Agency costs are escalating rapidly.
There are a number of reasons for this including a labor shortage, intense competition for the same people from a number of other industries (consulting, tech, clients), the great resignation, increased training needs, increased operating and technology costs and overall inflation. We are seeing and hearing about double digit cost increases that agencies are facing, and those costs eventually find their way to client invoices.
What can a smart CMO or marketer do to get ahead of this challenge?
Make sure you are a good client
Good clients have clear expectations, sound and consistent strategies, well trained teams, brief their agencies well, have streamlined review and decision-making processes, disciplined workflows, provide effective feedback and ensure their scopes are right sized to their budgets. Are you sure that is your organization?
Bad clients cost themselves a great deal of money.
If you are unsure how effective your team is at partnering with your agencies, find out and address how you can be an even better client. Kick off an immediate client-agency 360 assessment. The 360 approach includes the agency evaluating the client (in addition to the client evaluating the agency). The ideal approach includes both qualitative feedback and quantitative grading and is administered by an objective and experienced third party. At Mercer Island Group we have performed hundreds of these 360 evaluations with a disciplined and thorough process and have norms available for context. Our video here convers our approach. There are also a number of other fine firms that offer this service. The key is to get going now! Clients need to know what role they play in their agencies’ effectiveness and efficiency. Clients that are attentive to how they can be better partners get better work from their agencies – and get that work at the most efficient cost possible.
Review your SOWs to eliminate redundancy
Many clients need a roster of agencies to ensure they have the right skills and capabilities supporting their business. One challenge with having multiple agencies is that multiple clients are often asking different agencies to solve the same challenge. CMOs need processes in place to ensure that duplication of effort is eliminated – including ensuring that the scopes of the inhouse agency and the remainder of the roster are appropriately conceived and managed to ensure agility and minimize duplication.
Consider a roster consolidation
Do you need as many agencies as you currently have? How much overlap is there?
Agency rosters often grow organically over time and yet rarely shrink without a concerted, strategic effort. Many agency relationships are based on historic and sometimes out-of-date needs. Often multiple agencies are providing the same or similar services. This expansion of agency rosters over time often results in duplication of effort, lost efficiencies and less integration.
In addition, more agencies can often result in more challenges:
- Agencies that are only privy to some of an organization’s challenges and opportunities
- Agencies that focus on only narrow aspects of a customer’s journey, lacking a more holistic view
- Marketing spend that is fragmented and purchasing power that is diminished
- Agencies that see only some of a client’s data
- Multiple agencies managing similar tactics, handling similar data and addressing similar challenges
- Agency effort duplication (strategically, tactically, financially)
- Greater client management and staffing investment required to manage the agencies
For many clients, a roster consolidation effort can yield significant benefits:
- Greater media effectiveness and efficiency
- Better strategic counsel
- More effective integration of strategies and tactics
- Enhanced service
- Less duplication of effort
- Less company over-sight needed
- And better business outcomes!
If you have any concerns about your agency roster heading into 2022, we’d be happy to jump on a quick call!
Steve Boehler, founder, and partner at Mercer Island Group has led consulting teams on behalf of clients as diverse as Zillow Group, Microsoft, UScellular, Nintendo, Ulta Beauty, Stop & Shop, Qualcomm, Brooks Running, and numerous others. He founded MIG after serving as a division president in a Fortune 100 when he was only 32. Earlier in his career, Steve Boehler cut his teeth with a decade in Brand Management at Procter & Gamble, leading brands like Tide, Pringles, and Jif.