ANA Agency Relations Benchmarking Survey
December 17, 2007
The ANA Agency Relations Benchmarking survey asked respondents questions on the agency search and selection process, agency evaluations, and agency conflict causes, among other topics. There were more than 100 responses to this survey. Russel Wohlwerth, Principal, Ark Advisors/AAI, discussed the results of this survey and their implications. The results yielded some interesting data including the fact that only 3% of clients found agency evaluations to be completely ineffective and that 17% of clients thought that their company was very successful at managing agency integration.
In June/July of 2007, ANA conducted a benchmarking survey on key issues related to agency relations, including the agency search and selection process, agency evaluations, client organizational structure for managing agencies, agency conflict clauses, and the use/effectiveness of regular brand summit sessions with all agencies.
Agency Search & Selection:
The majority of respondents (85%) have been involved in a review (i.e., search and selection process) for an advertising or other type of communications agency within the past five years.
- The current generation of marketers is more "promiscuous" than predecessors as agency relationships are not monogamous; it's more the norm to work with multiple partners.
- Relationships are of a shorter duration. This has been brought about, in part, by the shortened tenure of the CMO.
- We are on the road towards an "open source management" model as it relates to how agencies are hired.
- The variety and volume of partners has not resulted in increased satisfaction.
The cost per agency to participate in an "average" review for a $30-70 million piece of business is about $300-500k. Of course, this ultimately gets allocated to overhead and the clients end up paying for it. Some clients pay a stipend to help offset agency pitch costs. This payment is often in the range of $20-50k, with $30k being the median.
The underlying cause(s) that led clients to place their agency under review were:
- Performance issues (73%).
- Marketing department personnel changes, including new CMOs (39%).
- Irreversible wear out (i.e., the relationship just lasted too long) (25%).
- Mandatory vendor reviews (21%).
- Irreconcilable differences (12%).
- Agency competitive conflicts (11%).
Respondents were also asked if they use 3rd party search consultants or if they conduct reviews using internal resources.
- 65% of respondents have used only internal resources.
- 4% of respondents have used only a 3rd party search consultant.
- 31% of respondents have used both internal resources and a 3rd party search consultant.
Clients chose to use internal resources because of the role of an in-house strategic sourcing team (procurement), in-house expertise/resources, lack of funds to hire a consultant, or a smaller scale job. Clients chose to use a 3rd party search consultant in cases where they were looking for industry expertise, time was short, they needed third party objectivity, or they needed to remove politics or remain anonymous.
There is high satisfaction with the review process (e.g. amount of time invested, ability to gain deep insights into the candidate firms, etc.), with 96% of clients being very/somewhat satisfied. There is also high satisfaction with the review results, with 99% of clients being very/somewhat satisfied.
Respondents ranked, on a scale of 1-10, the importance of the following review evaluation criteria (1 being low in importance and 10 being high in importance).
|Quality of personnel and collective IQ of the agency||8.96|
|Chemistry with agency team||8.88|
|Target market understanding/insights||8.81|
|Quality of agency management||8.53|
|Passion for your account||8.49|
|Integrated marketing philosophy||7.93|
|Relevant category experience||7.58|
|Media planning and or buying/channel||5.8|
A standard agency search takes 12 weeks, from start to finish. The average agency turnover is about 22% per year.
Just over 80% of respondents conduct agency evaluations on a regular basis in order to assess their agency relationships and identify potential problems. When respondents were asked, "How effective are these programs in maintaining strong agency relationships?," the response was:
- Extremely effective (26%).
- Very effective (46%).
- Somewhat effective (25%).
- Not at all effective (3%).
There is a high correlation between annual or semiannual assessments and the success of the agency/client relationship.
Client Organizational Structure:
Clients manage their agencies via:
- Marketing services group (71%).
- Brand/product team (59%).
- Specialized internal agency management team (32%).
Respondents were asked how successful they felt there company was in managing integration:
- Very successful (17%).
- Somewhat successful (44%).
- Moderately successful (31%).
- Not successful (8%).
Integrated marketing is the top concern of senior marketers, according to previous ANA surveys. The above results indicate that marketers are being increasingly challenged by the proliferation and complexity of the marketing and media landscape.
Agency Conflict Clauses:
What constitutes a conflict?
- Pre-determined list of competitors.
- Same category.
- Working with or soliciting business from direct competitors.
Does your agency contract contain a conflict clause?
- Yes (94%).
- No (6%).
Use/Effectiveness of Regular Brand Summits with All Agencies:
Does your organization conduct any type of regular, in-person meeting/brand summit for all agencies working on a brand to discuss brand objectives and ensure consistency/alignment of goals?
- Yes (74%).
- No (26%).
If so, how often are such meetings held?
- Annually (54%).
- Semiannually (30%).
- Quarterly (17%).
The frequency of such meetings underlines their importance. The goal of these meetings is to synergize all teams and make sure that they are all working toward the same goal, to ensure coordination of efforts with no duplication of work, and to encourage collaboration in order to improve ideas, reduce duplication, and increase speed to market.
"ANA Agency Relations Benchmarking Survey." Russel Wohlwerth, Principal, Ark Advisors/AAI. ANA Agency Relations Committee Meeting, West Coast chapter, 12/11/07.