The 5 Most Important Questions to Ask Prospective Agencies
Almost without exception agency relations break down when agencies cling to an outdated model and fail to understand the importance of customer experience. The growing influence of customer experience within client organizations, and not just in marketing, is transforming the approach that these companies are taking to how they structure their capabilities, use data, deploy and invest in technology, and improve competencies and processes.
Brand success increasingly means looking for new ways to deliver effective personalized messaging and to engage in synchronized cross-channels touchpoints. This means that the days of campaign-based pitch are over. To stay ahead, or even in the game, clients are seeking a new type of partner, one that has joined the customer experience revolution.
Ad budgets are being cut at major consumer products companies, as activist investors pressure them. Companies experience slow growth in a disinflationary era, and performance is often way below the success of Brazilian private-equity house 3G in raising margins at the acquired Heinz—and then at Kraft—to unprecedented highs. The relative under-performance of many companies and budget cuts, forcing CMOs do more with less will, I predict, accelerate the agency reviews cycle this year.
From my viewpoint, “inside the tent” as an agency search consultant, it’s clear that agency offerings and capabilities are lagging behind client transformation from a product to a service orientation. Agencies also don’t grasp that the channel-specific iterative campaign-based communications model has evolved to always-on, real-time content model and emphasis on customer experience.
The old days of selecting an agency superficially based on a single creative idea or media plan and detached from analyzing and evaluating the agency itself, are gone. Instead, the focus now is on scrutinizing the agency’s components:
- What is your value proposition: The definition of value needs changing as companies change. Are prospects adhere to an old-fashioned siloed model of communication across discrete channels, or are they designing, staging and optimizing harmonized experiences across paid/owned/earned channels and, ultimately, how can they guide transformations in the client organization itself.
- What is your margin structure: Margins are being squeezed by increasingly democratized services through technology, greater competitiveness and tougher negotiations by procurement. It is important to understand how the prospective agencies structure their potential profitability, and how much flexibility they have to invest in technology and talent.
- What is your approach to complexity: Growing complexity due to the fragmented technologies, media and data ecosystems means that planning and executing successful engagements can be extremely complicated, and eventually leads to inefficiencies. Knowing how the agencies plan to manage cross-channel platforms and all touchpoints, and whether they have a process to enforce simplicity is vital.
- What is your approach to talent management: There is fierce competition for talent among agencies, but recruiting and evaluating these days is antiquated. Most talent is allocated to traditional departments like creative and account services, and too few to technology or analytics. It is essential to understand agency culture and how it attracts and retains the best talent.
- Who are your strategic partners: In a hyper complex ecosystem, no agency can provide all technology and all services alone, its strategic alliances tell you a lot about how an agency views innovation. Probe if the strategic alliances managed by a dedicated team, with processes, policies, and other support required. Does the agency nurture a culture of alliances and encourage its staff to recognize opportunities whenever they arise. Which strategic areas are emphasized and partnerships are sought, and why.
The future will only be more competitive for companies and marketers, and selecting the right agencies is essential for their survival. There are clear signs that new engagements, new models and new types of client relationship are needed to unlock big opportunities—but only for those with the appetite to change.