The CMO's Guide to Agency Procurement
Agency and marketer executives don't always see eye to eye, but many do agree they're not fond of procurement. In a recent Association of National Advertisers survey, only 47% of clients believed procurement added value. Agencies rated it even lower -- just 10% of agency respondents said they felt procurement added value to the client-agency relationship.
In presentations to the ANA Advertising Financial Management Conference in April in Phoenix, Diageo's Marc Strachan and American Express Co.'s Eve Reiter set out to change that perception with guidelines that could help CMOs make creative agency procurement and management work better.
One of the simplest ways to avoid wasting agency time is requiring senior marketers, preferably VP-level executives, to write or at least approve all briefs. Ms. Reiter, VP-global supply management at AmEx, now oversees all the company's procurement and formerly headed marketing procurement. She said AmEx has an online template for full creative briefs and a "light" version for more routine work. The brief should include the target audience, demographics, consumer insights and a "sense of the budget and the creative parameters so they have all the tools they need." She also believes it should be delivered in person or at least on the phone.
Mr. Strachan, VP-on premise strategy and multicultural marketing for Diageo and a veteran of Leo Burnett, believes marketers and agencies can improve relations by swapping personnel for a few months to understand each other's work. He said his junior marketers often lack any real knowledge of what agencies do, and agency personnel often have no idea how little time marketer-side executives actually spend on marketing as opposed to other business issues. Along the same lines, he believes marketing procurement people should all have agency backgrounds.
Ms. Reiter said agencies often believe -- rightly, as it turns out -- that approval happens too late because junior marketers want things "just right before they show their bosses." The process can be shortened, and costs reduced, by having the senior person who approved the brief involved in the kickoff meeting and setting out a limited number of approval rounds upfront.
Avoid window-shopping, bake-offs, jump balls or shoot-outs
Marketers should not use agency pitches as a way of getting strategy ideas for a new project, Ms. Reiter said. The practice results in pitches and requests for proposals "that create churn and drive up costs on both the agency side and client side, because ultimately the agency costs will be passed on to the client," she said.
As for jump balls, when a client tasks existing roster agencies with working on the same project and then picks the best work, they most often don't make sense. "As a routine way of doing business, it will really drive up cost," Ms. Reiter said.
AmEx is a far-flung organization with more than a thousand people in its internal "marketing club." For many of those marketers, choosing the right agency for the right project isn't always obvious. So AmEx procurement has an online tool that helps marketers do just that, including case studies from the agency and a button to reach the right person at the agency to get started.
"You need very clear rules of the road for who can use what agencies at what time," Ms. Reiter said. For a strategic project or new work, it should usually be a principal agency. For lower cost, more routine work, it may be a "tactical agency" and specialized agencies. "What we don't want is people saying, 'I worked with this agency at my old job and I want to work with them now.' Only if it adds value. It's very expensive to onboard a new agency and takes away from the strategic relationship with the other agencies."
Evaluations and rewards
Evaluations should be two-way, so the agency also evaluates the client. "For the most part, it's positive, but you will find trouble spots," such as unclear briefings or team members who need to be "coached," Ms. Reiter said. The evaluations should be anonymously reported, along with "action planning" to address issues that are identified.
Ms. Reiter also suggested having informal or even monetary awards for high-performing individual agency personnel. It's a practice Unilever, for example, has applied to market-research agencies. AmEx bases compensation, in part, on agency evaluations, she said, noting that bonuses in the industry range from 10% to 20% of fees. But she said calling out top-performing agency people is also important in that annual process.