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Michael Farmers Plan B - The Madison Avenue Makeover

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www.trinityp3.com

On Tuesday December 4, 2017 Michael Farmer, author of the award winning marketing business book Madison Avenue Manslaughter presented his Plan B for the industry to turn the manslaughter into a make over that would get brands and agencies moving again. This is the presentation where he defines why the industry needs a Plan B and what that Plan B should look like to deliver a Madison Avenue Makeover.

The video of his lecture can be found here https://www.youtube.com/edit?o=U&video_id=zNhCKd3V-MA

The transcript of his speech can be found here https://www.trinityp3.com/2018/02/plan-b-turning-madison-avenue-manslaughter-into-makeover-part-1/

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Michael Farmers Plan B - The Madison Avenue Makeover

  1. 1. marketing management consultants Plan B: Madison Avenue Makeover Michael Farmer TrinityP3 USA December 4, 2017 © Copyright 2017
  2. 2. marketing management consultants Plan B What you do when Plan A self-destructs
  3. 3. marketing management consultants Time for Plan B
  4. 4. marketing management consultants He’s Plan B? Time for Plan C
  5. 5. marketing management consultants Don needs Plan B
  6. 6. marketing management consultants Plan B Drowning in deliverables
  7. 7. marketing management consultants Plan B The consultants are coming
  8. 8. marketing management consultants Plan B Even for Holding Companies
  9. 9. marketing management consultants Sir Martin Needs Plan B WPP Share Price 2017
  10. 10. marketing management consultants Plan A has self-destructed •  Money and growth … dried up •  AOR relationships … disappeared •  Respect for agencies … a thing of the past •  Commodity pricing … worse every year •  Reviews … at the drop of a hat •  In-house agencies … a real threat •  Depressed salaries … invisible bonuses •  Client cutbacks … less faith in marketing
  11. 11. marketing management consultants What is Plan B? Before you decide, … know what Plan A problems need to be solved
  12. 12. marketing management consultants PRICE, PRODUCTIVITY AND PROFITABILITY
  13. 13. marketing management consultants Icarus Agency Office with 10 Clients Client Name Fees FTEs Hours Fees per Hour Alpha $1,423,811 7.2 12,679 112.30$ Bravo $1,640,593 17.1 30,070 54.56$ Charlie $842,052 5.3 9,402 89.56$ Delta $500,204 2.0 3,584 139.56$ Echo $3,737,841 13.9 24,455 152.85$ Foxtrot $67,345 0.3 544 123.88$ Golf $1,988,342 11.2 19,795 100.45$ Hotel $7,464,519 21.3 37,456 199.29$ India $1,780,009 6.2 10,960 162.41$ Juliet $3,558,578 9.4 16,572 214.74$ Total $23,003,295 94.0 165,515 138.98$ ** ** Supports $104,000 – $110,000 in average salary per FTE
  14. 14. marketing management consultants “Workload?” “Income” “Resources & Costs”
  15. 15. marketing management consultants “Income” “Resources & Costs” PriceProductivity Profitability “Workload?”
  16. 16. DECLINING PRICE FOR AGENCY WORKLOADS -62.5% from ’92
  17. 17. INCREASED OUTPUT PER CREATIVE +128% from ‘92 OUTPUT PER HEAD: (SMUs PER CREATIVE PER YEAR) Ideal level = 4.1
  18. 18. marketing management consultants Office diagnosis – with workloads Client Name Fees Deliverables SMUs Price (Fee per SMU) Creative FTEs SMUs per Creative Alpha $1,423,811 444 40.9 $34,837 2.3 17.8 Bravo $1,640,593 425 38.0 $43,219 7.2 5.3 Charlie $842,052 61 12.5 $67,611 2.0 6.4 Delta $500,204 73 4.0 $124,160 0.7 5.5 Echo $3,737,841 33 20.2 $185,459 4.7 4.3 Foxtrot $67,345 4 0.3 $194,966 0.0 8.2 Golf $1,988,342 26 7.4 $269,574 2.4 3.1 Hotel $7,464,519 158 26.8 $278,808 8.2 3.3 India $1,780,009 17 6.0 $297,627 1.8 3.4 Juliet $3,558,578 15 8.7 $407,764 4.2 2.1 Total $23,003,295 1,256 164.7 $139,693 33.4 4.9 Icarus ScopeMetrics® for Top Ten Clients -- 2015 SOWs SMU’s = ScopeMetric® Units
  19. 19. marketing management consultants Resource Allocation FTEs per SMU Price per SMU (by client) Office or industry average, Resource & Price High Price, High Resource Clients (Overperformers) Low High High Low Price, Low Resource Clients (Underperformers)
  20. 20. marketing management consultants Creative Productivity SMUs per Creative Per year Price per SMU (by client) Office or industry average, Creative Productivity & Price Low High High High Price, Low Productivity Clients Low Price, Stretched Productivity Clients
  21. 21. marketing management consultants PROFITABILITY
  22. 22. marketing management consultants AGENCY RESOURCES – to maintain profit levels COMMISSION ERA CURRENT ERA
  23. 23. marketing management consultants Similar Competitors but different performance The typical Saatchi & Saatchi Account Executive salary is $52,943. The typical Bain & Company Associate Consultant salary is $77,172 Data source: Glassdoor.com 1/2017
  24. 24. marketing management consultants Billing multiples 2.3x salaries 5.0x salaries
  25. 25. marketing management consultants Hourly billing rates The typical Saatchi & Saatchi NY Account Executive: $66/hour The typical Bain & Company NY Associate Consultant: $214/hour
  26. 26. marketing management consultants Bain & company
  27. 27. marketing management consultants Saatchi & Saatchi Our Purpose Who we are and what we stand for ? ?
  28. 28. marketing management consultants Leadership Al Ross, The New Yorker, The Cartoon Bank. With permission
  29. 29. marketing management consultants Decide: What’s wrong with Plan A •  Agencies have not exercised control over pricing •  Pricing is in decline because workloads have been ignored •  With declining prices, agencies have downsized •  With downsizing, agencies have eroded their capabilities •  With eroded capabilities, agencies have failed to solve complex client brand problems The fundamental problem to be solved is the pricing problem
  30. 30. marketing management consultants MISSION
  31. 31. marketing management consultants Strategic mission (Agencies on behalf of clients) 1.  Mission. Identify, quantify and realize brands’ full performance potential 2.  Relationship Requirement. Negotiate a Top level Strategic Partnership -- an agreed LT program to achieve brands’ full potential 3.  Skills Requirement. Consulting-like business analytical skills, leading to new brand strategies. Then….Scope of Work development to achieve the strategies
  32. 32. marketing management consultants Scope of Work management
  33. 33. marketing management consultants SOW challenge 1.  Required Role. The Agency must design and negotiate recommended SOWs 2.  Remuneration. Agencies must negotiate fees based on SOW workloads 3.  Agency Policy. “Every client in every agency office must have its SOWs documented and measured in a uniform agency way.” 4.  ScopeMetrics®. Use our SOW measurement system – the only one in the industry to quantify SOW workloads for fee-setting purposes (Google “ScopeMetrics®”)
  34. 34. marketing management consultants Accountability
  35. 35. marketing management consultants Accountability challenge 1.  Requirement. Account Heads must be held accountable for results -- for fees, workloads, resources 2.  Overview. Agency top management must measure, review and manage Account Head performance. 3.  Requirements. Use ScopeMetrics®, and the use of ScopeMetric® Units (SMUs) to measure workloads 4.  Action Plans. Account Heads must develop “corrective action plans” for clients who underpay relative to SOW workloads
  36. 36. marketing management consultants In Summary 1.  Reposition the agency to analyze and fix client brand problems 2.  Create a culture of measurement and accountability 3.  Implement ScopeMetrics® to measure workloads and performance 4.  Track, measure and negotiate remuneration based on SOWs 5.  Hold Account Heads accountable for fees, workloads and resources 6.  Review and measure Account Head performance 7.  Fix underperforming clients 8.  Achieve premium pricing (Price per SMU) based on positive results
  37. 37. marketing management consultants Plan B
  38. 38. marketing management consultants For more information on Plan B contact TrinityP3 New York + 1 (646) 666-7142 Sydney +61 (2) 9964 9900 Singapore +65 6631 2861 London +44 (203) 790 9229 people@trinityp3.com www.trinityp3.com TrinityP3.com/blog/ @TrinityP3 TrinityP3 TrinityP3.StrategicMarketingConsultants

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