From RFP to Contract, How to Review Your Agency

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Presenters

ACCOUNT DEVELOPMENT MANAGER

EMILY TUCZINSKIMANAGING DIRECTOR,

MEDIA VALUE

MARGARET LEWIS

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This session will cover…

Media Agency Review Trends

Agency Review Process

What Separates the Winners from the Losers?

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4

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Why Should you Review?2

Media Agency Review Trends

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Similar offerings

The Media Agency Business…

A very competitive business

A pitch presentation

Similar skillsHeavy scrutiny on cost of this large budget line item

important part of the process of choosing an agency, doesn’t generate sufficient insight to make a decision in today’s complex media landscape

The average client-agency relationship is 2.8 years…

Source: http://www.mediapost.com/publications/article/269966/top-reasons-agencies-lose-pitches.html

while the average CMO tenure has doubled from 2 to 4 years.*

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Media agency reviews have surged

“Mediapalooza”

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Typical trigger for agency review: Change.

Whether good or bad, it’s time to re-assess when there’s…

New leadership

Significant change in business results

Media Disruption

Disruption in Digital

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Transparency & IntegrationA more integrated approach between traditional and digital media

Advertisers are open-minded to programmatic buying – but with real concerns about financial transparency, data ownership and access rights.Not unusual for a majority of a digital budget to be in non-working media.

What’s in the advertiser’s interest?

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Elevated role of Procurement

Financial crisis in late 2000s

Work alongside media teams

More actively involved in pitch

Financial crisis in late 2000s

More actively involved in pitch

“A former Agency Holding Company executive who left the industry within the last two years

reported that, approximately ten years ago, client media pitches were led with discussions about campaign strategy and an agency’s ideas. He

reported that this dynamic has now shifted to one in which discussions about price take the lead.

He noted that “many” clients entering into pitches currently send out large spreadsheets asking

agencies to produce detailed pricing information in advance of a presentation on strategy. He describes

this practice as a “buying model, not a thinking

model.”- ANA Media Transparency Initiative, Part 1

Work alongside media teams

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Need for data-driven adviceConsultants can be a critical resource to assist in the pitch process which is often overwhelming.

Definition of Scope

Success criteria

Media pricing / incentive frameworks

Staffing & compensation

Shepherding the Process

What We’ve Learned About the Pitch Process

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The Pitch ProcessThe advertiser takes on an ever-increasing responsibility when launching a review.

Understand that it will be complex and time-consuming

Respect the effort that will be put in by the agency

Take responsibility for the outcome

Ensure stakeholder alignment

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Global vs. local

Recommendation:

Procurement has stronger role at the Global Level, while the Local market clients may favor an agency with better strategy and team chemistry that will blend well with the local team.

Understand each others objectives

Make an extra effort to engage procurement

Share your work

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The Chemistry FactorAn undervalued factor during pitches is chemistry.

Consider this as important as the pricing or the strategy tools and buying tactics being shown

Make time for getting a feel for culture; consider whether the culture & chemistry check should happen at the beginning or later in the process

Identify the specific people that might work on your business

Recommendation:

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Factors of a winning pitch

Chemistry

Answering the brief

Challenging the brief, with a strong rationale

Differentiation

Aggressive pricing, both compensation and media pricing

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Popularity of PRIPs Three main components of a Performance Related Incentive Plan that holds the agency accountable and incentivizes the agency to improve.

Agency Service

Media QualityMedia Cost

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Popularity of PRIPs Strong upward trend in use of Incentives; increasingly important to validate performance

*Note: Sample size = 98 marketers; 1,011 client-agency compensation agreements

1991 1994 1997 2000 2003 2006/7 2010 20130%

10%

20%

30%

40%

50%

60%

70%

13% 19%30% 35% 38%

47% 46%61%

Use of Performance Incentives

Importance of Contracts

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Importance of ContractsAs part of the ANA and Ebiquity recommendations, several factors to ensure a solid contract…

Expired/Unsigned Contracts

Contract Content

Contract Audit Rights

Contract Governance

Advertiser Responsibilities

As advertisers are held to a higher level of accountability every year, they need to be…

confident that their media agency partners can deliver on their promises

clear and realistic about their objectives

prepared to give the agency a genuine opportunity to be a partner in their success