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OPTIMIZING AGENCY RELATIONSHIPS
Optimizing client-agency relationships begins with a clear vision from the client along with a strong leadership team that provides feedback and helps the agency stay on course at all times.

The next critical element is ensuring the company has partnered with the right agencies. We define the right agency partner as one that has the competency and resources required to achieve the client's objectives, is committed to providing the required resources to the client without holding back, and is a good cultural fit with the client.

Over the course of reviewing numerous relationships during the past 15 years, we identified four elements that were consistently present in productive client-agency relationships: 1) capability, 2) integration, 3) compensation, and 4) metrics & monitoring.

1. Capability. Agency capabilities can be classified in three areas: Creative, Strategy and Service. We frequently find the creative area to be the primary focus of clients when evaluating agencies or particular campaigns. While creativity and innovation are important, ideas must be based on sound strategic insight. Otherwise, the approach may be very entertaining but fail to adequately support the business objectives. Similarly, we have come across agencies that work around the clock to provide superior service and great strategic insight, but fail to develop breakthrough creative ideas. Companies should select a partner that achieves a sound balance across these three areas, and is capable of generating breakthrough ideas that are based on sound strategy and are effectively managed and implemented.

2. Integration and Client Expectations. There is a current trend of shifting away from a single Agency of Record responsible for multiple areas, and retaining multiple agencies that provide specific sources of expertise. This, however, also increases the likelihood of duplication of effort if agencies adopt a silo mentality and ignore the activities of the other partners. Avoiding this requires proactive cross-agency cooperation, which typically does not come naturally. It is the client's responsibility to mandate cross-agency cooperation through agency summits, status calls, agency hierarchy models, and other approaches.

Another requirement for effective integration is clear direction from the client. It is the client's responsibility to clearly define what is expected from the agency. It is then the agency's responsibility to define how it will be accomplished.

3. Compensation. Effective compensation models must be mutually beneficial and represent a balance between transparency, fairness, and ease of administration. All clients should from time to time evaluate the compensation model and fees paid to their agencies.

If agencies are expected to play a significant role in the company's growth plans, the compensation needs to be structured accordingly. Clients sometimes have so many agencies partners that no firm has sufficient fees to provide the required staffing. This problem is compounded when the agencies overlap in the services provided. For example, one of our clients used to work with 13 different co-op agencies simultaneously. Each agency had a relatively small scope of work. As a result, none of the agencies could afford to dedicate sufficient resources to the account and the client received sub par service.

4. Metrics & Monitoring. In order to help ensure success, companies should determine the desired outcomes and appropriate metrics prior to launching a program. Objectives and metrics should further be established for appropriate marketing areas, including: Raising awareness, changing attitudes, inducing trial and creating loyalty.

Agencies should be held accountable for metrics they are able to influence or control. For example, while a stock price may be a good measure of corporate performance, it is rarely something that the ad agency will have a direct influence over. In some cases, awareness is the right metric, but in others it might be related to customer conversion or product sales.

Formal agency evaluations should happen on a semi-annual basis so that both parties are able to correct course within the fiscal year, and also incorporate feedback from all key stakeholders, not just the marketing department. The evaluation process should encompass three areas: Subjective evaluations (i.e., working relationship), objective measures (marketing metrics) and financial performance (account profitability & scope).

PUTTING IT ALL TOGETHER
Ongoing profitable revenue growth occurs as a result of effective marketing strategies and sound execution by capable and motivated agency partners. While there are no silver bullet solutions to guarantee optimal agency performance, effective management of the four attributes discussed in this article will provide the necessary foundation for a long-term mutually beneficial relationship.


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