Developing Effective Digital Agency Compensation and Agency Performance Measurements in Digital --...

Developing Effec.ve Compensa.on and Agency Performance Measurement

in Digital

Jason Heller

1 Confiden'al

June 3, 2014

§  20 year digital veteran

§  Agency leadership background (knows where the skeletons are buried)

§  Last 12 months -‐-‐ involved in $500MM+ in digital agency reviews, compensa.on structuring , and media.on

§  Works closely with enterprise marke.ng and procurement leadership

2

Why should we pay attention to Jason?

Confiden'al 3

Everyone shares the same pain and frustration…

4

How to wrangle the complexity of digital §  Are we inves.ng properly?

§  Are we working with the right agencies?

§  Are we paying the right rates?

§  Are we evalua.ng the right metrics?

§  Are we moving the needle?

Today’s consumer is … Connected Empowered Distracted

Confiden'al 6

Digital marke.ng is equal parts Mad Men and Minority Report

Agencies have a big task §  Beyond design, UX of everything

§  Creating great content, and a lot of it

§  Managing a complex media ecosystem

§  Providing advanced analytics and insights

§  Collaboration and playing nicely with others

Marketing procurement has an equally big task §  Create a win-win relationship

§  Motivate agencies to do their best work

§  Unlock and create value – beyond cost savings and cost avoidance

§  Create accountability within internal teams

§  Support internal stakeholders while developing subject matter knowledge

Marketers struggle with various levels of accountability

Quan.ta.ve measures

Qualita.ve measures

Performance marke.ng

Difficult to .e back to value

Easy to .e back to value

CRM

Content

Website

Social media

Mobile apps

Mobile adver.sing

Video adver.sing

Brand display

SEO

Social listening

Crea.ve

CRM

Performance marke.ng

Website

SEO

* Not exhaus've

Content

Social media

Mobile apps

Video adver.sing

Brand display

Social listening

Digital requires both a quantitative and qualitative lens

Reach, exposure

Engagement

Sales / ROI

Branding effecDveness

CompeDDve SOV, social

buzz

Quan.ta.ve measures Qualita.ve measures

Discoverability Visibility

Your agency relationship toolkit

§  QualitaDve review of performance against goals

§  IteraDve strategy reviews

§  SeOng goals for the following quarter

§  Support marketers in ways that they cannot support themselves

§  DoRed line to the CMO

§  Internal assessments and capability development

§  Brands evaluate agency

§  Agency evaluates itself

§  Agency evaluates brands

Quarterly Business Reviews (QBR) Evalua.on Scorecards Marke.ng engagement

A FOUNDATION OF KNOWLEDGE: Landscape, best prac.ces, processes, technology

Evaluating your agencies on traditional quantitative measures alone is misguided

Quan.ta.ve measures Qualita.ve measures

§  FTE rates and alloca.on

§  Comparison against benchmarked FTE rates

§  Working vs. non-‐working media spend

§  Analy.cs output

§  Investment performance

§  Account leadership and strategy

§  Thought leadership and innova.on

§  Crea.ve and technical work

§  Staffing appropriateness

Establish goals and forecasts

14 Confiden'al

1 2 3

Review performance against goals and benchmarks

Iterate strategy and op.mize marke.ng investments

Enforce a simple process

Develop a weighted scorecard Account

leadership, strategy

• Rank each criteria, N/A=0, 1=Must Improve, 2=Could be beRer, 3=Good, 4= Very Good, 5=Excellent

• Provide raDonale for each score under 3

Thought leadership and innovaDon



CreaDve and technical work



Staffing



AnalyDcs and performance



Financial



Average score

Weighted score

Weight

Average score

Weighted score

Weight

Average score

Weighted score

Weight

Average score

Weighted score

Weight

Average score

Weighted score

Weight

Average score

Weighted score

Weight

Total score

Understands our business, brand(s), culture, our category, and our compeDtors

Communicates clearly, keeps us informed, follows up thoroughly, idenDfies potenDal issues early, and limits assumpDons

AnDcipates our needs proacDvely Account leaders are advocates and stewards for our brands within the agency and the market Manages Dmelines, provides adequate Dme for internal coordinaDon, and delivers commiRed work on Dme UDlizes a project management system, which we have access to and it is easy to use RecepDve to and follows our feedback and direcDon Challenges us when needed Challenges and quesDons their internal teams to drive performance UDlizes our Dme and their Dme effecDvely and producDvely Develops and iterates effecDve digital strategies for our brand(s) Collaborates producDvely with our other agencies Manages problems and difficult situaDons swidly and effecDvely

Account leadership, strategy, project management

Sample criteria …

Agency evaluates client Briefs clearly define projects, objecDves and definiDons of success ExpectaDons are reasonably aligned with budget levels Use our Dme/resources well Leverage our thought leadership and POV's Provide clear feedback, and follow planned iteraDon cycles Sets reasonable due dates giving agency adequate Dme to deploy its best resources; if deadlines are Dght, explains why and works with team to agree to feasible deliverables within compressed Dmeframe Regularly share business info, company prioriDes, challenges, trends, insights or other informaDon that can help us Decision making process is streamlined and effecDve Has the bandwidth to coordinate effecDvely internally and externally to move projects along Educated on digital topics and stays up to date on trends, and can effecDvely collaborate with us to develop best in class digital programs Raise issues to senior management when appropriate Appropriate and acceptable turnaround Dme on decisions and approvals Treat us like partners Fair aOtude when things go wrong; displays flexibility and understanding when problems arise Pays us on Dme Team is treated well and enjoys working on the account Top talent asks to work on our account

Sample agency 360 evaluation criteria

18 Confiden'al

§  Where does the agency excel? What should the agency conDnue to do in terms of how they manage the relaDonship?

§  How can we challenge the agency to improve this even further?

Con.

nue 1. ________________________

__________________________ __________________________ __________________________ 2. ________________________ __________________________ __________________________ __________________________ 3. ________________________ __________________________ __________________________ __________________________

Con.nue

19 Confiden'al

§  What should the agency start doing that they are not currently?

§  Where are there gaps in how the agency manages the relaDonship and/or your investments?

Start 1. ________________________

__________________________ __________________________ __________________________ 2. ________________________ __________________________ __________________________ __________________________ 3. ________________________ __________________________ __________________________ __________________________

Start

20 Confiden'al

§  What does the agency need to stop doing?

§  What are the sore spots or negaDve factors in how the agency is managing the relaDonship and/or investments that need to change?

Stop

1. ________________________ __________________________ __________________________ __________________________ 2. ________________________ __________________________ __________________________ __________________________ 3. ________________________ __________________________ __________________________ __________________________

Stop

§  FTE + Overhead + Profit model provides transparency and a founda.on for a successful rela.onship

§  Review FTE proposals and scope of work very carefully

§  Never accept “zero margin”

21

Negotiating agency compensation and contracts

§  Include risk/reward bonus structures

where appropriate

§  Analyze overhead costs; expect overhead to be close to 100% of FTE costs

§  Profit margins range from ~10%-‐20%, depending on scale and scope

22

Negotiating agency compensation and contracts

§  Ownership of work and source files

§  Ownership of all data §  Pass-‐through of all discounts and rebates

§  Full transparency on net costs

§  Monthly reconcilia.on / burn repor.ng for retainers

§  Acceptance clause

§  Address approach to staffing shiis

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Contracts: general digital nuances

§  Iden.fy as much of the tech stack as possible going in

§  Direct contracts with key marke.ng technology plajorms

§  Nego.ate an extension of agency rates where possible

§  Agency to manage use of plajorms

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Contracts: marketing technologies

Consolidation vs. diversity in your agency portfolio

▪  Where scale creates aggregate data opportuni.es ▪  Eg: Media, Social media, CRM

▪  The same digital fundamentals services are managed and produced across mul.ple agencies ▪  Front-‐end producDon ▪  Social community management

▪  Marke.ng technology categories with minimal differences or clear market leaders

When to consider consolida.on When to consider diversifica.on ▪  Specialized capabili.es that require best-‐in-‐class specialists

▪  Crea.ve vision varies from agency to agency, and diversity allows for the development of unique brands and campaigns

▪  Some.mes smaller and more nimble agencies can provide services at lower costs

Confiden'al 26

Structuring resources to maximise output in the digital area – SEO, social media, apps, mobile –how much investment should go where?

How will we maximize the output of digital spending?

§  Develop subject maler knowledge

§  Collaborate with marke.ng

§  Help support rigorous data-‐driven decision making

§  Establish goals

§  Review, evaluate, and iterate frequently

Thank you for listening! You have a lot of work

ahead of you.

Jason Heller

27 Confiden'al

[email protected]

@jasonheller

Developing Effective Digital Agency Compensation and Agency Performance Measurements in Digital --...

Marketing

Transcript of Developing Effective Digital Agency Compensation and Agency Performance Measurements in Digital --...