By Kim Walker, Founder & Chairman, Aprais
Clients that recognize their agency’s need to be financially healthy score the quality of their teams 21% higher and their creative 16% higher
The relentless drive to reduce agency costs is often seen as a hallmark of marketing procurement success. That’s wrong and Aprais has the data that shows why.
The saying “you get what you pay for” might date from the 15th Century but it remains true in today’s digital age.
We mined our extensive database of over 20,000 cases to investigate whether a marketers’ regard for its agency’s remuneration impacts the service it delivers.
We searched thousands of questions in the Aprais system to focus on those related to the financial health of the agency. These included issues such as:
- Acceptance that the agency needs fair compensation
- Regular reconciliation of fees against scope of work
- Timely provision of business metrics that impacts the agency’s compensation
Financial empathy delivers better returns
Our analysis revealed that clients rated in the top 10% for their sensitivity to their agency’s finances received a much better (21%) staff allocation to their business than the least considerate counterparts.
What’s more, top scoring clients achieved 16% better creative performance from their agency compared to the low scorers. Significant advantage is also evident across other agency disciplines, as shown in the chart below.
In summary, clients that scored highly for being aware of their agency’s need to be financially healthy, get the best results.
Key messages for agencies
- Be transparent about the relationship between fees and the resources this buys – especially the access to senior-level agency personnel.
- Ensure your team contains at least one trained and experienced negotiator. Don’t confuse the skills of ‘selling’ and ‘negotiating’.
Key messages for marketers
- Agency agreements should be negotiated in two stages. Marketers should first decide the required involvement of the agency’s senior management. The first negotiation is between marketing and procurement to create a workable fee package. Only then can the client-agency negotiation take place.
- Clients should seek cost savings from their agency, but these should be achieved through the optimization of work processes and reducing the number of stakeholders rather than by reducing the input of key staff.
‘Win-win’ works best
A business relationship where both agency and client ‘win’ financially, achieves the best results.
Clients must carefully and realistically define the ‘scope of work’ and agencies must respond with a transparent proposal. This is a crucial first step in building a mutually profitable relationship. Get it wrong and the relationship will suffer and with it, the work.
Over the past 20 years, Aprais has conducted over 21,000 evaluations of relationships between marketers and agencies globally.
A purpose built evaluation platform has enabled Aprais to build a database that allows its clients to compare and manage team performance against robust benchmarks with near absolute statistical confidence.
Aprais is the global leader in maximising team and individual performance.
Aprais is a partner of the Institute of Communication Agencies. Report on Marketing is where leading Canadian agencies showcase their insights, cutting-edge research and client successes. The Report on Marketing provides a valuable source of thought leadership for Canadian marketers to draw inspiration from. Find more articles like this at the Report on Marketing.