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The perfect agency model – form follows function

Many companies are currently reviewing their agency models in order to organise them more effectively and align agency arrangements to optimise their own corporate and marketing goals. In the following article we want to highlight the most important aspects for a successful, future-proofed, modelling process.

The desire of companies to invest more in the digital transformation of marketing and to focus on customer journeys are obvious. Clear silos that have existed over decades, ie; digital, classic communication and media, are becoming increasingly irrelevant. At the same time, the boundaries between marketing, data usage and technology are becoming blurred, and inevitably, the MarComms tool box is becoming ever more complex and diverse. As a result, many companies are currently examining their current agency eco-systems and dealing with the question of how their optimal “future-proofed” agency model should be structured.

Most companies have an agency roster that has grown organically over many years, drawing in more and more specialists and challenger agencies working on various topics and delivering for different departments and peers. More than 80% of respondents recently surveyed currently work with multiple agencies, each of which are managed individually by marketing. These were the findings of research conducted by The Observatory International in the spring of 2018 with the World Federation of Advertisers (WFA) on “The Future of Agency Rosters”. Whilst working on this basis, Companies may believe they have the best agencies in play to deliver their needs, but the likelihood is that they will have lost significant degrees of oversight and, ultimately, control.

The report goes on to identify that almost three-quarters of large multinational companies are currently in the process of reviewing their agency models and that 57% of those believe that their current roster structure is not working effectively.

As a result, those Businesses are seeking to determine whether or not they employ the right mix of agencies, to deliver the required skill sets and to understand how agencies can be organised in a logical and goal-oriented manner.

“The Future of Agency Rosters”
A survey of 50 multinational client-side marketers and 26 agency representatives with more than 50% in global / regional roles, distributed evenly across the globe in spring of 2018. The survey was conducted by World Federation of Advertisers (WFA) and The Observatory International.

Working with clients worldwide, we find that building a new agency model is a strategic process that goes far beyond mere marketing decisions. This is not about (as so often in the past) simply exchanging a service provider or group of such on an operational level.

There are three important and results driven aspects:

  • The development and implementation of a new agency model is a lengthy process of change and development that requires sponsorship from the most senior level.
  • A restructuring of the agency model always starts within the company itself, because one cannot “outsource” the digital transformation process.
  • A new agency model must be developed and not simply ‘selected’.

Change and the Agency Modelling Process
Developing a new agency model that is built specifically on business and marketing needs inevitably requires a fundamental change within the organisation. Old silos must be dismantled if a company really cares about customer centricity. This also means that many employees must change their ways of working and adapt them. This process takes time, but also commitment. The company’s management must be able to understand and take important decisions in a timely manner. The commitment and buy-in of all stakeholders involved: internationally, across multiple departments and possibly those of external service providers, is vital. It is not always easy to involve everyone, to pick them up and take them along the journey, but it is essential for a functioning, future-oriented, agency model.

Building a new model starts internally
It’s easy to say, “We want to be 100% customer centric in our communication, develop our creative based on data, and move away from a campaign-driven approach, because only the customer journey counts, etc.” But no agency can meet these needs, if the company does not set the course internally from the outset.

It is essential that a firm and dedicated core team is equipped with the necessary skills and experience required for the task and that there is a unilateral will for real change, together with a sensitivity and understanding for the inevitable reservations and fears of the workforce, be they real or imagined.
Every company must analyse and work out the following points very precisely:

1. What are the goals that need to be achieved?
2. What is the optimal creative process and the corresponding Ways of Workings (internal) to achieve these goals?
3. What does this mean at a structural level? e.g. for Marketing, Digital, Social, Content & Media? Do skills have to be bundled or split internationally in regions? Which additional competencies are needed? How should interfaces and responsibilities be redefined?
4. What Martech tools and technologies are required to enable the smooth running of this new marketing ecosystem? What investments are required in both the short and long term?
5. What are the ramifications on budgets and remuneration? How will budgets be distributed in the future? And critically, who has budget sovereignty?
6. What are the right KPIs? How do you ensure that good performance is rewarded?

Unfortunately, finding only partially-formed answers to these questions will be a guarantee that any new agency model will either fail in the medium term or remain well below the hoped-for potential.

An agency model is developed and not selected
For the right agency model there is no blue print or a catalogue from which one can choose the best based on a few criteria. As in the design, here too the guiding principle “Form follows function” applies.

Based on our experience, development and implementation is a process that should follow the following process:

1. Definition of the requirements and decision criteria for a new agency model. All agreed stakeholders should be aligned with their own organisational structure, the corresponding competences and resources
2. Design and definition of a model tailored to the goals – channel-neutral, based on the customer journey – including best practice
3. Definition of required skills and capabilities
4. Inventory and analysis of the current agency portfolio and corresponding segmentation
5. Identification of gaps in competences to be closed and, if necessary, specific appointments of additional agencies and specialists
6. Clear division of roles and responsibilities (for both client and agency) including governance
7. Performance measurement for constant maintenance of the model
8. Stringent review of the operating model that should support the new model structure

What the agency model ultimately looks like, which one is the best for the business and how it is populated by agency partners, e.g. A Holding Company solution or a model with many individually managed specialists, must be worked out carefully with all stakeholders. The Company and the agency model together with its agency partners need to be completely aligned and each participant has a clear understanding of responsibilities and goals to enable productive and efficient work.

Anyone who is prepared to invest time and brainpower in the right model will be rewarded with a contemporary “future-proofed” agency model that contributes to the success of the company as an integrated and highly efficient component of the marketing ecosystem.

Felicitas Lentz, Managing Director, The Observatory International, Hamburg.
First Published in Healthcare Marketing, Hamburg.

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