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Trends in agency compensation
ANA Magazine, Summer 2013, pp. 8-9
This article summarises the findings from the ANA's annual agency compensation trend survey among client-side marketers.
This article summarises the findings from the ANA's annual agency compensation trend survey among client-side marketers. This included questions on methods of compensation, the use of performance incentives, and the management of agency compensation. The results show that fees are the dominant method of compensation, regardless of the specific agency type or service and the trend for the use of performance incentives has increased. Despite general satisfaction, anywhere from one-third to one-half of respondents are considering changes to their current compensation agreement.
How to assess client-agency relationships effectively
Jeremy Caplin, Warc Best Practice, February 2012
Analysis of over 8,000 client-agency relationships has shown that agency performance is highly dependent on client performance.
Analysis of over 8,000 client-agency relationships has shown that agency performance is highly dependent on client performance. The analysis has also revealed that the best agency performance occurs when that of the client is optimal in four areas: Approval, Briefing, Timing and Behaviour. When the client's performance is strong in these areas, agency output is judged by clients to be +37% better than it is in agencies with poorly performing clients. As a result, clients are recommended to first find out their own capabilities and shortcomings. At a bare minimum, clients need to employ a two-way evaluation process. Calibrating the data from this evaluation against large externally benchmarked datasets can highlight client strengths and deficiencies. Regular measurement will allow clients to track their progress against any highlighted actions that need to be taken.
Marketer-agency relationships in APAC - some findings from The Observatory
Richard Bleasdale, Warc Exclusive, The Observatory Asia Pacific, March 2011
The Roster Usage and Satisfaction report was conducted to look at global trends in relation to 'home', APAC, markets versus the global picture, and how those reflect on marketers and their respective agencies.
The Roster Usage and Satisfaction report was conducted to look at global trends in relation to 'home', APAC, markets versus the global picture, and how those reflect on marketers and their respective agencies. In APAC, there is a generally lower degree of marketer engagement/involvement with agencies than elsewhere in the world, In overall terms, the number of respondents engaging with various agency types in the APAC region was rather lower than the global average, In particular, the numbers of those who engage with media agencies (both planning and buying) are particularly low compared with the global average. However, the actual amount of time they spend with agencies is significantly higher, with around two-thirds spending between 33% and 50% of their working week on agency matters. Globally, less than half that number spent that amount of time with their agencies.
The creative code: an organisational influence on the creative process in advertising
Mark W. Stuhlfaut, International Journal of Advertising, Vol. 30, No. 2, 2011, pp. 283-304
A study investigated the phenomenon, called the creative code, which is a collection of implicit theories about an advertising agency’s creative product that are held by people within a creative department.
A study investigated the phenomenon, called the creative code, which is a collection of implicit theories about an advertising agency’s creative product that are held by people within a creative department. A foundation was built upon organisation-culture theory. Evidence in literature supported the conceptualisation of the construct. Personal interviews with creative personnel at a midwestern US advertising agency found evidence for a creative code and its components, sources, conditionality and consequences. The study implies that a creative code should be considered as an independent or dependent variable in research about advertising creativity. Client and agency managers and creative employees also may benefit from being more cognisant of the creative code that exists within agency organisations.
Evaluating creative work
Merry Baskin, Warc Best Practice, December 2010, pp. 38-39
Merry Baskin outlines a process to help avoid making a costly mistake in advertising creative judgement.
Merry Baskin outlines a process to help avoid making a costly mistake in advertising creative judgement. The term ‘evaluating creative work’ implies clarity, acuity and decisive creative judgement, but all too often it’s a matter of personal preferences. Evaluating creative work is a big ask, and despite attempts by agencies to set out clear formulae and rational criteria for evaluating their creative concepts, all too often it is the client’s ‘hidden’ criteria that dominate the call, and these can be very subjective and hugely variable. You must start by establishing the evaluation criteria upfront. But it’s very hard to tell upfront if a communications idea is going to move people, shift product or raise the bottom line. Ultimately, you must be confident in your opinions.
Coca-Cola and ANA members rethink agency evaluation
Geoffrey Precourt, Event Reports, Advertising Week, October 2009
In this article, Geoffrey Precourt, Warc’s U.S. Editor, reports from an Association of National Advertisers’ Agency/Client Forum at New York Advertising Week 2009.
In this article, Geoffrey Precourt, Warc’s U.S. Editor, reports from an Association of National Advertisers’ Agency/Client Forum at New York Advertising Week 2009. He focuses on a presentation by Coca-Cola’s director of Worldwide Media & Communication Operations, Sarah Armstrong, who discussed the company’s efforts to change its agency compensation model to a value-based system. This was an idea the soft drinks giant first began to investigate in 2006. By moving away from either a commission or fixed-fee model, the beverage maker is aiming to tie payments to the “outputs and outcome” of its partners’ work, and thus provide them with more of an incentive to “deliver world-class results.” Coca-Cola, which spends billions of dollars a year on marketing, now intends to roll this approach out worldwide. However, some challenges do remain, particularly in terms of establishing performance criteria that are agreed upon both by clients and their agencies.
What the agency model can learn from other markets
Rory Sutherland, Market Leader, Quarter 3, June 2009, pp. 27-28
This paper argues that many businesses fail to distinguish between price and transaction costs, and fatally ignore the latter while trying to reduce the former.
This paper argues that many businesses fail to distinguish between price and transaction costs, and fatally ignore the latter while trying to reduce the former. Low-cost competitors may succeed not because their prices are lower but because they have made the purchasing process easier and less time-consuming (e.g. ability to book tickets online). Failure to understand the deterrent effect of transaction costs caused the music industry’s disastrous refusal for some years to sell online (other examples are quoted). Reducing the emotional cost of difficult transaction may be much more important than reducing price. The same problem applies to advertising agencies: too much attention is now being paid to reducing the price of what agencies do, whereas the real attention needs to be spent reducing the other costs. The splintering of agencies into different disciplines, and the fragmentation of media, have made choices more complex and unwieldy; decision making is time consuming and coordination costs have soared. Agency elements should co-operate better to simplify the package offered; at the same time we should challenge the remuneration system which penalises efficiency and rewards for process cost, not value, and also tortuous client approval procedures that magnify transaction costs. Pay is not the issue, but the high cost of everything else.
Ten steps towards bridging the brand-agency divide
Alain Thys, Admap, April 2009, Issue 504, pp. 46-47
The article argues that clients are increasingly disenchanted with their advertising agencies, but the agencies still think they deliver.
The article argues that clients are increasingly disenchanted with their advertising agencies, but the agencies still think they deliver. Ten reasons are identified for this gap in perception and how to put it right: 1) clients want a tailored, partnership approach, while agencies sell to fit their business model; 2) clients want to discuss ROI, while agencies show off their awards; 3) clients want agencies to be trusted media partners, but many believe agencies have private deals which bias media recommendations; 4) clients seek solid advice, but agencies act as yes-men; 5) clients want consumer engagement, but the model many agencies work to still favours an intrusive reach-frequency model; 6) clients need agencies who can handle digital and traditional media with equal facility, but there are too many `walls’ preventing integration between traditional and digital agencies; 7) most agencies do not understand the in-store environment, where most clients make their money; 8) clients need agencies who can talk the language of the boardroom and make strategic recommendations, not merely wolly creative talk; 9) in international marketing, clients need integrated agency support, but agency teams rarely mix well; 10) clients want innovation, while agencies are unable to change their accustomed models and ways of doing things. Agencies should decided whether they are full-service or specialist, and focus accordingly. Brand marketers should stop expecting agencies to answer strategy questions in which they are not competent, and accept this as additional investment. Reforming agency compensation is key, including offering agencies sufficient compensation to do a good job.
Douglas Quenqua, ANA Magazine, February 2009, pp. 45-46
In this 2009 article, specialist software which allow clients to measure the performance of an advertising agency over time is discussed.
In this 2009 article, specialist software which allow clients to measure the performance of an advertising agency over time is discussed. These programmes can allow clients to evaluate agencies alone, or for both sides to score each other; they include both qualitative and quantitative data. The cuts the time the evaluation process takes by automatically collating scores.
Ogilvy on Recession - How to Get More Effective Advertising
Tim Broadbent, Kent Wertime, Christopher Graves, Jeff Froud, Jerry Smith, Soames Hines and David Young, WPP Atticus Awards, Winner, 2008
We face one of the most challenging business environments for years. Recessions caused by liquidity problems are particularly severe.
We face one of the most challenging business environments for years. Recessions caused by liquidity problems are particularly severe. This book is based on Ogilvy's experience of winners in recession together with research into best practice. It suggests 15 action points for more effective advertising to allow companies to grow during a recession: choose an agency with a proven effectiveness track record; engage your agency with your business issues; set advertising strategy in line with corporate strategy; set hard objectives; define your Big Ideal; give your agency written briefs; write great briefs; get better at judging creative ideas; cut your approval layers; use research wisely; don’t cut production budgets; spend 360°; exploit low regional media costs; learn what works and do more of that and; pay by results.
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