Madam Shakes Up Agency-Search Consulting

If the business of agency search is a pot, Michael Lee is stirring it.

Mr. Lee, a former creative who most recently spent a decade at EuroRSCG working on Volvo, is launching a consultancy named Madam. Since exiting the Havas-owned agency in December, he's been devising an unconventional approach to pairing clients with agency partners that includes everything from Pinterest boards to online auctions.

In keeping with his firm's name -- which was adopted from a New York Post headline about an escort agency -- Mr. Lee aims to be provocative to differentiate himself from the current crop of consultants.

"We want to bring a real value to a client not by leveling the playing field or running a strict process," Mr. Lee said. "We should let agencies be themselves. Leveling the playing field has gotten a little out of hand."

The search-consulting space is tiny, largely made up of small, established firms that have been guiding reviews for decades. Disruption doesn't happen often, and at a time when the rest of the marketing world is changing, shaking things up isn't necessarily a bad thing.

The last change agent came 18 months ago, when industry vet Steve Blamer threw a hand grenade, calling the search process woefully broken, with most consultants operating as "double dippers" being paid by both agencies and clients.

Madam's timing could be better, as a perfect storm of lingering effects of a recession, media fragmentation and the increased involvement of client procurement departments has led to fewer consultant-run pitches. Many of the best-known firms in the sector, including Ark Advisors, Roth Associates, SRI International and Pile & Co., have diversified to engage in M&A advising, compensation consulting, client-agency relationship management and agency-model assessments.

Mr. Lee will solely conduct creative agency searches but says he'll evolve his model once he gets a few clients under his belt.

But agencies will need to be willing to comply with his methodology.

• To avoid "cattle-call" style pitches, he'll use a "9-6-3-1" winnowing philosophy whereby clients will never reach out to more than nine shops for initial participation in a pitch and using a simple request-for-information form.
• Six agencies will be chosen to participate in a formal pitch, after which they'll have a 15-minute Skype call with a senior client executive to ask questions and sense the scope of work.
• Reviews will employ e-auctions, in which agencies log on to an online portal with their chief financial officers and clients with their procurement departments. In a window of about 40 minutes, all agencies must submit fee requirements, and each can see what the others are bidding. "It's used heavily in purchasing of non-marketing materials effectively," said Mr. Lee, "and we didn't want to leave the financial area till the last minute."
• Agencies and clients will build Pinterest mood boards in what Mr. Lee refers to a more touchy-feely part of the process to see whether the client and agency are in sync.
• At in-person meetings, agency contenders have a 90-minute chat with clients about work. Clients can ask agencies "curve ball" questions they're not prepared for, "designed to see how the team operates in an unrehearsed way," Mr. Lee said.
• Then Madam meets with the client to help whittle down the number of shops to three. These agencies present work, and from there one winner is chosen.

Of all the unusual elements in the process, one that 's sure to raise a red flag to agencies is the transparent e-bidding procedure, whereby agencies can see one anothers' fee requests.

When asked whether that process commoditizes the business, Mr. Lee replied, "All this is doing is giving the client the ability to see where agencies are in terms of a general money area. It just enables everybody to get a lay of the land financially and it is not the final negotiation."

He said he's consulted with several prominent agency CEOs and clients, and they support the model.

One of those people is Becky Saeger, a marketing strategist and former chief marketing officer of Charles Schwab (and tapped Mr. Lee's services). She told Ad Age that Madam's focus on helping clients to see differences among shops should be appealing to companies embarking on an agency search.

"The idea of going through vetting of agencies, chemistry checks and tissue sessions -- there's nothing fundamentally wrong with the process," said Ms. Saeger. "But so much of the time it's cultural and not necessarily about capabilities.

"What drives people crazy is that it takes a long time, and you're often in the situation where you're going, "So what's the difference between the agencies? ... And it's expensive and it's time consuming. And then when you get into the contract negotiation part with procurement, it's exacerbated," he said.

Ad Age spoke to several established search consultants about Mr. Lee's plans, and they seemed unthreatened by a new entrant. But some longstanding firms registered concern.

"It's not healthy for agencies to see each other's compensation requests because it could lead to low balling," said Alan Krinsky, a consultant for two decades.

Additionally Mr. Krinsky said the "9-6-3-1" rule is too limiting, in light of today's digital needs and social-media deliverables. "That's an arbitrary rule to put in place. ... And to set a limit upfront is not realistic."