Marketing Math Blog

Mar 05
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Is the Notion of Uncoupling Production from Creative Really That Foreign?

By Creative Services, Production Services No Comments

There is an interesting approach in the creative services procurement area that has been gaining traction among large, multi-national advertisers… the “unbundling” of creative and production services. As part of this unbundling process, advertisers turn to a production specialist, rather than their creative agencies as a resource for generating creative outputs.

At first glance, this seemed an unusual move fraught with agency management challenges and the risk of sub-standard creative outputs tied to the uncoupling process. However, upon further reflection, the approach is not dissimilar to the process employed today. The chief difference is that the advertiser serves on point in sourcing and managing the production resource rather than the agency. Aside from the obvious improvement in agency fee transparency tied to the segregation of services, the benefits are certainly intriguing.

With the advent of technology enhancements in the area of digital brand asset management systems, a production resource that can provide support across multiple regions and generate outputs for a myriad of media touch points could improve the effectiveness and efficiency of the advertiser’s creative development process. How? Effectiveness can be enhanced by the ability to manage brand expressions on a consistent basis, around the globe and across media. From an efficiency perspective the centralized control afforded by a brand asset management system and a client sourced production resource will improve the level of repurposing of creative assets, thus reducing the need to recreate the wheel time and time again across an advertiser’s creative agency network.

Finally, in a market where response time is a highly prized commodity, this approach will help advertisers carve time out of the creative development cycle. Interested.in an agency professional’s take on this approach? Check out the following blog by Steve Puttock, Managing Director of Schwak London … Read More.

Feb 18
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An Example of “Why” Advertisers Should Audit Their Agencies

By Advertising Agencies, Contract Compliance Auditing No Comments

Let me start by saying that I am not casting doubt on Ogilvy’s position regarding the recent allegations brought by an employee in Federal Court that they overbilled their IBM client by several million dollars between 2006 and 2011.

The question to be asked is; “Does the client know whether or not they were overbilled?” If they have not conducted an independent contract compliance audit and fee reconciliation of their agency during the time period in question, they may have to wait until the conclusion of the court case to find out the answer.

Net, net… all advertisers should conduct periodic audits of their marketing services partners to achieve the requisite levels of transparency to be able to answer questions such as this.  Right to audit clauses in client-agency agreements are negotiated as a legal and financial safeguard to provide unequivocal feedback on performance and contract compliance questions. Have you conducted an audit of your agency recently?  Read More.

Feb 11
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An Advertisers Right to Audit

By Contract Compliance Auditing, Right to Audit Clauses No Comments

Virtually all client-agency agreements contain a “Right to Audit” clause, yet few advertisers are committed to conducting contract compliance or performance audits. Which raises an interesting question; “Why negotiate this clause into an agreement if the organization doesn’t intend to conduct an audit?”

Auditing a supplier’s compliance or performance is good practice, not a negative reflection on the supplier or the strength of the relationship with the client. Auditing in a post Sarbanes-Oxley world is a corporate governance best practice, part of an organization’s fiduciary responsibility to its shareholders. Further, the marketing budget often represents a major portion of the organization’s selling, general and administrative expense. Auditing enhances transparency, improves processes and controls and insures that the legal and financial safeguards established by the advertiser in the contract are being adhered to. Further, audits provide substantive benchmarks on performance that form the basis for a mutual commitment to “continued improvement.”

So if the process is a positive one, the question remains; “Why do so few advertisers audit their marketing suppliers?” Unfortunately, U.S. based client-side marketing professionals and the agencies that make up their marketing vendor network don’t always take the view of audits as a positive, albeit necessary process to properly steward a firm’s marketing investment. The premise is simple, “trust but verify.”  The winners when a client conducts regular, audits of their vendor network are the groups that fear it the most… marketing and their agency partners. Ironically, even in the context of a dissolution of a vendor relationship, client organizations often forgo their right (if not responsibility) to conduct an audit. Exit audits can yield valuable insights, yield process improvements, insure that all billing and fees have been properly reconciled and that all intellectual property rights and assets have been properly transitioned.

The following quote from an anonymous source may best sum up the premise behind an audit; “In God we trust, all others we virus scan.” An effective audit process does not single out a particular supplier and pursue them in a vindictive manner. Rather, it determines a schedule, methodology and defines an approach that encompasses all members of an organizations marketing vendor network in a fair, even-handed manner.

Jan 26
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Understanding the Current State in Client/ Agency Relations

By Advertising Agencies, Marketing Agency Network, Marketing Procurement No Comments

The attached article by Avi Dan in Ad Age offers a succinct and accurate summation of the current state of affairs regarding client/ agency relations and the role of procurement.

Once agency leaders and client side marketing individuals take an honest, introspective look at the situation they will be in a much better position to re-establish their position as valued strategic partners. Linking client marketing investment to successful outcomes and building C-suite awareness of marketing’s contributions to the organization’s goals will go a long way in improving confidence in the marketing services supplier network.

This improved confidence, combined with the ability to establish a causal impact of an agency’s contributions on the client’s return on marketing investment will serve as necessary building blocks in distinguishing the agency and optimizing compensation … Read More.

Dec 18
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What is it About Procurement That Ad Agencies Dislike?

By Advertisers, Advertising Agencies, Marketing Procurement No Comments

agency client procurement relationshipBriefly, it appeared as though Strategic Sourcing, client-side Marketing and Agency professionals were engaged in constructive dialogue regarding procurement’s role in the marketing services arena.  That is until representatives from the ad agency community took to their soap boxes and railed against corporate procurement’s role.

Why do certain agency community representatives continue to wage a public battle to minimize or eliminate the influence of procurement in the agency sourcing process?  Perhaps one has to move beyond the seemingly endless diatribe about procurement’s “lack of understanding” of how to value an agency’s contribution or the intangible nature of agency deliverables on brand health or procurement’s role in driving agency margins down to get to the root cause of their concern.

After all, forging strong alliances with Strategic Sourcing professionals represents an opportunity for agencies and should be a cornerstone of their business development and client retention strategies.  Could it be that some within the agency community are fearful of the financial scrutiny and performance benchmarking that are part of the process?  Perhaps they are not comfortable justifying fees and or offering demonstrable proof that their stewardship of their clients’ advertising investments generated a positive economic impact.

If their concerns are grounded in the former line of thinking that ship has left the pier and those arguments no longer hold water. Company Boards of Directors and Senior Management teams have both mandated Strategic Sourcing’s involvement on an enterprise-wide basis and expanded their near-term charter to include marketing services.  If the concern is related to the difficulty in valuing their contributions there are two economic analyses that are required.

The first is certainly well within an agency’s ability to catalog, monetize and communicate… their investment of resources into stewarding their clients advertising investments.  The second may require more work, particularly if the client-side marketing team and the agency have not implemented a sound return-on-marketing-investment monitoring system to accurately track and attribute their in-market results back to each facet of the client’s marketing investment.  Difficult as that may be, a fact-based, rational construct is the best bet for engaging all parties in a productive discussion regarding agency performance and contributions and for positively impacting the procurement process.

For many organizations the investment in marketing and advertising is one of their largest indirect expenses… it will continue to be scrutinized. Interested in reading more? Attached is a fascinating exchange between individuals with slightly different perspectives … Read More.

Nov 19
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How Will Madison Avenue Fair in the Future?

By Advertising Agencies No Comments

how will madison ave fare?For an industry that has long prided itself on its ability to adapt to change the future will prove interesting for the advertising industry.  Technology driven trends ranging from dynamically generated behavioral driven ad generation to media fragmentation and dramatic changes in consumer media consumption have ushered in a number of changes that must be dealt with during this time of marketing convergence.

Perhaps the most fundamental change is that the industry’s “old” communications model of intrusive media talking at consumers is waning in relevancy in a world where user generated, user shared content forms the basis of a dialogue among consumers’ and between consumers and brands.

How will agency holding companies and individual agencies structure themselves to deliver services? What services will they offer?  Will there be room for specialist marketing services providers or will we see the re-emergence of the full-service agency (or agency holding company)?  How will compensation practices evolve to reflect the structural changes that are occurring within this market?

While change creates challenges, it also generates opportunities for advertisers and agencies alike. Those that grasp the strategic relevance of the rapidly evolving landscape will emerge as thought leaders and will have an opportunity to establish distinguished positions for their firms. As George Bernard Shaw the Irish playwright and co-founder of the London School of Economics once said:

“Reasonable men adapt themselves to their environment; unreasonable men try to adapt their environment to themselves. Thus all progress is the result of the efforts of unreasonable men.”

Where will your firm fall on the progress continuum? The following Fast Company series on “The Future of Advertising” provides a thought provoking look at what’s next for the advertising industry … Read More.

 

Nov 01
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Progressive Move by the ANA on Agency Procurement

By Advertisers, Advertising Agencies, Marketing Procurement No Comments

The ANA recently announced an initiative to combat the negative perceptions that many advertising agencies have regarding client-side procurement professionals and their understanding of the marketing services sector. Hats off to the ANA and the “Procurement Task Force” members who have agreed to donate their time and insights as part of this initiative and the proposed mentoring program.

This is a very positive step on the part of advertisers to assist in expanding the knowledge base among the organization’s members with less experience in the area of marketing services procurement .  In addition, the move further dispels the often held belief that strategic sourcing departments “don’t understand” and “don’t care” about the differences between professional services procurement relative to other facets of their corporate charters.  Real or imagined, discussing those differences within their association and providing consultative support to ANA members seeking to augment their knowledge base is a sound approach to what has become a divisive topic.

Perhaps the 4A’s can reciprocate and work to educate its enrollment on best practices to be considered when engaging with corporate procurement professionals.  The complimentary approach would further enhance the industry’s mutual understanding of procurement’s role in the process and by adding clarity, perhaps reduce the anxiety on the part of client-side marketers and agencies alike.

Jul 18
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Survey Reinforces Need for Independent Auditing

By Advertising Agency Audits, Contract Compliance Auditing, Internal Audit No Comments

calculator and cashIt is widely understood that a coordinated audit program, leveraging the resources of Internal Audit and the strategic use of 3rd party auditors is a smart business practice and represents good corporate governance.  The audit process results in improved transparency and solid control testing, both important elements when attempting to ensure that an organization is securing maximum value for the money spent while incurring the least amount of risk.

Adding fuel to the “pro” audit argument is a global study of 550 accounts payable departments conducted by software provider Basware. The eye-opening results certainly reinforce the need for organizations to periodically review procurement and AP processes and controls and to monitor the performance of both the organization’s own AP department and that of its vendor network.  Perhaps most alarming, the Basware study found that just 40% of invoices generated were based upon purchase orders and where a valid P.O. did exist, many financial departments had trouble reconciling against them.  Further, among the survey respondents, which processed on average 93,000 invoices per year, 7% contained errors.  These errors led delays in paying suppliers among 35% of the respondents and delays in being paid among 24% of the respondents.

In spite of the fact that many vendor agreements contain AP guidelines and even spell out accounts payable criteria related to prompt pay discounts, late fee avoidance, days payable targets, fiscal period reconciliation parameters, etc… too often performance in this area goes unchecked. A parting thought, inspired by the words of Sir Edward Coke, the noted seventeenth-century English jurist;  “Precaution is better than cure.”  Read More.

May 15
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Marketers Reassessing Use of Digital Agencies

By Advertisers, Advertising Agencies, Digital Media No Comments

online mediaInvestments in digital marketing have grown significantly over the last several years.  In addition, there have been unprecedented improvements in technology platforms and applications to support the effective and efficient distribution of messaging via digital channels, fuel an expansion in data analytics and targeting capabilities, speed the deployment of web-based tools to enhance B2B and B2C marketing efforts, etc… As a result of these trends and CMOs desire to drive value within their marketing vendor networks, they are evaluating the potential to shore up their internal resources and capabilities in preparation for transitioning portions of their digital activities to in-house teams.

And why not?  Client organizations drive strategy, manage integrated go-to-market strategies, own the databases that fuel targeting and resource allocation decision making and are highly sensitized to their businesses needs and opportunities.  CMOs clearly sense that they have the potential to streamline their marketing vendor networks, drive costs down and build their in-house competencies as a means of delivering enterprise value and in-market success.

This does not signal the end for digital agencies. Quite the contrary, many digital agencies recognize the economic and market forces driving these decisions and are working hand in hand with their clients to facilitate the transition of select tasks to in-house environments, assisting in the sourcing and training of client personnel and helping to redefine their roles in the digital value chain … Read More.

Mar 28
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Time for Marketers to “Take Charge” of Their Agency Networks

By Marketing Agency Network No Comments

time for marketers to take controlGreat article.  In particular, the recommendations for laying the foundation for your “agency house” were very thought provoking.

The examples cited of Honda and HSBC Bank reinforce the need for client side CMO’s to own the strategy and execution oversight for developing, implementing and assessing the performance of integrated marketing campaigns.  Further, the trend cited by Forrester of agencies trying to “re-bundle” their services is fraught with risks to the advertiser.

In a fast moving market, with emerging technologies and the explosion in social media, the case could be made for companies to consider specialized “Best in Class” providers, rather than generalist shops. Of course this type of model will likely require an investment in internal resources to help shore up Marketing resources and capabilities.

In light of the risks associated with waiting on solutions to emanate from within the “agency house,” perhaps this is an investment worth making … Read More