There are moments in your life when many factors come together. You could say, when the stars align, but as someone whose career has been forged on data and facts, such a celestial analogy would be incongruous.
Nevertheless, this year I took over as global CEO of FirmDecisions – at a time when forensic analysis of spend, contracts and marketing returns has never been more needed. The coronavirus pandemic has created the most challenging business environment most of us have lived through. Certainly, its universal effect on commerce is exceptional.
Crisis calls for adaptability and – as those of us who have worked through the rapidly changing media and marketing landscape of the past few decades can testify – survival and growth require hard work, flexibility, scrutiny and a willingness to constantly improve one’s expertise. My philosophy has always been that the best way to learn how to do things is to roll up your sleeves and get stuck in. It is only by learning and building the skills within your business that you will be fit for this changing world.
The changing agency model
The agency model has been shifting for some time and that has introduced huge levels of complexity into the market. It is because of these complicated and evolving business arrangements that transparency is so critical as interrogating contract compliance becomes essential for all advertisers.
The past 20 years have seen the agency model evolve from full-service to separation, starting with media being syphoned off. As media made the most money and agencies had combined, agency groups started to bundle trading across the agencies they owned, and negotiations with vendors moved from a few million pounds for a client, to tens or hundreds of millions of pounds, thanks to group-consolidated buying power.
With that, the complexity of contracts stepped up a gear; the contracts being agreed were often less open about the details of agency trading. As clients increasingly pushed agencies down on their fees, agencies had to source revenue growth from elsewhere.
This is being replicated across all marketing suppliers. As services have become more commoditised and clients insist on cost savings, agencies have had to look for alternative revenue sources, just as their shareholders demand.
The chief marketing officer challenge
While it may sometimes be uncomfortable, this is nonetheless an exciting time for the marketing sector. Marketers are having to adapt to rapidly changing consumer behaviours and this has impacted marketing plans and partner requirements.
We have witnessed the shift toward investing in digital marketing channels, such as mobile, influencers and e-commerce. In addition, chief marketing officers (CMOs) have changed the way they manage and deploy their marketing activities by using technology, changing resourcing (for example the rise of in-housing) and localising functions, such as creative and production, to improve audience targeting.
Amid this fragmentation, the CMO now has the challenge of managing all those suppliers and ensuring that each one of them is complying with their contractual obligations. This often now extends beyond client agency relationships, as advertisers do deals directly with media owners, technology platforms, influencers and other service providers.
This inevitably means that our role as auditors of these contractual obligations also evolve so our clients feel confident that relationships with their legacy – and newly chosen – partners are built on trust. This is where our mantra – Trust but Verify – comes into its own by auditing this myriad of complex contractual obligations.
This goes beyond making sure that the full spectrum of partners – from media agencies to digital specialists, from merchandiser and field force to point of sale and influencer – are working in the clients’ best interests and meeting the terms of their contracts. It also involves helping clients understand where the risk areas might be so they can be better informed to negotiate better contracts going forward.
Building trust: Why 2021 is the year of contract compliance
What is important for our clients is that they can build strong, trusting relationships with their marketing partners. A close link between the marketing provider and the client is essential for the client vision to be realised and to reach consumers in the most appropriate fashion.
That requires a rigour that has long been applied to other industries, such as the financial sector. It is the surety that your partners are giving you the services they have promised.
Auditors are often seen as backwards looking – picking over the detail of past contracts and spend levels – but this is a fallacy. Building business success is about being forward thinking, employing experts who can scrutinise the data to ensure a stronger position to weather future uncertainty.
Marketers are looking for help. More than three quarters of CMOs of the Global 5000 are concerned about not being able to quantify, communicate and optimise the value of marketing.
After the experience of 2020, where agency scopes were amended at the last minute to reflect the uncertain time, in 2021 clients will want to be sure that those changes are correctly reconciled and their marketing investment was managed according to the contract terms.
Face the future
Looking at the coming year, we, our clients and agencies must all be ready and willing to broaden our horizons, learn and develop new skills.
The marketing supply chain is the most complex it has ever been and this $1.7tn industry must adopt transparent and fair commercial practices.
Financial transparency is front of mind for brands and most believe that auditing their agencies leads to more care being taken with their money. So, as factual and objective contract compliance stretches beyond marketing, it will benefit all aspects of commercial operations and that will help everyone through this next, challenging stage in our business lives.