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BEST!PRACTICES!FOR!ACQUIRING!AND!MANAGING!AGENCY!PARTNERS!IN!THE!DIGITAL!SPACE!
Content contributors: Jane Bedford, Jon Cook, Rob Crigler, Kerry Kielb. Art direction: Dan SearleNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical,
photocopying, recording, or otherwise — without the permission of The Bedford Group. This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
Online ad spend has increased more than 53% over the last 5 years and continues to climb with growth projected to top $50 billion by 2015.
DIGITAL MARKETINGEXPLOSION
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2002 2003 2004 2005 2006 2007
ANNUAL REVENUE IN BILLIONS1
2008 2009 2010 20110
5
10
$6.0$7.3
$9.6$12.5
$16.9
$21.2$23.4 $22.7
$26.0
$31.7CAGR: 20.3%
15
20
25
30
2010 2011 2012 2013
U.S. ONLINE AD SPENDING, 2010 - 2015 (BILLIONS)2
ONLINE AD SPENDING % CHANGE
2014 20150
10
20
30
40
50
50
$26.0
$31.3$36.8
$41.2$45.5
$49.5
Technology is Fast; Consumer Adoption is Faster
Ever increasing consumer connectedness
• 53% U.S. smartphone penetration and continuing to increase
• 42% of US adults are “ultraconnected” (3 devices/3x/day) and expected to be the global majority by year end
Digital Marketing is of primary importance to the C-suite
• 68% of C-suite executives identify digital marketing (and social tools) as a top 10 corporate priority
• More than 70% of marketers are already taking budget out of traditional channels to fund new interactive spend
DIGITAL MARKETINGEXPLOSION
3
4
5
6
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Adaptive Marketing is the New Norm
DIGITAL MARKETINGEXPLOSION
OLD
BRAND TARGETMEDIACHANNELS
DATAAgency challenge to adapt
• Mass media is no longer the foundation
• Data Analysts, Technologists and Developers have become a necessary part of the core Creative team
• Consumers are the new publishers and influencing them is as important as media spend
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DIGITAL MARKETINGEXPLOSION
NEW
DATA
BRAND TARGETMEDIACHANNELS
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Adaptive Marketing is the New Norm
Agency challenge to adapt
• Mass media is no longer the foundation
• Data Analysts, Technologists and Developers have become a necessary part of the core Creative team
• Consumers are the new publishers and influencing them is as important as media spend
The agency world has been evolving to better suit the new era it is operating in. The structure and function is as unique as the marketing they manage.
THE DIGITALDIFFERENCE
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TOPICS:
The digital agency difference
Knowing when you need a new digital partner
Steps for a successful selection process
Readying for a new partner
Negotiating a relationship that lasts
Summary
Q&A
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THE DIGITALDIFFERENCE
Common agency roles & responsibilities have emerged over the past decade...
THE DIGITAL AGENCYDIFFERENCE
ADVERTISING AGENCY DIGITAL AGENCY
MEDIA AGENCY
BRANDEDCONTENT
DIGITAL ADVERTISING
MEDIASTRATEGY
TRADITIONALMEDIA
DIGITALMEDIA
SEO
BRAND!STRATEGY!
ACCOUNT!LEADERSHIP
TELEVISION
RADIO
OUTDOOR
DIGITAL!STRATEGY
WEBSITES
TECHNOLOGYDEVELOPMENT
DIGITAL!PLATFORMS
MOBILITY
SOCIALMEDIA
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This model is loaded with exceptions.
It is in rapid evolution and
deconstruction.
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The ownership of branded content and digital advertising are areas of highest contest between ad and digital agencies.
1 3As digital agencies have strengthened, matured and grown in scope and sophistication - the “AOR” position is in play for many agency types.
2 4Ad agencies saw a decline in position and revenue as digital broke out as a specialty to other agencies. That same thing is happening to digital agencies as many clients prefer to send key elements of their scope to specialists.
Holding companies centralizing digital media away from ad and digital agencies leaves a major question on where key relationships/decisions with digital properties should live (e.g. Facebook).
THE DIGITAL AGENCYDIFFERENCE
SpecializationEffect
Media AgenciesStake Claim
TheBattleground
LeadershipEvolution
1
23
4
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DIGITAL AGENCYEVOLUTION
LOOK OF THE LEADERAcquisition of key agency lead skill sets creates “permission” to serve as lead agency
KNOWLEDGE IS POWERHarnessing data and intelligence drives customer relationships.
KEYS TO THE KINGDOMThe owner of brand strategy often is the owner of the AOR position. As digital agencies are more armed with this skill set, the AOR role has evolved.
GENERAL CONTRACTORDigital agencies are learning to be the force that brings together the other components of marketing - a role once reserved for and embraced only by ad agencies.
COMMITMENT TO THE BASICSEmbracing core ad agency marketing skills (a premium on messaging, creative briefs, target audiences, brand planning) allows digital agencies to play in the bigger game.
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KNOWING WHEN YOU NEEDA NEW DIGITAL PARTNERHistory shows that while decisions are varied, the most common predictors of a shift fall into one of five categories.
Triggers for a digital agency search
Marketplace changes • New opportunities require new specialized skills• Austerity program• Want to consolidate to leverage size/optimize
efficiencies
Business/Strategy changes • Company direction no longer matches with
agency skills• You’ve outgrown your present team
Need for fresh thinking • Creative disagreements• Dissatisfaction with results
Relationship difficulties/People changes • Discontinuity of team• Chemistry clash• New marketing team
Compensation• Question the value for the spend• SOW disagreement
01:
02:
03:
04:
05:
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KNOWING WHEN YOU NEEDA NEW DIGITAL PARTNERThe first and most important step is to assess and evaluate your current partnership. If there are concerns, it may be possible to institute remedies to make existing resources more suitable.
Ask yourself these questions:
?
Does your current agency partner have the bandwidth and skills necessary to help your brand compete in the digital space?
Is your agency keeping up with new technology?
Does your agency help you to capture the right data and use it to regularly optimize? ?
? Is your program continually improving?
Has your company made a significant shift since you hired your agency ??
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Gain consensus among key stakeholders on key issues:
• To search or not• The right agency model• Selection criteria• Foremost goals and
objectives
• Reduce required time of corporate staff member so they can stay focused on their every-day business
• Provide metrics and analysis of each step
• Manage difficult logistics
• Robust ongoing research and agency database
• Counsel on what to look for and expect
• Customized evaluation tools that mirror needs and processes for focused choice
• Total documentation of the pros and cons of each candidate along the way
• Offer “confidence” for the “rightness” of the decision based on process and research
• Say the hard things client doesn't want to say
• Create “ground rules” for agency/client interaction
• Help unlock mysteries of costs/contract negotiations
• Rigorous benchmarking • Deep-dive reference report
CLARIFY IMPLEMENTSIMPLIFY REDUCE RISK
Often it’s helpful to have a third party consultant help you to determine your needs and, if a search is necessary, help you to select the right partner.
DON’T GO AT IT ALONE
KNOWING WHEN YOU NEEDA NEW DIGITAL PARTNER
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SELECTION PROCESSSTEPS TO SUCCESS
Don’t treat “Digital” as an island.The Integration challenge begins internally.
• Too often siloed by “online” and “offline” departments and leadership
• Digital marketing partner will influence success of all efforts so key marketing stakeholders must be involved
Break down the barriers by reaching consensus on key issues.
• What is the role of digital marketing in building brand perception?
• What metrics should be used to judge its success?
• What are the strategic priorities for the brand in the digital space?
• How will digital marketing impact the growth of a brand?
• How will a digital program help achieve the organization’s business objectives?
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A SUCCESSFULSELECTION PROCESS
AGENCY SELECTION LIFE CYCLE
ELIMINATING CONSIDERING EMBRACING
OBJECTIVE INFORMATION
SUBJECTIVE INFORMATION
QUALITY ASSURING TRIAL SAMPLING SELECTINGSCANNING
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Defining needs/setting goals, criteria needs assessment
Scanning: Getting down to a short list
Quality assuring
Trial: Evaluating finalists
Selection
Creating a winning partnership
THE FUNNEL
A SUCCESSFULSELECTION PROCESS
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READYING FORA NEW PARTNERDigital has added to an already extensive marketing landscape where brands fight for attention among hundreds of consumer touch points.
Increasing fragmentation of channels means that marketers must closely evaluate how they allocate resources.
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DIGITAL
DATAANALYTICS/
QUANTITATIVE
WEBSITE/ECOMMERCE
ONLINEDISPLAY/
BRANDING
SEO/SEM
SOCIALMOBILELOCAL
READYING FORA NEW PARTNER
Marketing organizational structure of old may not be designed to meet the digital opportunities of today.IT infrastructure and technology may need an upgrade.• Make friends with your IT department - Digital initiatives require cooperative alliances• Set mandates of how you will interact with each other• Agree on a new structure and rules of engagement
Data and analytics disciplines should be given the prominence they deserve.• This function is the linchpin for helping to drive smarter, more informed strategies and results-oriented programs
Make hiring and retention of talent a priority
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READYING FORA NEW PARTNERMake your digital system flexible.• Business processes must keep up with the
rapidly changing channel landscape to facilitate smooth integration and adaptation/adoption of the new order
• A robust case management is key
- Digital is binary, either it works well or it doesn't at all
• Millions of tiny details so, you must ensure an infallible method of workflow tracking
Breakdown the siloes to ensure integration is across all consumer/customer touch points.• Establish clear definitions of who does
what and how each discipline will integrate
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WEB
DEV
/ EC
OM
MER
CE
PRIN
T M
EDIA
MO
BILE
PUBL
IC R
ELA
TIO
NS
SEO
/SEM
CRM
SOC
IAL
BRO
AD
CA
ST M
EDIA
DA
TA A
NA
LYTI
CS
DIGITAL TRADITIONAL
CROSS-CHANNEL INTEGRATION
DIGITAL/TRADITIONAL: TYPICAL SILOES
Recognize that the pace has changed and counsel in the
adoption/expectations for this reality.
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READYING FORA NEW PARTNER
The Importance of IntegrationThe enterprise must be on board whether they like it or not.
• Create a climate for a faster paced environment
• Educate leadership on opportunities and how to harness them
• Bring traditional counterparts up to speed
ITOPERATIONS
TRADITIONALMARKETING
DIGITALMARKETING
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READYING FORA NEW PARTNER
• Define delegation paths and appropriate level of authority to ensure reasonable response, eg:‣ Develop a social media action plan that
considers route by issue (PR, legal, customer Service)
‣ Select technology needed to best handle routing (integrated platform support)
• Establish protocols for how agencies will work together
ITOPERATIONS
TRADITIONALMARKETING
DIGITALMARKETING
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The Importance of Integration
DESCRIPTION SOLUTION
TECHNOLOGYROLE
DUPLICATIONDYNAMIC
EMBRACEDISCOVERY
PRODUCTION
INDEMNIFICATION
Level of technology involvement is one of the largest drivers to size of agency scope, rate structure, team make up. And one of the largest sources of friction when not established early.
Critical to establish role of client IT department in technology planning, development and ongoing maintenance.
There is a common question when employing a digital and ad agency on whether there is duplication between creative leadership, account management and strategy.
Successful digital agency relationships allow for interactive-specific roles in these key positions.
Common mistake in digital agency scoping is the establishment of final fees for all technical development at the outset of relationship.
Important to fund and schedule for proper discovery and collaboration for the technology component before final fees are established.
Obviously, there are increased options for offshore rates as a component of overall digital scope.
Allow digital agency to staff for the much-needed quality assurance and project management of production.
Quickly rising on the list of elements that cause the most negotiation delay and heartache between digital agencies and brands, because of patent troll claim increases.
Look for reasonable parameters on what types of technologies should be covered and that the agency has impact on, and look to find a reasonable cap to indemnification level.
Key differences to consider when creating a successful digital agencymaster services agreement.
SUCCESSFUL DIGITAL AGENCY COMPENSATION APPROACH
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SUCCESSFUL DIGITAL AGENCY COMPENSATION APPROACHCore pillars of digital agency master SOW best practice ...
INCENTIVE
LABOR BASED
VALUE BASED
PRODUCTION
Digital agency’s ability and remit to provide specific metrics of engagement, commerce, transaction, etc. makes this a compelling and key incentive consideration. Rewards effectiveness and partnership.
Increasing in both need, frequency and priority, value-based compensation allows for compensation for the market or fiscal impact of an output rather than the time it took to create. Rewards big ideas, business-penetrating thought process.
Standard method of compensating any agency type remains an important part of the compensation mix. Successful rate-based labor important for standard digital agency work. Optimal if a mix of two core types:
• Retained Resources: Enables agency to provide optimal team continuity to client partner, allows agency to provide level of firm forecast for a core portion of overall scope. • Scope of Work Based Resources: Provides flexibility for portions of scope
that are less confirmed at outset of year/relationship. Best when working against an overall aggregate budget target / forecast, even if not guaranteed.
It is important that digital agency commits - as relevant - to a solution for X% of overall scope to be handled in sub-premium or standard rate structures. Offshore production is a common solution or form of production.
Proportions of the boxes in the diagram are not meant to be an exact recommendation. Each relationship requires an independent review of appropriate mix.
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SUMMARYTEN THINGS TO REMEMBER
Agency role structure is in massive evolution,especially on where the point of leadership lies.01:Digital agencies are quickly gaining the skillsrequired for being the brand AOR.02:
Evaluate your current partnerships first.03:Include all stakeholders in determiningneeds, not just the "digital" team.04:Bring in some marketing management helpfor optimal results.05:
Gain consensus on strategic needs, not justtactical skills.06:Get your team ready – make data analytics the foundation.07:
Break down the internal siloes to achieve partner integration.08:You cannot be too descriptive when definingroles and mapping workflow.09:Recognize and discuss key differences in agencytypes when defining digital agency comp.10:
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FOR MORE INFORMATION, CONTACT:
Kerry KielbSenior ConsultantThe Bedford [email protected]
Jon CookCEO and [email protected]
SUMMARY
Jane BedfordPrincipal and FounderThe Bedford [email protected]
Rob CriglerVP Digital MarketingRooms to [email protected]
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1. IAB Internet Advertising Revenue Report conducted by PricewaterhouseCoopers, 4/2012
2. Emarketer, US Online Ad Spending Forecast, 6/2011
3. Nielsen, The Mobile Consumer, A Global Snapshot, 2/2013
4. Forrester report: 2013 Interactive Marketing Predictions, 8/2012
5. McKinsey and Company, Global Executive Survey, 5/2012
6. The Bedford Group Database Extract, 2/2013
Related Research Documents
The Bedford Group Agency Selection Process © 1986-2013
SOURCES
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