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WFA Sourcing Forum: Tight Briefs, Focused Scopes and Value Creation

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Mark Bowling, TrinityP3 Senior Consultant based in Singapore recently addressed the World Federation of Advertisers Sourcing Forum on the current issues and trends in Marketing Management and Marketing Procurement and Sourcing.

In the presentation he discusses:

1. Scope of work setting and management
2. Agency remuneration models and trends
3. The challenges of a performance based remuneration model
4. Issues encountered during agency negotiations
5. Agency roster relationship and performance management

Published in: Business
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WFA Sourcing Forum: Tight Briefs, Focused Scopes and Value Creation

  1. 1. marketing management consultants Tight Briefs Focused Scopes and Value Creation Mark Bowling TrinityP3 October 2015 For WFA Procurement Meeting, Singapore
  2. 2. marketing management consultants Are your conversations about fees like this? https://www.youtube.com/watch?v=KLirjATEZBI
  3. 3. marketing management consultants Local, Regional And Global TrinityP3 works across Asia-Pacific including Australia, China and SE Asia with offices in Sydney, Melbourne, Hong Kong and Singapore and globally through our membership in the Marketing FIRST Forum (M1F). M1F is a global collective of like minded marketing professionals providing global expertise and local knowledge to assist marketers achieve maximum marketing potential and value. TrinityP3 and M1F are aligned to provide globally consistent services, tools and processes but with local market knowledge. The M1F structure often mirrors our clients own business unit structures. Thus, as a united team we work efficiently and effectively to the benefit of our clients. View more information on M1F at http://www.m1f.org
  4. 4. marketing management consultants Our Scope of Work Marketing Performance Services: 1.  Marketing business alignment. 2.  Budget KPI and ROI setting. 3.  Marketing structure process review. 4.  Marketing planning process review. 5.  Sustainable marketing assessment. 6.  Relationship performance evaluation. Agency Performance Services: 1.  Strategic supplier alignment/ Relationship management. 2.  Supplier search. 3.  Agency selection / Pitch. 4.  Media buying benchmarking. 5.  Agency assessment modelling. 6.  Contract reviews. 7.  Contract negotiations. 8.  Scope of work management. 9.  Rate card review (Ad Cost Checker). Delivery & Implementation Performance Services: 1.  Engagement agreements. 2.  Relationship performance evaluation. 3.  Production management assessment. 4.  Production transition management. 5.  Sustainability assessment. 6.  Results report assessment. 7.  Media performance assessment. View our full scope of services at http://www.trinityp3.com/services/ TrinityP3 has more than 15 years experience and expertise in providing specific services to achieve maximum marketing potential. These services are provided to our clients on both a project basis and as part of a more expansive optimisation process.
  5. 5. marketing management consultants Scope Fulfillment •  Checklist all the things you are paying for •  Are you getting everything?
  6. 6. marketing management consultants Diligence in Delivery •  Checklist ongoing •  Procurement liase with Marketing on delivery •  Helps assess quality and value of the Scope deliverables Deliverable Delivered? Quality 1 2 3 4 5 Weekly Reporting Monthly Newsletter Daily Campaign Optimisation Summary Quarterly Competitive Review Quarterly Business Review Half-Year CEO Check in
  7. 7. marketing management consultants Comfort Zones are Dangerous
  8. 8. marketing management consultants Scope Review •  Checklist all the things you need for the business •  Do you need to change your SOW?
  9. 9. marketing management consultants Tight Briefs and Detailed SOWs Save Money •  Out of Scope work can be up to 180% of the cost of In-Scope work •  If 40% of your agency work is Out of Scope, then your agency fees could be 22% over budget WORK COST Out of Scope In Scope
  10. 10. marketing management consultants How do you know how much to pay? https://www.youtube.com/watch?v=oZofzH468NA
  11. 11. marketing management consultants Remuneration Models •  Most common remuneration models: •  Commission & Service Fees •  Resource Package Fees (Retainer) •  Variable fees based on actual hours •  Project Fees •  Hybrids •  Latest Trends: •  Move from cost to value based •  Return of the commission •  Incentive based models
  12. 12. marketing management consultants Performance or Incentive •  Benefits: •  Improved agency performance. •  Improved advertiser performance. •  Goal alignment and congruence. •  Types: •  Bonus - additional to the agreed profit margin. •  Cost recovery - represents all profit. •  Shared risk and reward - agency puts % of margin at risk and advertiser meets that % in pool. •  Earn back - agency puts % of margin at risk to be paid in results.
  13. 13. marketing management consultants Performance Criteria •  Business Performance (Hard) •  E.g. sales, traffic, profit, market share, volume growth, etc. These can be measured by the same criteria that the advertiser uses for their internal bonus systems. •  Advertising Performance (Medium) •  EG: product awareness, ad awareness measures, consumer measures, attitude ratings, persuasion, purchase intent, awards, brand equity, image, effectiveness awards, etc. •  Agency Performance (Soft) •  Relates to the evaluation of agency functional areas: account services, creative and media in terms of: performance, service, relationship, cost efficiencies, etc
  14. 14. marketing management consultants Moving from Input/Costs to Outcome/Value •  Most of the existing models are input / cost based that reward volume of work and not effectiveness. •  The current best practice is to move to an output based / pricing model that fixes the value based on output. •  The leading trend is for a value based remuneration model where the reward is based on the value created or contributed. •  Therefore the global remuneration trend is summarized by:
  15. 15. marketing management consultants Inputs vs Outputs vs Outcomes
  16. 16. marketing management consultants 5 Challenges of Performance Payments 1.  Agencies are hesitant to link compensation to performance 2.  The performance criteria prove difficult to agree on 3.  The scope of the incentive is too narrow 4.  It proves difficult to budget the payment 5.  Disputes over the payment of the incentive
  17. 17. marketing management consultants Common Mistakes •  Negotiating one variable, such as the overhead and profit multiple and miss the other variables •  Using average cost per FTE (divide the total cost by the number of FTEs) •  Not agreeing total or maximum billable hours
  18. 18. marketing management consultants Ongoing Hygiene Problems •  Accounting for total man hours
  19. 19. marketing management consultants How many working hours in a year? Salary $100,000 $100,000 $100,000 Billable Hours 1540 1650 1840 Multiple 2.4 2.4 2.4 Hourly Rate $156 $145 $130
  20. 20. marketing management consultants Ongoing Hygiene Problems •  Accounting for total man hours •  Assessing Team Dynamic and Relationship
  21. 21. marketing management consultants Understanding Valuable Relationships
  22. 22. marketing management consultants Tapping into the best talent •  Demand Agency Org Charts – are you aware of the size and structure of the agency •  Are Management part of ‘Overhead’? Are heads of capabilities actively involved in your business? What proportion of their time are you getting? •  Track award winning business from your agency – why are your team not winning? Is another client getting a ‘better’ team? If so, why?
  23. 23. marketing management consultants Ongoing Hygiene Problems •  Accounting for total man hours •  Assessing Team Dynamic and Relationship •  Reviewing Capabilities and Agency Product
  24. 24. marketing management consultants Assessing Agency Capabilities •  Don’t underestimate the value of a capabilities review with your roster agencies •  Agencies usually only provide to clients what they are requested and do not have time to update you on their progress in other areas •  Calibr8or is launching to help assess agency capabilities and performance
  25. 25. marketing management consultants Benchmarking Agency Rates •  Agency costs are difficult to break down •  No standard costs are followed and limited resources to assess where your stand •  Benchmarking is one simple solution
  26. 26. marketing management consultants Accessible to Clients and Agencies
  27. 27. marketing management consultants Are you compensating for DAMAGES? https://www.youtube.com/watch?v=AUaA78Ch5rs
  28. 28. marketing management consultants
  29. 29. marketing management consultants For more information contact: TrinityP3 Pty Ltd Sydney +612 9964 9900 Melbourne +613 9682 6800 Hong Kong +852 3478 3982 Singapore +65 6631 2861 people@trinityp3.com www.trinityp3.com Trinityp3.com/blog/ @TrinityP3 TrinityP3 TrinityP3.StrategicMarketingConsultants

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