The roster paradox: Do brands use too many agencies or too few?
Some big brands keep expanding their roster while others work hard to shrink them. Both strategies can work, if they create better ways of working, Lucinda Peniston-Baines says.
The paradox of international marketing is that different companies can make opposite decisions and both can be absolutely correct.
In fact, it’s more confusing than that. Different parts of the same company can behave completely differently in the way that they manage their agency relationships and both can still be right.
We’ve just conducted some research alongside the World Federation of Advertisers, looking at how the world’s biggest advertisers manage or want to manage their rosters now and in the future.
Based on the opinions of advertisers spending nearly $70bn (£52.9bn) annually each year, the finding that caught my eye was that while nearly 60% of the respondents were looking to cut back on the number of agencies they dealt with.
Answers to another question, however, found that more than 50% were looking to engage with more specialists.
Rationalising your agency roster
The drive to reduce the number of agencies is totally understandable.
Each additional agency requires more management time to on-board, brief, integrate and assess as well as reducing the budget pool that’s available to create brilliant content and distribute it across the media landscape.
But at the same time, digital has created new challenges.
The traditional purchase funnel approach has been disrupted and companies are wrestling to understand and place consumer journey at the heart of marketing in order to deliver seamless customer experience.
For many brands, it is still early days in their attempts to get to grips with these challenges and they do need help from external partners.
The good news for brands is that they can add more agencies on business-critical areas such as the consumer journey but only if certain other things are in place.
To use a tech analogy, let’s imagine agencies as hardware. You can add more hardware – a new printer or a wireless music system – but only if your software is in a place where it can link and connect them seamlessly.
In a marketing context that means getting your ways of working, your agency governance, clear roles and responsibilities and collaboration incentives in place to ensure that every agency works well with every other external partner.
The challenge is that many agencies feel that this “software” doesn’t work quite as seamlessly as it should.
The reality is more Vista than Apple. Agencies found that collaboration could be hindered by internal structures (51%), poor quality briefings (49%), approvals and sign off processes (40%), lack of trained client personnel (40%) as well as lack of a clear data strategy (52%).
A variety of models
Nevertheless, we do see variety of roster models across our clients. One global fashion organisation has blended central network agency creative and digital resource with best-in-class independent specialisms in areas such as in-store and PR. The role of each new hire is to help co-create big ideas that can work along the full consumer journey.
Central executions from each specialism are supported by a regional and growing in-house content creation function.
The number of agencies has not reduced, but the new way of working is designed to drive a fundamental increase in speed to market and improved integration of communications.
In another example, a multinational organisation has reduced its roster considerably by consolidating most agency discipline requirements into a single Holding Company model with a simple interface and highly focused multidiscipline strategic team at its heart to drive integration.
Whilst very different models, both of these are the right decisions for those businesses given their unique strategies, growth drivers, internal resources and capabilities.
The research echoes that experience. It found that while the current dominant model of agency management is “multiple agencies managed individually by marketing” (81%), followed by “integrated lead agency” (44%) and network agency with specialisms from same holding company” (39%), many advertisers use a variety of models across their operations.
The truth is that the only right roster is the one that works for your company (or your business unit). While other people’s experience is important, what matters are your strategic goals and your ability to structure and manage that roster to deliver on them.
Get those right and the way forward for your business will be much more profitable.
Lucinda Peniston-Baines is co-founder and managing partner at The Observatory International
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