Pick up any marketing industry publication and you will likely see an article about some client running a pitch to find a new advertising agency.
The proliferation of agencies available to clients today and the various services they provide (media, advertising, digital, PR, Production, Social) gives the client a great deal of choice and ensures that change is a constant in the marketing environment.
Reasons for change are varied but can often come down to the personal element of the client/agency relationship and as such these are areas where successful agencies excel. Winning business is tough (and costly) but retaining it can be even tougher (and costlier in the long run).
Agencies have long known that relationships with their key clients are the lifeblood of their business model. Having a strong bond with a CMO can lead to a lifetime of value for the agency – it’s not uncommon to see a CMO move to a new brand and bring in a favorite agency within 12 months. There is nothing wrong with this but it does highlight the need to build strong relationships based on trust, commitment and mutual success – if the client does well, the agency should also be doing well.
Set against this backdrop is the traditional procurement function and a now maturing approach to managing the brand’s investment in marketing. In many corporates, marketing spend is a significant proportion of the business’ ‘indirect spend’ and, as a result, a good deal of effort is made to achieve savings in this area.
Traditional ‘category management’ approaches often focus on the larger areas of investment (Media, Creative and Production) and many category managers earn their crust by running RFPs that help drive down costs for the company (sometimes to the detriment of the brand’s advertising effectiveness).
With so much effort being put into the ‘front end’ of the client/agency relationship (just look how much agencies invest in ‘new business’), are we missing the opportunity to then ‘manage’ those relationships once we have got past the pitch and contracting stage?
SRM is not a new concept but, in this area of spend, it is often left to the marketing team to carry out the management of its suppliers with little support from procurement beyond a ‘standard questionnaire’. Proper (and effective) agency management requires a level of skill and knowledge that many businesses have not yet invested in. It is well known that there is a scarcity of truly capable marketing category expertise out there, and where it does exist, it is normally employed in the front end of category management.
Some brands have recognized that deploying talent in the management of agency relationships can actually drive significant value for their business. Having a focus on what happens once the dust has settled on an agency pitch allows the client to continuously get the best out of their agency relationship by:
Reflecting on how the agency is delivering against its promises
Objectively reviewing how the agency works with the brand’s other partners
Offering (and receiving) feedback to the agency in a timely and clear manner – avoiding the emotional feedback that can be all too easy to provide
Getting in front of issues as they develop to ensure that they are handled in the right way for the brand and the agency
Being the voice of reason when it comes to the brand’s expectation of the agency
Recognizing where the relationship is in the agency/client lifecycle and managing the agency accordingly (more on this in a later article)
By having a focus on the above, brands are more likely to drive excellence through their agency relationships and, as a result they should get a lot more value from their investment.
The main barrier to this being successful is the drive for cost savings by the procurement organization. If the marketing procurement leaders can work with their internal clients to design a fair measurement of value improvement they will be in a much stronger position to deploy top talent on the management of relationships.
If procurement teams want to make a lasting difference for their brands they need to understand that managing a long term relationship with a key agency partner is just as effective (if not more) than pitching the account to get a keener price.
Remember; the bitterness of poor quality remains long after the sweetness of low price is forgotten…
Daniel Jeffries heads up Jeffries Consulting.