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WFA Crisis Clinic – Agency Remuneration during the COVID-19 crisis

Stuart Pocock from The Observatory International took part in an interactive session with the WFA and Ebiquity covering the impact of COVID-19 on agency remuneration on 3rd June 2020. This session gave WFA members the opportunity to discuss the issues they are experiencing in paying their agencies under these circumstances and going forward.

We’ve updated some Top Tips from an earlier Global WFA report on Agency Remuneration to reflect the conversation and this moment in time:

  1. Procurement and Marketing must work even more closely than usual. It is crucial that you work together as a team to ensure absolute alignment on what you are trying to achieve in any negotiation with your agencies and don’t jeopardise an agency relationship that may be playing a critical role for Marketing.
  2. Scopes of work are dynamic right now. Agencies understand this and are generally trying to be flexible. Play your part by reducing, where appropriate, non-essential meetings & frequency of reporting requirements. And, if you possibly can, accelerate financial processes to ease cashflow management for them – you’ll be remembered for this.
  3. Be realistic on budgets. All businesses are looking for more from less right now. However, on occasions, what is being asked from the agency for the monies available is simply not possible. Be prepared to discuss what the agency can do for the monies after satisfying yourself their rates are realistic. Benchmarking agency rates can be complex and time-consuming and you may need to look at third party data to reassure yourself it’s in line with market norms.
  4. Consider contracts. Contracts are there to protect both parties and it’s crucial that you have a clear, fair and motivating one in place. Clients and agencies alike are examining these now to protect themselves from loss of revenue or ‘over-commitment’. You may need specialist advice on Force Majeure terms and the inclusion of additional clauses around pandemic-related matters in future agreements.
  5. Be fair and balanced in your dealings. Dealing with professional services requires special skills largely because you are buying intangible assets and people. You need an objective mindset, but this needs to be balanced with a recognition of the fact that long after negotiations have ended, your marketing counterparts need a motivated business partner rather than a supplier who is always pushing back over monies. You need to ensure that you are getting good value – but not be overly aggressive to simply push costs down. You and the agencies are looking for the same outcome right now – win-win.
  6. Finally, be open-minded. Right now, clients and agencies are striving to adapt payment models and develop new approaches that will allow agencies to stay solvent and clients to get the outputs they need, when they need them. Be open to discussions around paying now for future work (at discounted prices) or switching scopes to future innovation projects to get the strategists busy on ensuring your business will emerge first and fastest from the traps.
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