The Alternatives to Undergoing an Agency Search

In a recent post to the Strategic Sourceror, The Benefits of Undergoing an Agency Search, Liz Skipor discussed the advantages associated with conducting an agency search. Skipor noted the increased visibility into service and scope details as key benefits of the search process, along with gaining access to a diverse talent base and the latest technologies and marketing innovations. While an agency search is an important exercise for advertisers to undergo, it is not always the best approach for every organization.

There are certain drawbacks to undergoing an agency search that advertisers must consider before executing this strategy, such as:

• Disruption of Agency Relationships – For advertisers using this tactic as a way to test the market and ensure their agency’s competitiveness, there is a risk of harming current relationships. Conducting an agency search can send a negative message to your existing agency, whether intentional or not, and have a detrimental impact on your existing relationships. This may result in the agency being unwilling to work collaboratively during your search process or disengaging entirely.
• Lack of Readily Available Scope Details – The first step in any agency search is defining the scope of work for the services you are sourcing; and, for some, this can be one of the most difficult steps in the process. For organizations with long-standing agency relationships, there are numerous services and value-adds the agency provides that have become second nature and/or were never clearly defined, making it difficult to capture in the scope. In addition, there may be numerous brands, stakeholders, and departments involved in the relationship, making the scoping exercise an arduous task.
• Time and Resource Constraints – An agency search requires dedicated time and resources to execute and manage the process, from the early stages of scope definition to contracting and implementation. For organizations without the ability to allocate resources to managing this process, an agency search can cause resource constraints and other priorities may be compromised.

Below are a few alternate strategies you may consider if a full-scale agency search is not in your best interest.

Decoupling

Decoupling is a tactic in which you carve out the production components of your agency’s scope from the creative and strategic components. For example, with digital agencies this could mean utilizing your existing agency for the creation of creative concepts and strategic insights for your digital campaign, but utilizing a digital shop for the development of websites, apps, software, etc. The topic of decoupling is highly debated in the marketing space, with various pros and cons depending on the situation. Perhaps your agency has admitted that production is outside of their core competencies or they are currently outsourcing this portion of the scope, then a decoupling strategy would be a suitable approach. However, a decoupling strategy does not make sense for all advertisers, specifically if your creative agency is unwilling to work with a third party provider. A decoupling strategy allows you to engage in a sourcing initiative for a portion of the scope of work, while keeping the remaining services with your incumbent agency.

Benchmarking

Benchmarking is a strategy that advertisers can utilize to determine their competitiveness in the market. The results of this type of exercise can be leveraged to determine if an agency search is the best course moving forward. By leveraging different sources of market intelligence, including rate cards, contracts, industry publications, market studies, etc., a comprehensive comparison of your agency relationship can be conducted. However, the necessary market intelligence for a thorough benchmark analysis is not always readily available, such as relevant scope documents, up-to-date pricing details, etc. Third party providers exist in the market with access to the market intelligence needed to develop a benchmark report. These providers have the subject matter expertise to provide insights into market conditions and best practices to develop an actionable benchmark report with clear insights and recommendations. If the market intelligence exists, a thorough benchmark report provides you with a detailed analysis of your agency compensation structure compared to agencies providing similar services for other clients. A review of contractual terms and conditions is also typically captured in a benchmarking exercise. Through a benchmark, you will be able to determine the competitiveness of all aspects of your agency relationship, both quantitative and qualitative.

Agency Relationship Management

There are plenty of reasons why organizations choose to review their agency relationships, and it is not always because they are interested in finding a new partner. Many times, advertisers want to ensure that their agencies are keeping up with the latest trends and offering them the most relevant and innovative solutions. Rather than testing the market through an agency search to get a glimpse into the strategic and creative thinking of other agencies, a thorough agency relationship management (ARM) program can produce similar results. An ARM program allows you to establish SLAs and KPIs for your agency that encourage them to stay on top of the latest trends. An ARM program can also enhance the transparency in the relationship and agency performance so you can monitor agency activities and ensure they are in line with your goals and objectives. The best starting point to developing an agency relationship management program is sitting down with your agency and having a 360 degree feedback discussion. Your agency should be considered a partner, not a tactical vendor; and it is quite possible that the way they are being managed is limiting their effectiveness and efficiency. Your agency may offer up suggestions to improve the working relationship that can lead to them being more effective on your behalf.

Agency Audit

An agency audit provides advertisers with the opportunity to get an in-depth understanding of their agency’s compliance with the current contract in place and how the assigned budget is managed and allocated. An agency audit does not have to be limited to one particular agency relationship, but can be conducted for multiple relationships and categories. Through an audit, you can determine if there is any duplication of efforts between agencies and if your service standards are being met. Billing and budget reconciliations are other components of an audit, which provide you with visibility into billing discrepancies and how your budget is allocated by the agency, with the involvement of third parties. Similar to benchmarking, the results of an agency audit can help you determine if an agency search is a necessary next step.

An agency search can be a beneficial exercise for advertisers, providing visibility into market pricing, best practices, and industry trends; however, it is not the end-all, be-all of marketing sourcing strategies. There are situations where an agency search is not the ideal approach for an organization. For example, when strategic agency relationships are involved, the scope of work is unclear or not easily attainable, and/or the search process would cause resource constraints. In these situations, it is important to keep in mind that alternate strategies exist that can deliver similar results in less time. Decoupling, benchmarking, ARM programs, and agency audits are only a few of the alternate strategies available to organizations rather than a full-scale agency search. 

Source One's Agency Relationship Management experts will be at ISM2016, where Source One is the exclusive sponsor of the Exec IN forum. Want to save on registration costs to attend this landmark event? Learn more over at SourceOneInc.Com.