Involve Agencies As Partners in Brand Innovation, Not Just Vendors

But Should They Be Compensated for Their Ideas?

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Employees a Critical Link to Brand Innovation

At one point during the evening, talk turned to agencies and the role -- or lack thereof -- they play in product and brand innovation, as well as whether or not they should be compensated for their ideas:

Jennifer Rooney: To what extent are agencies involved; what role do they play in innovation?

Roger Adams: [Our agencies] come up with things that will advance our positioning relative to the consumer's point of view. For example, in our Hispanic area, we came up with a Hispanic line of paint that is all done in colors that are native to Mexico. It's called Colores Origines, and it came up from our Hispanic ad agency, and it's something that we brought and took to our predominantly Hispanic base in our stores. We found there was such a strong demand for it that we expanded it to all our stores across the country. They're just interesting colors that came out of an insight from an agency that said, "These aren't really colors that serve this market." We could develop this, and we found it plays just as well among the general market as it did among the Hispanic market. So that's an example of how an agency can bring that to life. And it's part of the marketing officer's job to say, "It's OK for an ad agency to have a product idea." You have to allow them into the discussion, because an insight can come from anywhere. You just have to recognize it when you see it, and that's the judgment part of our job.

Andrea Spiegel: When we share with our agency some of the ideas that we've come up with, they can help us make sense of it. They can help us say, "This is a good idea, but to really be true to the brand, it should be positioned this way," or "Have you thought about X, Y or Z?" So we'd love for them to come up with original ideas, which they do often, but they're also a great sounding board for ideas we come up with internally, and [they help us think about] out ways to actually make them work.

Jonah Bloom: Just to play devil's advocate for the agency. ... Let's say this agency guy comes up with a product. Is there some way to compensate him? I mean, brand innovation, I hope we all agree, can come from anywhere. It might be something you spotted with your consumers, it might be that your CEO's got another [idea], it might be you've got it, maybe one of your agency's got it, or something else. But are you really ready for it to come from anywhere? Is there anything for them to gain out of giving you that idea?

Katy Frohling: I want to expand the definition of "agency" because I've spent most of my career on the ad-agency side. But there's also another resource: We have a wonderful ad agency and we encourage them in terms of our partnership to give us ideas, but we also work with a brand agency, and they do a lot of work around value propositions. They can provide an objectivity, because of all of the other businesses that they work with, that you can't get necessarily from someone who's just developing advertising. At the end of the day, what the brand really is, the positioning really is, is a focal point; it's a compass. It can direct and focus all of your efforts, both from touch points to communications; it's sort of a galvanizing force.

Tarang Amin: On that subject, there are so many different models, in terms of how you compensate, and I think in the end, it fundamentally depends on whether you see them as partners or as vendors. And there's a big difference, because with vendors, I always feel like, you get what you measure. At the end of the day, if what we are really after are longstanding growing brands that are going to be here for generations from now, and relationships that are going to be here generations from now, growth actually takes care of a lot of things, including compensation. At the end of the day, the reality is, marketers, we have to grow, and if we don't grow -- and I'm not only talking about the bottom line of the sales of the brands -- but if you don't grow the equity of that brand, if it's not stronger when you leave than when you came, then you've failed, and so getting people in line with what those objectives are and looking beyond a single year is probably a more healthy formula. And I've never had an agency complain when you've grown a brand significantly.

Mr. Adams: One of the insights from the [ANA/Guideline brand-deterioration] survey was, the No. 1 thing to drive brand health is product innovation. And product is kind of a generic term, because it can mean a new type of service in a service-oriented business as well. But I think that's so true, that you have to have new offerings that are keeping on trend with what's happening. And as it gets to the agency question, the agencies are part of that equation as well. And, at least from our standpoint, our agency-compensation model is built on the health of our business, first and foremost. And then it's also built on what they specifically did for it. But they have a piece of growing the total business. But I think I would be remiss to not say the agencies have a role in developing product ideas, because that's the lifeblood of brand health.
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