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Decoupling 2010
The Strategic Imperative for Marketing Supply Chain Productivity

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  1. 1. For Marketing Procurement Professionals Decoupling 2010 The Strategic Imperative for Marketing Supply Chain Productivity Decoupling is attracting serious attention and consideration as a productivity innovation for advertisers and marketers because of intense pressures to reduce costs and leverage investments in creative ideas. Understanding what decoupling means, how it works and why it is important to the marketing supply chain is the focus of this white paper. Decoupling Marketing Communications Production Services Improves Efficiency Marketing supply chain professionals define decoupling as separating strategy and creative by Michael J. Boyle development from execution and delivery. Many large, multinational brands are decoupling About the Author their marketing communications strategy and creative from the execution, and adopting a Michael Boyle is a shared services model for production. consultant, change agent and subject matter expert Decoupling is a result of cost pressures on marketing budgets and procurement’s involvement on Creative Services and in the marketing supply chain. The execution model of ‘create assets once, use once’ is defunct. Production Management It’s been replaced by create assets once, use often. Advertising decoupling started in Europe. with 25 years experience. His organizational and financial Charles Kirchner, Chairman of Marketing Supply Chain Ltd., defines it as any low visibility, back talents were acquired office category such as digital and print production, or communications materials sourcing. while overhauling non- Decoupling is one of the specialties of production suppliers who compete openly with performing production units agencies for execution projects. It is gaining acceptance and popularity in several categories— at agencies and financial pharmaceutical/biotech/medical devices, aerospace and defense, and technology. Decoupling services companies. You is also growing throughout financial services, because it promises lower costs and improved can connect with him at use of creative ideas and brand assets. Decoupling is another chapter in the unbundling of services once provided by full service agencies who created execution silos based on lines of business, brands or clients. It is also an outcome of media fragmentation. Execution of broadcast, digital and print is often handled by third parties who deal directly with marketers, or by consultants hired by the advertisers to manage costs. Operating in low cost centers of competence, these groups deliver speed, flexibility and operational excellence that traditional agencies cannot match. Decoupling also delivers efficiency through an extraordinary mix of application innovation and standardized shared services that yields an agile, cost-effective capability. Most procurement officers acknowledge the valuable guidance provided by subject matter experts (SMEs) to optimizing the workability of a decoupled execution solution. A recent Ad Age interview with Pfizer’s procurement executive confirms SMEs as the bedrock to decoupling sustainability. Successful decoupling also relies on digital asset management and content management systems (DAM/CMS) because they deliver better utilization of brand assets and creative ideas—thus reducing the production cost of campaign elements. DAM/CMS is the underpinning of any decoupling endeavor because it shifts the stewardship of the brand assets and creative concepts from agencies to marketers. Create once, use often becomes the new reality. This yields greater leverage and independence for marketers that can be used to improve the creative agency’s performance and highlight more disintermediation opportunities and more process innovation. Page 1 © 2010 Michael J Boyle. Al rights reserved.
  2. 2. Decoupling 2010 The Strategic Imperative for Marketing Supply Chain Productivity For Marketing Procurement Professionals Creating and implementing an integrated DAM/CMS is a major initiative. It demands substantial intellectual and financial resources. Its the foundation for decoupling which generates real savings — usually in the range of 25-40% of overall production costs. DAM/CMS also promises intangible results such as improved brand integrity from create assets once, use them often — layouts, images, taglines, headlines and other campaign elements. One example is localization kits with culturally appropriate content, created simultaneously during production to enable global campaigns with fewer assets at greatly reduced costs. Decoupling’s underlying driver is asset and content management. Marketers are implementing enterprise level asset and content management systems — as fixed installations or software as a service (SaaS) solutions because they guarantee independence from any holding company, creative group or production resource. Once in place, these systems become the basis for a number of decoupling strategies and tactics — near-sourcing, outsourcing, off-shoring and automation. Engaging in a successful decoupling project without DAM/CMS and SMEs is possible, but the ROI will be significantly reduced and the project is less likely to succeed. Decoupling — A Marketing Supply Chain Management Best Practice Decoupling is a highly effective marketing supply chain productivity innovation with the appropriate implementation. It requires: u Subject matter expertise focused on the nuances of the specific executions to identify the hidden savings u Access to all the creative assets and content — who controls your assets and how are they tagged? u Insights to the overall goals and objectives of the marketing campaign and advertising strategy u Knowledge of the budgets and the agency compensation model used u A thorough understanding of the workflows, processes, quality levels, media, distribution and final outputs required How Decoupling Works Full Service Agency Process Decoupled Process Research Creative Approved Development Creative sent to of concepts Decoupled for Broadcast Global/Regional Strategy Production Presentation Print and Online. Group including messaging, media plan, campaign Decoupled tactics, and other Global/Regional Creative Creative Agency Production Group mandatories. Client Presentation Executes Decides Edits, localizes, Broadcast: TV & Video to Master Version translates, versions, Animatics/Storyboards, Client Approved Decouple Delivers all assets/content and other adaptations. Radio Scripts Strategy Production to decoupled global/ Print: Ads, DM, OOH regional production group. Online: Site Maps and Wireframes Decoupled Global/Regional Creative Production Group Creative Brief Agency Receives approved Broadcast Print Approved Creative Develops VID Brand Style Guide for with budget. (Visual Identity) execution of all campaign Online Brand Style Guide elements. Online for all media with approvals by clients and Production Specs. creatives ensures compliance. Production This process can be applied to any decoupling tactic.
  3. 3. Decoupling 2010 The Strategic Imperative for Marketing Supply Chain Productivity For Marketing Procurement Professionals Evaluating Four Decoupling Tactics 1. Near-sourcing is locating a decoupled execution resource within a specific geographic proximity or time boundary. Near-sourced resources provide a range of service, flexibility and control. A domestic company might near-source their execution to a low cost center of competence within the U.S. — such as Maine, Las Vegas, Texas and other similar location. The advantages are a unique set of services and professional skills that dovetail to the unique strengths and specialties of the marketer, plus moderate time zone differences, local nomenclature and bandwidth to support large file transfers. One downside of near-sourcing is the lack of immediate, measurable savings. One derivative of near-sourcing is nearshoring—locating U.S. production to Canada or Central America. Cheil Communications has executed a number of high-profile communications campaigns for Samsung Electronics and could be considered an excellent near-sourcing partner for Samsung. Creative Services Video Optical (CSVO) and Hogarth are other near-sourcing options in the U.S. and EMEA respectively. 2. Outsourcing is any decoupled execution contracted to a third party provider — be it co-located, near-sourced, near-shored or offshored. The primary advantage is outsourced resources produce work according to any number of client dictates (confidentiality, rate cards, SLAs, etc.) while insuring lower costs. Decoupled marketing communications functions typically outsourced are high volume, repetitive tasks. This includes presentations, page building (mechanicals) according to a template, low level digital production of banners and emails, or video post production services such as duplication, versioning, delivery and storage. Outsourcing companies are often based on a particular functional silo or business silos such as digital production or financial services. Williams Lea is one example of a global outsourcing company primarily for financial services. Other case studies highlight the success of direct response marketers who generate catalogs, banners, emails and direct mail packages using outsourced solutions with low cost production capabilities. One limitation with outsourcing is matching needs to capabilities. Outsourcing providers often promise to be all things to all clients. 3. Offshoring is commonly associated with outsourcing and implies relocating executional work to low cost centers of competence in locations such as Argentina, India and Bangladesh. Offshoring presents challenges of different languages and cultures, long distance relationships and different time zones, plus communication barriers. The benefit of offshoring is securing the lowest possible cost for production — one of the stated goals of decoupling. Organizations like Office Tiger, Clipping Factory, AvVenta and others regularly execute new projects for many U.S. companies in Asia and Central America at a fraction of the domestic cost. Numerous assignments and executions for many Fortune 500 companies such as Morgan Stanley, Dell, Merck, Pfizer and Mercedes-Benz prove the success of this model. 4. Automation using dynamic content and dynamic sizing is a technology that supports decoupling. Automation solutions leverage robust DAM/CMS installations. They are usually sponsored by the traditional print service providers like Quad Graphics, Schawk and Xerox. Automation of banners, emails and print materials continues to grow. Early automation solutions enabled the delivery of dynamic content (art and copy) to a fixed template. More robust solutions now enable dynamic content, dynamic sizing, quality assurance and delivery of approved creative content to various media distribution outlets. Automation relies heavily on templated creative — an idea resisted by traditional creative teams. However, CRM, brand campaigns, retail ads and POS materials are increasingly executed via automation. Creative Print Technologies, Pica9, and Document Sciences are automation providers in this space. Each has a specialty. All use similar dynamic content tools and techniques. Page 3 © 2010 Michael J Boyle. Al rights reserved.
  4. 4. Decoupling 2010 The Strategic Imperative for Marketing Supply Chain Productivity For Marketing Procurement Professionals Action Plan for Agencies — Answering the Decoupling Challenge 1. Get lean fast! Clients often decouple because agencies are perceived as inefficient. Standardize, consolidate and streamline your DAM/CMS, project management, workflow tools, best practices, rate cards and other production disciplines. This requires a comprehensive inventory of people, technology, processes. 2. Develop a decoupling response strategy that is not fear, uncertainty and doubt (FUD). Great creative is only as good as the worst execution. Partner with a low cost execution capability that supports your creative ideas. An inexpensive, high capacity, decoupled production alternative gives a struggling agency the execution powerhouse that they need to win new clients and retain old ones. 3. Innovate, innovate, innovate. Challenge your entire organization to lower costs and develop unusual execution solutions. Challenge your partners to do likewise. Innovation yields extraordinary solutions that you can own and sell. Foster a culture of innovation. 4. Initiate a discussion with clients about decoupling. Become their trusted advisors and SMEs. Educate them on the questions, alternatives and pitfalls. Collaborate with them on decoupling pilot projects. 5. Study the decoupling marketplace. Identify and establish key relationships. Decoupling is already a stratified offering with huge growth potential. Know the players, the rules, the variables and the nuances of decoupling. It’s another new business channel. 6. Automate at least one production process. Apply change management techniques to insure success. Action Plan for Marketers — Preparing to Decouple 1. Audit your DAM/CMS. Scrutinize every aspect of your creative assets and marketing content. Question who, what, when where, why and how it’s related to the marketing strategy and implementation. Understand your exposure. 2. Audit your marketing supply chain spend for all broadcast/print/online executions. 3. Audit the processes, methods, procedures and workflows related to asset and content creation. Identify and standardize the tools, file formats, metadata and tagging conventions. Understand the production silos. Eliminate duplication of effort. Streamline all review and approval processes. 4. Create a decoupling costing model that allows you to evaluate the four tactics, the financial implications of each and the ROI related to decoupling. 5. Begin decoupling due diligence. Identify SMEs and trusted advisors. Write an RFI/RFP/RFQ. Action Plan for Print Service Providers — Becoming a Decoupling Supplier 1. Get lean fast! Empower your management team to make decisions and take responsibility. Streamline your project management team. Standardize and consolidate methods, procedures, workflow tools and best practices. 2. Identify and cultivate your subject matter experts (SMEs). Know who they are, what they know and how you can leverage their knowledge with existing clients and in new business presentations. 3. Study your existing clients — recognize the opportunities for incremental, value-added services such as DAM/CMS. 4. Understand your core marketing supply chain offerings (products and services). Add context marketing supply chain functions (incremental services that can be performed by your SMEs) where appropriate. 5. Educate your sales team on the new realities. Seek opportunities for decoupling RFPs. Page 4 © 2010 Michael J Boyle. Al rights reserved.
  5. 5. Decoupling 2010 The Strategic Imperative for Marketing Supply Chain Productivity For Marketing Procurement Professionals Other Related Topics 1. Separating core marketing supply chain functions (products and services) from context marketing supply chain functions (ancillary activities that can be performed by outside SMEs). 2. Conducting decoupling due diligence including a SWOT analysis and writing a decoupling RFI. 3. Service level agreements that inhibit innovation by eliminating margin. 4. Beyond Decoupling — how to amplify the decoupling model to drive incremental savings. 5. Cultural barriers to decoupling (internal & external). Decoupling that is responsive to the needs of the business. 6. Internal vs. External decoupling tactics. Decoupling execution to an internal group insures higher levels of service while decoupling execution to external resources often delivers the best price. 7. Decoupling Production without Decoupling Creativity. Page 5 © 2010 Michael J Boyle. Al rights reserved.