcoholic beverages company and they had three creative agencies, two PR companies and a media agency all working together. And they had nothing but complaints. And their biggest complaint was the lead agency, the lead creative agency.
We finally got to the bottom of it using our Evau8ing tool, which measures collaboration. And what we found out is the lead agency thought “lead” meant that they got to tell everyone what to do. It wasn’t “lead agency,” it was the boss agency, it was the role that they were playing. And what they were actually doing was acting as a gatekeeper to all the other agencies. So, the client wasn’t getting what they wanted.
They wanted a lead agency that would facilitate and encourage the best ideas forward rather than the agency that was going to be bossy.
Now, we then worked through that and defined what being a lead agency would look like and what the others would look like. And then six months later went back, and now, the client was complaining because the agencies were collaborating beautifully, they just weren’t including the client. The thing that we forgot to define is collaboration actually includes your client as well.
That makes me laugh. Actually, I can imagine that happening. We get so excited about the work that you’re doing, you actually forget who you’re doing the work for.
Exactly. And the agencies loved it. They were going off on marketing ideas, and then at the 11th hour presenting them back to the client who was going, “Well, this is the first time I’ve seen it. Could we have maybe met at some point and reflected on what you were doing?”
Yeah, yeah. It takes me back to client-side days, actually, it’s quite funny. So, tell me, I know the other thing that you were quite vocal about – and this, I think relates to what we’re talking about here is the pitch process.
So, I’m going to let you unleash on that topic. How do you think that plays … I mean, you talked earlier about, obviously, look inward first, understand who’s on your roster and what capabilities and resources you’ve got at your disposal before going outwards.
And then prioritising them into a hierarchy.
Yeah. But then separate to that, there’s always this … and so some companies as you know, have regular pitches. So, even agencies of record or they’ve got a policy where they’ve got to go to pitch every three years or whatever their cycle is. What are your views on that? And how disruptive do you see that being?
Yeah, look, going to pitch every three years is disruptive, it is counterproductive and it is largely a waste of everyone’s time. Because what you’re doing is you’re not comparing like for like. You have a relationship with someone; if it’s with an agency, if it’s working well, going out to pitch is a terrible way to test the relationship.
A procurement guy in New York, we’re having this conversation because he swears black and blue that every three years they should pitch their business. And I said, “Are you married?” He went, “Yes.” I said, “How long have you been married?” He said, “Six years.”
I said, “Would you like to go home to your partner tonight and say, ‘Look I’m really happy with this relationship, but I just think I should date for maybe six weeks or eight weeks. And then if there’s nothing better, I’ll come back to you.’ Now how do you feel about that?”
“I don’t think that’s very fair.” And I said, “Well, you’re effectively doing the same thing because you know this agency really well. You’re going to be dating a whole lot of other agencies that will promise you the world. They’ll tell you they can do it faster, cheaper, and better without proving it. And then you’re going to make a choice and someone will come in and they’ll say, we’ll do it cheaper.”
Now, here’s the disaster is that when you appoint a new agency, everyone’s in the honeymoon period for six months, at least six months. It doesn’t matter whether it’s wrong. In fact, we offer a six-month guarantee and we’ve only had to fix it twice. We say, if it’s not right in the first six months, we will come back and sort it out at no cost.
And we’ve done it twice in 20 years because most people are in the honeymoon period. Six months and one day, it’s suddenly like, “Oh my God, nothing’s better, it’s terrible. Why did we bother going through all that?”
It’s like a friend of mine that’s been married five times, rants on about what was wrong with every partner. And then you point out to him, the only common factor was him, that perhaps he needs to spend some time getting himself in shape so that he can actually maintain a productive relationship.
Well, I think that’s very relatable. And you’re very, very wise to bring up, I think in terms of that ideal that there’s constantly something, the grass is greener on the other side, we know that, and there’s constantly the latest, hottest, greatest agency that is doing the rounds.
And I read actually, I don’t know – it must’ve been quite recent, I read I’m sure an article that you wrote or a blog or something about the best isn’t necessarily right. And so, you might be the best agency in town, but it may not be the right agency for you. And there are a lot of factors that go into what makes it right.
So, I think that’s a good point, kind of understanding what it is you need, looking inwards before going outwards. You know, managing and making sure that I guess, you’ve done the homework in terms of setting up those roles, responsibilities, setting expectations, having regular reviews, being transparent in your conversations, and working hard. Like any partnership or relationship, working hard to make it work first before tossing it out the door.
Well, I point out to a lot of marketers that I’ve yet to find an agency where all the staff turn up every day, wanting and desiring to do a sub-ordinary job.
People turn up to work, people are attracted to advertising and marketing because they want to make a difference. They want to do great work.
So, if an agency is underperforming, you have to look at both the agency and you as the client.
Now, the agency could have some intrinsic problems, but you as the client, have the most power to actually help fix those problems. Because it’s the golden rule, the person with the gold gets to make the rules. And so, rather than sitting back and going, “Oh, there’s something wrong with them” – if they were a good agency and they’re having the wobbles, the client, the marketers should be the ones that call them to account. Don’t sit back and wait for the agency to come good.
Say to the agency, “Here are the issues that we’re having. Here’s what we’re observing; you sort it out, you’ve got 90 days to sort it out.” Because I think there’s only really one reason or two reasons to go-to pitch.
The first is if you need a capability that doesn’t currently exist in your roster anywhere, first of all; or secondly, when the relationship, the performance of the agency is beyond repair, in which case you would not include the incumbent in the process because it’s beyond repair. And that’s a big test for us, is every marketer will say, “Oh yes, we want to go to pitch, we’ll never want to work with that agency again, but we want to include them.” No, you’re not quite ready to say goodbye.
Or they’re just not brave enough to say goodbye. I mean, I think sometimes that’s a part of it, is sometimes you have to be really kind of courageous to have those difficult conversations. Because they are, they’re difficult, they’re not easy to have.
Or you hire a pitch consultant to help coach you through it.
Of course, yes, there is that solution.
The blatant plug.
That’s what you’re here for, right? But on that note, actually, I’m looking at the time and I know that we’re kind of almost at the 30-minute mark. So, I would love to just … I know we’ve had a couple of questions and I’m going to just review them quickly now.
So, this is for you Darren of course; “Would you be willing to take the lead in the Australian market, determine the best rates for media agencies in Australia so that agencies aren’t constantly undercutting each other?”
Look, when we started 20 years ago, people like Rob Morgan at Clemenger said, “I would be the death of advertising” because he thought I’d commoditise it. In actual fact, when we manage pitches, we will set what we believe for the client and the agency, and the type of work – will be the resources required and a benchmark cost.
We then ask the agencies to fill it in. They’re usually below what we think it should be.
That doesn’t surprise me by the way.
In one case, we had an agency that was almost half the price that we suggested it would be. The client’s going, “Well, that’s great.” And I go, “But can they sustain it?” We’ve got to be careful. And just because something looks cheap, especially when it comes to people and services to be provided in the future, that’s the unknown. It could look great on paper, but you’re going to have to live with it.
So, we will not get into price-fixing because one, it’s anti-competitive and we’re held to account and taken to court by the ACCC. So, it’s illegal. And second, is we will do as much as we can, and we have been known to say to clients, “You get what you pay for, let us prove the value that’s here and why this agency is not actually proposing value.”
Yeah. And I think I want to go a bit deeper on this point, because I know we’ve chatted about this previously, the idea of costs and value and price. They’re two completely different things. But in agency land, and certainly, when it’s a competitive situation, there is always the pressure to put out a price that you think is going to be market appropriate, that you think is going to be at the same level or below other agencies just to get your foot in the door.
And there isn’t necessarily this known, agreed price point. And of course, we can’t do that. It is anti-competitive, we can’t do that. But what is your perspective and how do you help clients, and maybe even agencies as well, think about pricing their services and how to best determine value when the price is a metric that is so dependent on the scale really?
Look, we could do a whole session on this. So, I’ll just briefly say value pricing and output-based models are becoming increasingly popular. But also, performance-based pricing. And agencies have to realise that when I talk about performance, I’m not saying all their remuneration.
We had an insurance company and with their media agency, they were just paying a retainer. So, it was the number of resources by cost. And what we said was, there’s a large component, more than 50% of their media spend was in performance media, because it was all about acquisition. And we said, you could pay a much smaller retainer for the part that’s not performance, and then pay on leads and conversions for the part that is pure performance because the media agency had so much influence over the placing of media. So, just make that bit performance-based.
And then the client said, “Oh, hang on. But what if they doubled the number of acquisitions?” And we said, “You’d end up paying twice as much.” “Oh, I don’t like that.” So, both marketers and agencies or advertisers and agencies, really need to have a conversation around what value represents, and then find the best model to do that.
We have a thing called the “agency fee decision tree” on our website which takes you through a series of questions and reveals to you all the different types of agency fee models that are available to you.
Okay. Well, that’s worth looking at; we can include the link to that in the resources.
Another question for you; “Do you think it’s worthwhile doing mutual performance reviews against agreed criteria between clients and agencies?” And I assume by that question, they mean the traditional 360 where you’re giving reviews both ways. What are your thoughts on that? Is that stepping on dangerous territory?
No, I think any marketing department that’s more than 12 people should have a formal survey that goes both ways. And I’m not talking about, “This is what I think of the agency, what does the agency think of the agency,” I mean giving feedback to the client.
We’re grownups, we should be mature enough to have productive conversations about ways that we could work better together.
I think having a formal process so that it is done every six months at least and get things coming out of that. You know, this gap analysis I’m not quite so sure about.
But for me, the purpose of a survey is really to create a framework and a list of topics or issues that we need to identify and discuss. And the bigger the marketing department, the more important it is to have some sort of formal approach. Very small marketing departments, you know what’s going on as a CMO or head of marketing in your department, and you know the relationships with your agency. So, you probably don’t need to make a formal commitment.
Okay. And there’s another question in relation to the point we talked about earlier, which is about managing different agencies. So, how do you manage a relationship between two agencies on your roster say, or even three, without, as a client, getting pulled into every single conversation?
Well, and that goes back, Janine, to the idea of actually setting your expectations. What are the conversations I need to get pulled into? And what are the ones that I’m happy for you just to sort out between yourselves?
We put in place one of these engagement agreements (we had an escalation process) and that if the agencies couldn’t sort it out between themselves, they could escalate it. And here’s the thing, any agency that escalated more than five times in a quarter was then reviewed for why they weren’t able to get on with their other agency partners.
Or resolve it directly, right? Yeah.
That’s right. So yes, have an escalation process so things don’t stalemate, but also make sure that the escalation process doesn’t become the first resort when it should be the last resort.
No, fair call. I think that’s probably the bulk of the questions actually. I think we’ve covered so much today in terms of some of the criteria to think about certainly from a client-side, in terms of looking inwards, really understanding the lay of the land and your current agency roster, thinking about all of those players as resources that are available to you before going outwards.
But if you do need to go outwards, what kind of criteria you’re looking for, setting clear roles and responsibilities, setting clear expectations, having open and honest transparent conversations and yeah, keeping that dialogue flowing.
And I think that point around value pricing or understanding what you’re getting if you do go out to a pitch process, why you’d even embark on that and what value really represents and what’s realistic to expect from a new relationship.
So, thank you, Darren. That’s been quite a bit that we’ve covered. Is there anything else that you want to wrap up with or any other pearls of wisdom you want to leave everybody with?
Well, look, the only thing I’d say is that anyone that’s interested in knowing more or reading more, we’ve dedicated the last 10 years with a blog … there’s over 2000 articles with all these different topics.
I’d say to people have a look. It’s a rich resource. And if there’s something in there that you’re unsure of or you want some specific advice, it’s easy to make a phone call or drop us an email. All we want to do is improve the productivity and performance of all of our client relationships. And that means helping both advertisers and their agencies.
Excellent. Thank you. And yeah, I mean, when we send this out, we’ll drop the recording out to everyone who’s registered early next week. And when we do that, we’ll link to some of the key resources that you’ve mentioned, but also obviously to your own resources. I know you invest a lot of time and effort into doing that.
And for anyone who does want to get in touch with you directly or follow you, what’s the best way for them to do that?
Well contact me through the website or firstname.lastname@example.org, and I’ll respond to every email.
Perfect, great. Well, thank you so much, Darren. Really appreciate you sharing your wisdom with us and getting us all on the straight and narrow. And for everyone else who’s out there, take on Darren’s advice, of course.
And if you want to check out other episodes of Made for Marketers, they are also on our website. We’ll provide that link when we send this recording. And in the meantime, keep marketing. Thanks, everybody.
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