It Is No Longer About Costs. It Is About Costs.
Are agency rosters getting harder to manage or easier?
(the picture is not a clue btw, honest)
Earlier this month I heard again another very senior marketer ask a room of people (other very senior marketers) how to best manage a large roster of agencies. This is a big question, and in our experience becoming increasingly frequently asked. It's advisable (for sanity's sake)to consider this a simple problem rather than a complex one.
I believe the issue has two elements, firstly to get agencies aligned and focused enough to be able to collaborate in a constructive way that does not become a distraction for the business, second to avoid serious duplication of resource and therefore duplication of non-working marketing budgets (that is the bits that get paid in fees rather than actual marketing to customers for example).
The first thing that strikes me is that as a general rule, we still hear more negative than positive remark about agency-land. Perhaps much of that is unjustified but however much evolution, collaboration and modern thinking exists in agencies now compared to five years back, there are still some fundamental, huge issues which sit on marketers desks and are not being addressed by their (often handsomely paid) agency execs.
For many years marketing clients have been working through a process of rationalizing costs, whether by interrogating production budgets (and agency production income) or by leveraging down mass media costs and overall agency fees. For many marketers that process has reaped many positive rewards and costs have been reasonably managed to an appropriately competitive level (usually based on volume). However now the language is more commonly about value creation (or variants thereof) which is charged directly at a specific agency "we want more value from our contract with you" or at the roster as a whole "you guys need to work better together to create greater value". Both are valid.
We believe that marketing will be the next frontier of corporate productivity gains. Those gains won't come from cost cutting, they will come from a strategic approach to sourcing marketing services partners ("what do we need, who can supply that, how will we measure success and how shall we pay for that success"). Its about cost-management rather than cost-cutting. In the coming months and years we expect to be advising clients how to cut (yes, I said that out loud!) their marketing budgets by designing and organising their roster more efficiently around a business marketing strategy.
So, in short I think the recent era of cost-cutting in marketing (the naughty procurement) will be replaced with an overdue era of diligent cost-management (the smart strategic procurement), based mainly on a roster's ability to demonstrate value delivery.
See, I told you it was simple....
This ID COMMS article originally published on M&M Global