The Digital Difference: Best practices for selecting and managing digital agency partners


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With an online ad spend increase of 53% in the last five years and continued growth expected to hit $50 billion by 2015, we are way past the days of "emerging" media and "new" technology. The technology is fast and consumer adoption is faster.

Because of the pace and interconnectedness of disciplines within the space, a digital agency model functions quite differently than "traditional" agencies. As a result, the more traditional rules of agency search and management do not always apply. Kerry Kielb, Senior Consultant - The Bedford Group, along with Jon Cook, CEO of VML and Rob Crigler, VP of Digital Marketing, Rooms to Go present best practices for navigating this highly variable world of specialists to optimize output for your brand. Topics include critical actions for digital agency search and selection, organizing your internal team for optimal efficiency and performance and how compensation and KPIs may differ in the digital agency space and why.

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The Digital Difference: Best practices for selecting and managing digital agency partners

  1. 1. BEST PRACTICES FOR ACQUIRING AND MANAGINGAGENCY PARTNERS IN THE DIGITAL SPACEContent contributors: Jane Bedford, Jon Cook, Rob Crigler, Kerry Kielb. Art direction: Dan SearleNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical,photocopying, recording, or otherwise — without the permission of The Bedford Group. This document provides an outline of a presentation and isincomplete without the accompanying oral commentary and discussion.
  3. 3. Online ad spend has increased more than 53% over the last 5 years andcontinues to climb with growth projected to top $50 billion by 2015.DIGITAL MARKETINGEXPLOSION© 2013. Production (reproduction) of content strictly prohibited. | 32002 2003 2004 2005 2006 2007ANNUAL REVENUE IN BILLIONS12008 2009 2010 20110510$6.0$7.3$9.6$12.5$16.9$21.2$23.4$22.7$26.0$31.7CAGR: 20.3%152025302010 2011 2012 2013U.S. ONLINE AD SPENDING, 2010 - 2015 (BILLIONS)2ONLINE AD SPENDING % CHANGE2014 20150102030405050$26.0$31.3$36.8$41.2$45.5$49.5
  4. 4. Technology is Fast;Consumer Adoption is FasterEver increasing consumerconnectedness• 53% U.S. smartphone penetration andcontinuing to increase• 42% of US adults are “ultraconnected”(3 devices/3x/day) and expected to bethe global majority by year endDigital Marketing is of primaryimportance to the C-suite• 68% of C-suite executives identifydigital marketing (and social tools) as atop 10 corporate priority• More than 70% of marketers are alreadytaking budget out of traditionalchannels to fund new interactive spendDIGITAL MARKETINGEXPLOSION34564© 2013. Production (reproduction) of content strictly prohibited. |
  5. 5. Adaptive Marketing is the New NormDIGITAL MARKETINGEXPLOSIONOLDBRAND TARGETMEDIACHANNELSDATAAgency challenge to adapt• Mass media is no longer the foundation• Data Analysts, Technologists andDevelopers have become a necessarypart of the core Creative team• Consumers are the new publishers andinfluencing them is as important asmedia spend5© 2013. Production (reproduction) of content strictly prohibited. |
  6. 6. DIGITAL MARKETINGEXPLOSIONNEWDATABRAND TARGETMEDIACHANNELS6© 2013. Production (reproduction) of content strictly prohibited. |Adaptive Marketing is the New NormAgency challenge to adapt• Mass media is no longer the foundation• Data Analysts, Technologists andDevelopers have become a necessarypart of the core Creative team• Consumers are the new publishers andinfluencing them is as important asmedia spend
  7. 7. The agency world has been evolving tobetter suit the new era it is operating in.The structure and function is as unique asthe marketing they manage.THE DIGITALDIFFERENCE7© 2013. Production (reproduction) of content strictly prohibited. |
  8. 8. TOPICS:The digital agency differenceKnowing when you need a new digital partnerSteps for a successful selection processReadying for a new partnerNegotiating a relationship that lastsSummaryQ&A8© 2013. Production (reproduction) of content strictly prohibited. |THE DIGITALDIFFERENCE
  11. 11. This model is loadedwith exceptions.It is in rapidevolution anddeconstruction.11© 2013. Production (reproduction) of content strictly prohibited. |
  12. 12. The ownership ofbranded content anddigital advertising areareas of highest contestbetween ad and digitalagencies.1 3As digital agencies havestrengthened, maturedand grown in scope andsophistication - the“AOR” position is in playfor many agency types.2 4Ad agencies saw a decline in positionand revenue as digital broke out as aspecialty to other agencies. That samething is happening to digital agencies asmany clients prefer to send keyelements of their scope to specialists.Holding companies centralizingdigital media away from ad anddigital agencies leaves a majorquestion on where key relationships/decisions with digital propertiesshould live (e.g. Facebook).THE DIGITAL AGENCYDIFFERENCESpecializationEffectMedia AgenciesStake ClaimTheBattlegroundLeadershipEvolution123412© 2013. Production (reproduction) of content strictly prohibited. |
  13. 13. DIGITAL AGENCYEVOLUTIONLOOK OF THE LEADERAcquisition of key agency lead skill setscreates “permission” to serve as lead agencyKNOWLEDGE IS POWERHarnessing data andintelligence drives customerrelationships.KEYS TO THE KINGDOMThe owner of brand strategyoften is the owner of the AORposition. As digital agencies aremore armed with this skill set,the AOR role has evolved.GENERAL CONTRACTORDigital agencies are learning tobe the force that bringstogether the other componentsof marketing - a role oncereserved for and embraced onlyby ad agencies.COMMITMENT TO THEBASICSEmbracing core adagency marketing skills (apremium on messaging,creative briefs,target audiences, brandplanning) allowsdigital agencies to play in thebigger game.13© 2013. Production (reproduction) of content strictly prohibited. |
  15. 15. KNOWING WHEN YOU NEEDA NEW DIGITAL PARTNERHistory shows that while decisions are varied, the most common predictors of a shift fallinto one of five categories.Triggers for a digital agency searchMarketplace changes• New opportunities require new specialized skills• Austerity program• Want to consolidate to leverage size/optimizeefficienciesBusiness/Strategy changes• Company direction no longer matches withagency skills• You’ve outgrown your present teamNeed for fresh thinking• Creative disagreements• Dissatisfaction with resultsRelationship difficulties/People changes• Discontinuity of team• Chemistry clash• New marketing teamCompensation• Question the value for the spend• SOW disagreement01:02:03:04:05:15© 2013. Production (reproduction) of content strictly prohibited. |
  16. 16. KNOWING WHEN YOU NEEDA NEW DIGITAL PARTNERThe first and most important step is to assess and evaluate your current partnership. Ifthere are concerns, it may be possible to institute remedies to make existing resourcesmore suitable.Ask yourself these questions:?Does your current agency partner have the bandwidth and skills necessary to help yourbrand compete in the digital space?Is your agency keeping up withnew technology?Does your agency help you tocapture the right data and use it toregularly optimize??? Is your program continuallyimproving?Has your company made asignificant shift since you hiredyour agency ??16© 2013. Production (reproduction) of content strictly prohibited. |
  17. 17. Gain consensus among keystakeholders on key issues:• To search or not• The right agency model• Selection criteria• Foremost goals andobjectives• Reduce required time ofcorporate staff member sothey can stay focused ontheir every-day business• Provide metrics andanalysis of each step• Manage difficult logistics• Robust ongoing researchand agency database• Counsel on what to look forand expect• Customized evaluation toolsthat mirror needs andprocesses for focused choice• Total documentation of thepros and cons of eachcandidate along the way• Offer “confidence” for the“rightness” of the decisionbased on process and research• Say the hard things clientdoesnt want to say• Create “ground rules” foragency/client interaction• Help unlock mysteriesof costs/contract negotiations• Rigorous benchmarking• Deep-dive reference reportCLARIFY IMPLEMENTSIMPLIFY REDUCE RISKOften it’s helpful to have a third party consultant help you to determine your needs and, ifa search is necessary, help you to select the right partner.DON’T GO AT IT ALONEKNOWING WHEN YOU NEEDA NEW DIGITAL PARTNER17© 2013. Production (reproduction) of content strictly prohibited. |
  19. 19. SELECTION PROCESSSTEPS TO SUCCESSDon’t treat “Digital” as an island.The Integration challenge beginsinternally.• Too often siloed by “online” and “offline”departments and leadership• Digital marketing partner will influencesuccess of all efforts so key marketingstakeholders must be involvedBreak down the barriers by reachingconsensus on key issues.• What is the role of digital marketing inbuilding brand perception?• What metrics should be used to judge itssuccess?• What are the strategic priorities for the brandin the digital space?• How will digital marketing impact the growthof a brand?• How will a digital program help achieve theorganization’s business objectives?19© 2013. Production (reproduction) of content strictly prohibited. |
  21. 21. Defining needs/setting goals,criteria needs assessmentScanning: Getting down to ashort listQuality assuringTrial: Evaluating finalistsSelectionCreating a winning partnershipTHE FUNNELA SUCCESSFULSELECTION PROCESS21© 2013. Production (reproduction) of content strictly prohibited. |
  23. 23. READYING FORA NEW PARTNERDigital has added to an already extensive marketing landscape where brands fight forattention among hundreds of consumer touch points.Increasing fragmentation of channels meansthat marketers must closely evaluate howthey allocate resources.23© 2013. Production (reproduction) of content strictly prohibited. |DIGITALDATAANALYTICS/QUANTITATIVEWEBSITE/ECOMMERCEONLINEDISPLAY/BRANDINGSEO/SEMSOCIALMOBILELOCAL
  24. 24. READYING FORA NEW PARTNERMarketing organizational structure of oldmay not be designed to meet the digitalopportunities of today.IT infrastructure and technology may need an upgrade.• Make friends with your IT department- Digital initiatives require cooperative alliances• Set mandates of how you will interact with each other• Agree on a new structure and rules of engagementData and analytics disciplines should be given the prominence they deserve.• This function is the linchpin for helping to drive smarter, more informed strategies andresults-oriented programsMake hiring and retention of talent a priority24© 2013. Production (reproduction) of content strictly prohibited. |
  25. 25. READYING FORA NEW PARTNERMake your digital system flexible.• Business processes must keep up with therapidly changing channel landscape tofacilitate smooth integration andadaptation/adoption of the new order• A robust case management is key- Digital is binary, either it works wellor it doesnt at all• Millions of tiny details so, you must ensurean infallible method of workflow trackingBreakdown the siloes to ensureintegration is across all consumer/customer touch points.• Establish clear definitions of who doeswhat and how each discipline will integrate25© 2013. Production (reproduction) of content strictly prohibited. |WEBDEV/ECOMMERCEPRINTMEDIAMOBILEPUBLICRELATIONSSEO/SEMCRMSOCIALBROADCASTMEDIADATAANALYTICSDIGITAL TRADITIONALCROSS-CHANNEL INTEGRATIONDIGITAL/TRADITIONAL: TYPICAL SILOES
  26. 26. Recognize that thepace has changedand counsel in theadoption/expectationsfor this reality.26© 2013. Production (reproduction) of content strictly prohibited. |
  27. 27. READYING FORA NEW PARTNERThe Importance of IntegrationThe enterprise must be on boardwhether they like it or not.• Create a climate for a faster pacedenvironment• Educate leadership on opportunities andhow to harness them• Bring traditional counterparts up to speedITOPERATIONSTRADITIONALMARKETINGDIGITALMARKETING27© 2013. Production (reproduction) of content strictly prohibited. |
  28. 28. READYING FORA NEW PARTNER• Define delegation paths and appropriatelevel of authority to ensure reasonableresponse, eg:‣ Develop a social media action plan thatconsiders route by issue (PR, legal,customer Service)‣ Select technology needed to best handlerouting (integrated platform support)• Establish protocols for how agencies willwork togetherITOPERATIONSTRADITIONALMARKETINGDIGITALMARKETING28© 2013. Production (reproduction) of content strictly prohibited. |The Importance of Integration
  30. 30. DESCRIPTION SOLUTIONTECHNOLOGYROLEDUPLICATIONDYNAMICEMBRACEDISCOVERYPRODUCTIONINDEMNIFICATIONLevel of technology involvement is one of the largestdrivers to size of agency scope, rate structure, teammake up. And one of the largest sources of frictionwhen not established early.Critical to establish role of client IT department intechnology planning, development and ongoingmaintenance.There is a common question when employing adigital and ad agency on whether there is duplicationbetween creative leadership, account managementand strategy.Successful digital agency relationships allow forinteractive-specific roles in these key positions.Common mistake in digital agency scoping is theestablishment of final fees for all technicaldevelopment at the outset of relationship.Important to fund and schedule for proper discoveryand collaboration for the technology componentbefore final fees are established.Obviously, there are increased options for offshorerates as a component of overall digital scope.Allow digital agency to staff for the much-neededquality assurance and project management ofproduction.Quickly rising on the list of elements that cause themost negotiation delay and heartache between digitalagencies and brands, because of patent troll claimincreases.Look for reasonable parameters on what types oftechnologies should be covered and that the agencyhas impact on, and look to find a reasonable cap toindemnification level.Key differences to consider when creating a successful digital agencymaster services agreement.SUCCESSFUL DIGITAL AGENCYCOMPENSATION APPROACH30© 2013. Production (reproduction) of content strictly prohibited. |
  31. 31. SUCCESSFUL DIGITAL AGENCYCOMPENSATION APPROACHCore pillars of digital agency master SOW best practice ...INCENTIVELABOR BASEDVALUE BASEDPRODUCTIONDigital agency’s ability and remit to provide specific metrics of engagement,commerce, transaction, etc. makes this a compelling and key incentiveconsideration. Rewards effectiveness and partnership.Increasing in both need, frequency and priority, value-based compensation allowsfor compensation for the market or fiscal impact of an output rather than the timeit took to create. Rewards big ideas, business-penetrating thought process.Standard method of compensating any agency type remains an important part ofthe compensation mix. Successful rate-based labor important for standard digitalagency work. Optimal if a mix of two core types:• Retained Resources: Enables agency to provide optimal team continuity toclient partner, allows agency to provide level of firm forecast for a core portionof overall scope.• Scope of Work Based Resources: Provides flexibility for portions of scopethat are less confirmed at outset of year/relationship. Best when workingagainst an overall aggregate budget target / forecast, even if not guaranteed.It is important that digital agency commits - as relevant - to a solution for X% ofoverall scope to be handled in sub-premium or standard rate structures. Offshoreproduction is a common solution or form of production.Proportions of the boxes in the diagram are not meant to be an exactrecommendation. Each relationship requires an independent reviewof appropriate mix.31© 2013. Production (reproduction) of content strictly prohibited. |
  32. 32. SUMMARY
  33. 33. SUMMARYTEN THINGS TO REMEMBERAgency role structure is in massive evolution,especially on where the point of leadership lies.01:Digital agencies are quickly gaining the skillsrequired for being the brand AOR.02:Evaluate your current partnerships first.03:Include all stakeholders in determiningneeds, not just the "digital" team.04:Bring in some marketing management helpfor optimal results.05:Gain consensus on strategic needs, not justtactical skills.06:Get your team ready – make data analyticsthe foundation.07:Break down the internal siloes to achievepartner integration.08:You cannot be too descriptive when definingroles and mapping workflow.09:Recognize and discuss key differences in agencytypes when defining digital agency comp.10:33© 2013. Production (reproduction) of content strictly prohibited. |
  34. 34. FOR MORE INFORMATION, CONTACT:Kerry KielbSenior ConsultantThe Bedford Group404.237.4565kkielb@bedfordgroupconsulting.comJon CookCEO and PresidentVML816.218.2800jcook@vml.comSUMMARYJane BedfordPrincipal and FounderThe Bedford Group404.237.4565bedford@bedfordgroupconsulting.comRob CriglerVP Digital MarketingRooms to Go678.475.0499rcrigler@roomstogo.com34© 2013. Production (reproduction) of content strictly prohibited. |
  35. 35. 1. IAB Internet Advertising Revenue Report conducted by PricewaterhouseCoopers, 4/20122. Emarketer, US Online Ad Spending Forecast, 6/20113. Nielsen, The Mobile Consumer, A Global Snapshot, 2/20134. Forrester report: 2013 Interactive Marketing Predictions, 8/20125. McKinsey and Company, Global Executive Survey, 5/20126. The Bedford Group Database Extract, 2/2013Related Research DocumentsThe Bedford Group Agency Selection Process © 1986-2013SOURCES35© 2013. Production (reproduction) of content strictly prohibited. |
  36. 36. Q&A
  37. 37. THANK YOU