Why the agency selection process is broken – and how to fix it
Nick Waters, Chief Executive Officer
Friday, July 8, 2022
As appeared in The Drum on 7 July 2022, read here.
Something is rotten in the state of advertiser-agency relationships – indeed, several things are rotten – and this is manifested most clearly in the broken agency selection process. Reviewing prospective agency partners is now too onerous, costly, and time-consuming on both sides. Selection criteria are dominated by costs saved rather than value delivered. In many cases, there’s been an erosion in trust between advertisers and their agency partners.
As a result, for many this relationship no longer functions as a mutually-beneficial relationship. What’s more, agencies have even started to decline the opportunity to tender for major global brands, even if they have a long, established partnership. It’s time for a wholesale reimagining of the agency review and selection process.
Too long, too involved, too complex
As the media and marketing ecosystem has become progressively complex, the number of channels and individual cost items under review has become unwieldy. Advertisers are looking to test agency capabilities and performance in so many different areas that the process of review can become a serious distraction from the day-job, consuming unsustainable quantities of time, energy, and resource.
Too much focus on cost over value
Another reason behind the agency selection process breaking down is that brands – often encouraged by procurement colleagues and some independent, third-party advisers in this market – have focused too heavily on cost. Always looking to drive down cost has commoditised agency services, making agency selection a race to the bottom and “cheapest price wins”. Agencies are understandably reluctant to be measured on cost alone. It’s also pointless if cheaper media doesn’t build the brand, increase sales, or grow market share.
Quantity over quality
One important consequence of the focus on cost is that the media inventory delivered by a “low cost-per-rating-point (CPRP) wins” approach is almost always inevitably of lower quality. Cheap media may deliver a lower CPRP, but that neither enhances brand health nor drives sales. The race to the bottom pulls against business and marketing objectives.
Good vs bad procurement
The rise and growth of marketing procurement in many major advertisers is undoubtedly positive. In many companies, procurement employs enlightened teams who help marketers keep a lid on costs – of course – but also enable them to work with agency partners who can create and demonstrate significant value. Yet in other businesses, media investment continues to be measured by generalist procurement teams in units of cost. As the award-winning media sector analyst, Ian Whittaker, has repeatedly argued, brands should treat marketing spend as capital not operational expenditure; an investment to drive growth through increased brand health and stronger sales, not a drain on resources.
How to fix the broken agency selection process
Reimagining agency selection requires all actors – advertisers, agencies, and independent, third-party advisors who work with brands to find the right partners – to do the following:
- Make it lighter, nimbler, and less resource-intensive
- Shift the focus from cost reduction to value creation
- Run short, live use cases
Lighter, nimbler, less resource-intensive
To help advertisers secure the agency partners they need to thrive and grow in the 2020s, the agency review and selection process needs to become lighter, nimbler, and less resource-intensive. This means limiting the number of rounds in pitches, making them less polished but more collaborative and human in a manner that is better reflective of real, day-to-day relationships. We’ve found that this allows advertisers to better address the issues that really concern them.
Eliminating waste and creating value
Rather than focus entirely on the price of media across the ever-growing number of media channels and platforms, agencies should be encouraged to paint a more strategic and holistic picture of what their custodianship of a brand’s budget would be like. For instance, brands could ask agencies this genuinely smarter question: “If our budget is 100, how would you advise that we should deploy that across brands, channels, and markets to deliver optimal value for the company?” Essentially, that asks: “How can we invest to deliver against our business objectives?” Cost matters – of course it does – but value and return on investment matters more. The ability of agencies to negotiate well and deliver cost savings is critical to making media spend go further. But it is not the only criterion for success.
Running short, live use cases
You can only really know what it’s like to be in a relationship once it’s live. Accordingly, we increasingly require agencies tendering for our clients business to run short, live tests of their technology and media buying platforms. An example is Amazon Live Tests, where we give read-only access to a client’s Amazon account and have agencies demonstrate how they would run things differently from the status quo, using a challenging but realistic scorecard that includes both quantitative and qualitative metrics.
Finding the right agency to become your long-term partner is crucial for brands looking to navigate and thrive in the complex digital media and marketing ecosystem. The rapid evolution of the ecosystem, a relentless focus on cost over value, and a “unit cost” approach to marketing procurement have all served to make the agency selection process suboptimal. So, too, has a combination of some imaginative agency trading practices, unscrupulous advice from some third-party consultants, which together rendered the process so onerous that some agencies are reluctant even to tender for business.
By making the process lighter, nimbler, and focused on value creation, all parties have the opportunity for a long-overdue hard reset. By running live use cases – by starting the relationship before it’s officially begun – by making the process more human and less exhausting, and by ensuring that requests are equitable for all, we have the opportunity to reimagine agency selection for the 2020s and beyond. These are the keys to eliminating waste and creating value.