Marketers that don’t measure agency performance are unlikely to benefit from the value that long-term partnerships bring.
All marketers are under constant pressure to demonstrate real business return. And yet too many fail to track the performance of their agency partners in contributing to this goal.
This seems ironic because not only is it easier to correct any issues as and when they come up but doing so enables brands to benefit from the improved performance that’s delivered when relationships last for the long term.
So, let’s take a step back and ask ourselves why these relationships are so important. It’s a two-step journey:
- First: there’s a strong link between great creativity and brilliant business results. As far back as 2010, research from the UK’s Institute of Practioners in Advertising and Thinkbox, in conjunction with the Gunn Report, revealed a direct correlation between strong advertising creativity and business success. The study showed that the most creatively awarded advertising campaigns were 11 times more efficient at delivering business success.
More recently, at last year’s Cannes Lions, McKinsey revealed that “enterprises which flourish in the creative realm, as a rule, witness equally impressive outcomes on the fiscal measures favoured by the C-suite and Wall Street: namely organic revenue growth, total return to shareholders and net enterprise value. On each of these indices, firms receiving a high ‘Awards Creativity Score’ doubled the ratings posted by their low-ranking competitors”.
- Second: you only get this kind of business-enhancing creativity when marketers and agencies have spent time together. A study presented at the 2016 Cannes Lions by Razorfish and Contagious analysed 15 years of entries and awards from the festival to reveal the patterns, attributes and secrets behind the world’s top creative performers.
Amongst the findings, they stated that: “Agency/client relationships that last past the 10-year mark have win rates twice the average”. Their recommendations included: “Invest in long-term relationships – it’s the long-established creative relationships that are proven [by data science] to be the highest-performing over time”.
As Marla Kaplowitz, the new President of the American Association of Advertising Agencies [4As] puts it: “People are at their best and most creative when they feel trusted and valued. Trust is the cornerstone of any good relationship. We must foster it through candid collaboration and conversations”.
Better returns on longer relationships
Despite the evidence of such benefits, however, many find it difficult to nurture these relationships. Too many marketers are frequently time-starved and find it increasingly difficult to allocate time to the ‘softer’ functions like agency relationship management (even if more agile working practices might improve matters).
The good news is that some may already have tools that can help manage performance and relationships more effectively. The global shift towards agency compensation based on results, for example, demands greater levels of agency performance measurement.
These are now common practice in many companies and agencies and the agency performance assessments that should be a vital element of a broader PBR scorecard can be used to steer relationships away from the rocky shores of re-pitching.
It requires time but only then will marketers get a great ‘Return on Relationship’ [ROR]. Marketers [and their agency partners] need to invest in initiatives designed to improve the quality, efficiency and effectiveness of their relationships.
Agency Performance Measurement is the ‘tool’ that generates the right ‘conversations’ and identifies the need for course corrections on both sides of the agency advertiser-divide.
These might include:
- Re-alignment on goals or objectives;
- Revisiting ‘rules of engagement’;
- Fine-tuning team make-up;
- Improving skills sets; and
- Refining process.
From a practical standpoint, it requires an approach that is time-efficient and cost effective but is capable of generating the ‘right’ feedback and sparking meaningful conversations.
Agency performance measurement might, for example, highlight the need for marketers to improve their capabilities too, in areas such as briefing skills, creative evaluation and feedback capabilities and also alignment and co-ordination of stakeholders.
Appropriate frequency is also important. We recommend quarterly ‘light touch’ interventions, followed by an annual ‘deep dive’ survey. The latter can also serve to generate the KPI scores for PBR or bonus payment purposes.
If we can all agree that long-term agency partnerships deliver better value, then the investment required for a programme of two-way performance measurement seems a small price to pay.
Most companies now apply similar processes to their relationships with employees with appraisals and 360-degree performance reviews now a fact of everyday employment practice. It seems foolish not to apply the same rigour to relationships with outside partners.
Smart performance measurement not only helps agencies deliver their best work but also delivers for the clients’ bottom line. It is, as the saying goes, a true win-win.
Regional Managing Partner, Middle East & Africa
The Observatory International