Future of Marketing and AgenciesDocument Transcript
L e c t u r e r :
J a n e t
H u l l
0 2 . 0 4 . 2 0 1 0
T ABLE OF C ONTENTS
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C URRENT S ITUATION : W HERE ARE W E NOW ?
For the purpose of this report, the group has decided to base the context of the case on a real,
functioning company; however, due to confidentiality agreements, the name has been changed
to Greenzo Corporation, a car retail and manufacturing business. For additional and insider
details were found through an interview with one of the communication experts (Appendix A).
I NDUSTRY S TRUCTURE
The structure of the automotive industry has changed a lot over the past 20 years.
Manufacturers have focused on the profitable elements of the value chain and
externalized most of the upstream activities. This sector is highly competitive on both
national and international levels. To face the international competitors, French
constructors have to better the competitiveness-price. (Industrie Automobile Française,
C ONSUMERS E XPECTATIONS AND S TATE OF M IND :
Price France = 2009
Competition Financial Crisis
• There is more concern about environmental issues.
• People are looking for eco-friendly cars, more sustainable and responsible.
Sustainable transportation is merely in the concept stage; however, it is a growing trend
that manufactures are taking into consideration when designing their latest models (ex:
Toyota’s Prius early mover into market). A challenging external factor that has
recently hit the automotive market is the recent (2008-Present) global financial
downtown. This downtown has caused the following current and projected situations
(Industrie Automobile Française, 2009-10):
• Production activities decreased by 20% (due to relocation)
o Slight increase in production activities from 2009 to 2010.
• Sales of new cars increased by 10% (due to a government incentive program for
recycling your ‘clunker’ for a more environmentally friendly vehicle)
o New car sales will steadily decrease due to an increase in unemployment
and suppression of the government-sponsored incentive program.
W HAT IS G REENZO ’ S BRAND POSITION ?
Greenzo is currently one of the largest and leading automotive companies in Europe, but
it has not escaped from low sales volume in the recent years. They are in a highly
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competitive industry, which is constantly changing and presents a need for innovation. It
is necessary for Greenzo to remain strong in their research and development (R&D)
efforts to maintain their competitive advantage. Their current R&D core strategy is
centralized around renewable resources and alternative energies. Customers are
unwilling to pay high premiums for ‘green’ products, so the following challenge then
becomes an issue for the marketing department:
• How do you market a vehicle to customers that is based on their ‘green’ desires
when an ‘green’ vehicle is not a major factor in their purchasing decision?
W HAT IS THE TRADITIONAL MARKETING DEPARTMENT STRUCTURE ?
The marketing department is product oriented and is in charge of one entity per type of
car model. There is a separation between the marketing and communication
departments, as they function as two separate entities.
• Marketing: In charge of defining the marketing mix around one car model (car
dealership strategies, pricing strategies, defining the car features according to
customers needs, and a small role in the communication/promotion aspect).
• Com munication: In charge of ‘below the line’ media activities (printed
brochures aimed at dealerships, etc) and ‘above the line’ media activities (media
advertising, print advertising, radio, etc).
This report will focus primarily on the marketing department, as it boasts an impressive
160 employees, where as the communication department hold only 42.
H OW HAVE YOU BEEN USED TO WORKING WITH YOUR AGENCY ?
• Remuneration Scheme: The contract is an exclusive contract for the
advertising projects and on a volumes basis (+/- 20%) for the print production
• Long-term Relationship: The agency successfully took control of the
Greenzo account several years ago and has been working together for six years.
• Devoted Team Mem bers: Artistic directors, copywriters, creative teams, and
project managers who regularly follow-up on the different communication
• Working conditions: The department is in contact on a daily basis via e-mail
and phone. Face-to-face meetings are organized only at specific periods (during
the presentation of the creative idea by the agency and then throughout several
milestones) to make sure projects are on the track.
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M ESSAGE F LOWCHART :
M ARKETING AND C OMMUNICATION D EPARTMENTS W ORKING WITH THE A GENCY
MARKETING DEPARTMENT AGENCY
The marketing department gives the messages to be broadcasted and the marketing
objectives to the communication department. From there, the communication
department translates these objectives into communication objectives and writes the
brief for the agency. The agency works on the brief and then provides the
communication department a creative idea who then must receive the approval from the
marketing department. With this process, the communication department functions as
the intermediary, where as the marketing department functions are the decision maker.
T HE M AIN C ONFLICTS E NCOUNTERED
In order for the working relationship between the marketing department and agency to
improve and establish a common ground, it is useful to construct a scoring matrix
(Appendix B). This matrix will help each side to understand the business issues and the
market-place knowledge. For additional information on what both sides (marketing
departments and agencies expect from each other, please see Appendix C. Additionally,
for information on the main issues and their proposed solutions, please see Appendix D.
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O UR V ISION : W HERE DO W E W ANT TO BE ?
According to a study commissioned by Deloitte, 70% of respondents do not believe that the role
of the marketing department and their purpose is clearly defined. (Marketing in 3D, 2007) This
vision for Greenzo’s marketing department then must become the following:
Clearly articulate and define the functions, purpose, attributes, and contributions made
by the Greenzo marketing department with particular focus on demonstrating value and
justification for existence to the board of directions.
One way to tackle this ambitious vision is to realign and restructure the marketing and the
communication departments into one, like-minded and focused department – Marketing
Communications (MarCom) Department. Additionally, job titles and position descriptions would
be slightly altered as to adhere to the new standards of one department.
P OTENTIAL S OLUTION FOR C ONFLICTS
The position for each team member must be clearly defined and their responsibilities
outlined in order to minimize and provide foresight against potential conflicts. Within
this context, the following bullets are just a few suggested job titles and functions:
• Title: Strategist
Function/Responsibility: To investigate consumer touch points to find out
potential points of failure within the interaction between the company and the
consumer. (Ex: Conduct surveys on fears, hopes, etc.)
• Title: Creative Team Member
Function/Responsibility: To associate consumer aspirations with relevant
• Title: Communication Executive
Function/Responsibility: To bridge the gap between the media and the
marketing processes, as well as to inform other departments of the internal
communication process so as to mention and educate about the current campaign.
• Title: Accountant
Function/Responsibility: Playing a vital role in the department, they would be
responsible for providing figures and values for justification of ‘why’ the
department exists and their long-term returns on investment (ROI).
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• Title: Customer Relationship Executive
Function/Responsibility: Primary role is to ensure that there is a two-way
communication flow between the MarCom and the Sales departments. This will
alleviate conflict between campaign development and the misunderstanding /
misinterpretation of the message by the sales associates.
Cross-training: Employees from other departments should be encouraged to spend a
few hours a month in the MarCom department to gain an understanding of its function
and how it relates to their own job.
H OW WILL YOU INTERFACE WITH FINANCE AND THE BOARD OF DIRECTORS ?
It is highly recommended that the CEO (Chief Executive Officer) and CFO (Chief Financial
Officer) attend the initial marketing briefs of the MarCom department. This effort would
provide both executives the opportunity to be ‘silent listeners’ and an allowance for
questions and feedback for the CMO (Chief Marketing Officer). Likewise, it is suggested
that the CMO maintain contact with the CFO as to create a better working relationship
and an understanding for each other’s positions and job functions for the overall goal of
the company. With the merge and formation of the MarCom department, the CMO may
also be referred to as, or share in partnership the tasks with, the CCO (Chief
H OW WILL BRAND PERFORMANCE BE MONITORED AND MEASURED ?
Before using the measurement tools, it is instrumental to compile all featured reports
and have them presented in the weekly (or bi-monthly) meeting between the CEO, CFO,
and CMO. This procedure will ensure to demonstrate the effectiveness and impact
marketing has on business performance. (Deloitte, 2008) To avoid a false
representation, the following tools should be utilized for the measure of the MarCom
1. Key Performance Indicators (KPI): According to the Deloitte study, these KPIs
are most effective when they are
• internally consistent and externally verifiable;
• comparable over time (showing business trends);
• comparative over time (showing market performance); and
• material to business performance (driver of value).
2. Top of Mind Awareness (TOMA): Telephone survey investigating campaign
awareness (Pelsmacker et al., 2007: 77).
3. Net Promoter Scores (NPS): Customer satisfaction survey of a brand.
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Each of these tools should be regulated on a quarterly basis as to provide strong and
relative arguments backing the position of the MarCom department.
B ONUS S TRUCTURE / I NCENTIVES S YSTEM
As there currently appears to be lacking a bonus structure and incentives system, one
should be implemented with the merging of the two departments. This system should
be on a quarterly scheme based on performance objectives that are clearly linked to
time-constrained tasks and assignments. One example of a bonus period could be the
direct correlation to the performance of the NPS scores. If the scores were above the 75%
margin, each MarCom employee would receive a stipend bonus amount. If they were
above the 80% margin, then the employees would receive a slightly higher stipend and
so forth. In addition to this example, there could be another NPS incentive that if the
margin were at 100%, there would be an annual flat sum pay out. Within this context,
the higher-level positions would, obviously, receive a larger stipend than their
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A GENCIES : W HAT IS OUR DEGREE OF INTERACTION ?
When working with agencies, it is necessary for companies to develop standard protocols and
procedures in dealing with the various issues that may arise throughout the working
relationship, such as payment schemes and the ownership of materials produced.
P AYMENT S CHEME
The key to a long and successful partnership between an agency and its client lies in the
finances. It is however difficult to calculate and quantify ideas and concepts.
The following points are four main remuneration structures for agencies (Sims, 2005):
• Com mission: The agency receives a percentage of the profit resulting from a
campaign. It is a simple method but it does not reflect the amount of work and
the time involved in the project.
• Phased Fee: It is calculated according to the time the agency is going to spend
to accomplish the project. With that structure, fees are calculated easily and it
enables companies to compare agencies’ efficiency.
• Project Fee: The company is only charged when the project is completed. The
fees can be agreed on or estimated beforehand. This method is generally chosen
when projects are not done on a regular basis.
• Payment by Results: This remuneration method is predominantly used as a
complement of another. The reference points can follow from the project’s
efficiency or the agency service. The only difficulty is to measure the results to
give the appropriate incentives.
With the new MarCom department in charge of working with the agencies, the chosen
methods for best practice include the ‘phased fee’ structure associated with a ‘payment
by results’ plan. This will ensure that the agency will be paid according to the time spent
on each campaign, as well as remuneration for the creative team depending on the
effectiveness of each project. This will also help to establish a more consistent budget
structure providing clearly defined agreements and security to the agency. Equally, by
using the ‘payment by results’ method, Greenzo is guaranteed quality service. As many
contracts are never signed between companies and agencies, this method will also help
to avoid future problems, especially as the relationship will ideally be long-term (Sims,
Unfortunately, due to the word constraint, there will not be a mention of additional
external suppliers. It was decided as a group that the main focus would relay within the
issues of the marketing and communication departments and working with agencies.
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W HO OWNS THE RIGHTS ?
It is easy for there to be a misunderstanding between marketing departments of a
business and their contracted agencies over who owns the final rights for the production
of materials. A company, specifically the marketing department, may hire an agency to
create or produce various marketing elements throughout an advertising campaign from
print designs to a ‘catchy’ slogan to multimedia development. The company may have a
preconceived notion of the ideas they would like to implement for the campaign or they
may hire the agency to do everything. In either case, unless agreements are pre-
arranged, there is a potential issue over who owns the rights of the final ‘product’.
For the purpose of this report, a simplified visual structure will be set into practice.
Terms and agreements must be contracted between Greenzo and the chosen advertising
agency. It will be the right of the agency to receive credit for all materials produced for
the Greenzo campaigns; however, it will be under the ownership of the Greenzo
Corporation. All credits to the agency will be promoted on web materials and press
packages. Restrictions on material usage will be within the rights of Greenzo. By having
Greenzo maintain full control on the material usage, there will be a reassurance of
maintaining company standards. For example, the specifications of where a logo can be
placed, the proximity limitations of layout design for print advertisements, locations on
where campaign messages may be spread throughout a city and by which means of
communication. (Verbauwhede, 2005)
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Deloitte (2008) Marketing in 3D. Highlighting perspectives on marketing effectiveness [available
Industrie Automobile Française (2009-10), XERFI 700
KPI’s for Marketing reporting- a framework for effective Marketing disclosure, IPA 2008
Net Promoter (2010) http://www.netpromoter.com [accessed March 2010]
Pelsmacker, P., Geuens, M., van den Bergh, J. Mare (2007) Marketing communications: a
European perspective, 3rd ed, Harlow: Prentice Hall/Financial Times
Sims, M. (2005) Working with agencies: an insider's guide, Wiley, 1st edition
Thomas, Liisa (2008) When Are Slogans Trademarks, and Who Owns Them-the Agency That
Developed the Slogan, or the Company That Uses It?, INTA Bulletin, Vol. 63, No. 14 [August]
Verbauwhede, Lien (2005) Intellectual Property Issues in Advertising, SMEs Division, WIPO1
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APPENDIX A – INTERVIEW GUIDELINE
Date: 31. 03 2010
Interviewee: Nicolas S (Communication manager in charge of the Below The Line activities of
Headquarter: Paris, Boulogne
We need to describe and examine the relationship among your communication/marketing
department and your main agency. We would like to understand the current situation in to
propose recommendations to improve it, and understand what would be the future issues
concerning this relationship.
1. How many people work for the marketing department?
About 160 employees
2. How many people work for the communication department?
About 42 persons
3. What is the nature/type of your contract with your main Agency? Are you
paying them by projects? Per year? …
It is an exclusive contract as regard the advertising projects (TV adds, printed add on
billboards...), but it is very different for the printed production (brochures..) where our
agency is paid per volumes (+/- 20%)
4. How do you measure your agency efficiency?
We have a satisfaction survey, which is fulfil by the purchasing department. We are only
measuring if the communication projects respect the annual company budget.
5. Can we have a company flowchart so we can see the link between the
finance department and the Marketing Communications department?
Well, from what I know, there is no link...
6. How do you see your relations with your communication agency? Do you
have some idea to improve the situation?
Well, we will reduce the communication budget because of the economic French
crisis…obviously it will certainly affect both sides…
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APPENDIX B – SCORING MATRIX
This matrix evaluates the ability of a company and its client to reach a mutually beneficial
relationship. It is a sample evaluation criteria.
Company’s criteria Your level of Agency Examples of comments
Understanding of business 4 5 Good understanding of business
goals, company operations, politics,
Marketplace knowledge 3 3 Knows trends at local level but does
not have strong sector knowledge.
Ok for us to provide this
Strategic thinking 4 5 Good implementing. Could be better
Creative .. .. Concepts can be very samey
Cultural fit/chemistry .. .. Very good day-to-day team
Marketing vision .. .. Agency management does not
World-class people .. .. Days to day contacts excellent on
implementation side but lacking
Integration with other .. .. We determine this
Results .. ..
Scoring 1-5; 1=very low, 5=very high)
Agency’s criteria Your level of Agency Examples of comments
Spirit of partnership and 4 5 This could be better
Understanding of agency 3 3 We need to get closer to them
Emphasis on creativity 4 2 ...
Inspiring marketing ... ... ...
Client profitability and ... ... ...
Brand enhancement ... ... ...
Ease of working ... ... ...
Scoring 1-5; 1=very low, 5=very high)
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APPENDIX C – EXPECTATIONS FROM BOTH SIDES
Reference: The Future of Agencies, Sims M., Chapter 1
What we want from an agency:
• Understanding our complex business issues
• Marketplace knowledge (they should provide benchmark about competitors campaigns)
• Strict budgeting
• Strategic thinking / consultancy/ solutions that integrate with our others activities
• Creative expression and implementation
• Cultural/chemistry fit
• Marketing vision
• Geographic coverage
• Work professionally like-minded business partners
What agencies want from a client?
• They want him to take risks and produce award-winning work
• Understanding of their business
• A client who know what is wanted but willing to be surprised
• A client who enhances our reputation and inspires us to do great work (issues of an
agency just doing production studio…
What Greenzo’s agency is expecting from its client?
• Mainly to answer their questions on the ongoing projects
• To have company’s feedbacks and validation on the choice of graphic codes, car
pictures, text about the car’s features, tagline, slogan, layouts...
• That Greenzo let them some freedom of creation and that they follow their advices
The main issues faced by both parts:
• Lack of access to senior people
• Poor communication brief
• Feeling of being undervalued, under-rewarded
• Agencies should work more professionally and not be creative maverick partners
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APPENDIX D – MAIN ISSUES AND PROPOSED SOLUTIONS
This table details some of the major issues the marketing department faces when relating to
the hired agency as well as provides potential solutions to resolve conflict.
Main Issues Proposed Solutions
• Greenzo underestimates the role - Quarterly corporate events to build
and function of the consulting relationship and trust.
agency through strict regulations, - When introducing a new product, fully
which reduces the agency's scope of engage the agency in understanding
creativity and becoming a “managed ‘why’.
suppliers.” (Sims, 2005) - Invite the agency to an R&D center to
see how the features and USP (unique
selling points) are developed.
- Share some confidential information,
business results, and future targets to
relate the campaign to sales results.
• Lack of consideration for the - Invitation to internal, corporate events.
agency’s staff members. - Introduce agency team to other
company departments, such as the
finance department. (Sims, 2005)
- Ask for participation in presenting
concepts and campaigns to other
company departments to understand
their issues and areas of interest.
• Budget and deadline divergence: - Create and develop a benchmarking
- Poor pricing justifications system.
- Suggestion: CEO and directory of
the agency create the template
chart in tandem as to provide a
sense of transparency of
information and negotiations can
be made at the beginning of a
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