Accountabiity and Agency Reviews - Steve Fajen

BOTH SAVINGS AND INVESTMENT MUST BE HANDLED SIMULTANEOUSLY. THAT'S THE CRUX OF THE MARKETING/PROCUREMENT PARTNERSHIP AND RELEVANT METRICS MUST BE ADOPTED BY THE AGENCY TO MEASURE RESULTS.

To build strong brands, shareholder value and sustain a client/agency relationship, client procurement needs to enhance profits while marketing must build revenue. These are not mutually exclusive activities. The same people charged with these twin responsibilities must balance savings and investments at the same time. It is the crux of the procurement/marketing partnership.

The bottom line is: Focus on both savings and investment simultaneously and expect a reasonable rate of return .

Savings can be accrued and measured. Consultants can benchmark and analyze agency compensation, leading to an acceptable fee and additional savings. Auditors can post and analyze audience delivery against commercial costs, leading to improved future negotiations and further savings. Return on media investment however has longproven to be more illusive when trying to link it directly to agency output.

Twenty-five years ago the average client/agency relationship lasted an average of more then seven years. Accountability metrics were scarce then. It was generally thought to be near impossible to link advertising to marketplace results (except when testing). Today, the average client/agency relationship has dropped to between three and four years. Worse still, half of these relationships won't even last two years. Yet today, dashboards abound with metrics that reputedly measure accountability and should lead to improvement. So what's wrong?

Over the last five years the single most important concern clients have expressed is accountability. We feel that clients and agencies have failed to find a way to successfully keep score when it comes to accountability in the marketplace tied to client/agency outcomes. As a result, relationships, shareholder value and brands can suffer. We need a better way to measure accountability.

Baseball produces an avalanche of statistics. However, batting averages, ERAs, errors, stolen bases and the like do not describe who won the game. A simple counting of the runs scored at the end does that. To measure accountability we need to use predictive modeling and attribution to guide our expectations regarding outcomes as well as how to link media investment results to compensation incentives.

We need a better marketing accountability dashboard partly because the right indicators must be used or we need to improve the ones we have.

When an agency is being considered, we need to know: Are the proper issues being explored fully before a final selection is made? Are both client and agency in alignment in their understanding of what needs to be done and what the agency should accomplish? Did both parties agree on a way to measure progress? In other words, did the client and agency agree on a way to hold the relationship accountable?

There are a lot of media and marketing metrics available to measure elements of the client/agency relationship and their output. Metrics like – cost efficiency, brand awareness – commercial recall – consumer engagement – purchase consideration - persuasion – etc, are all useful. But these are proxy measurements. The metric that matters most is "What were the results in the marketplace?"

How much money went into the campaign? How much money came back? Analytics and attribution.

If the ROI is not larger than the expenditure then first test an alternate strategy or change the campaign, not necessarily the agency.

An agreement at the outset of a new client/agency relationship that explicitly identifies client goals and expectations can help bring the right resources to bear at the agency to deliver the result. It doesn't take long to read marketplace results these days. And, this would not only improve the client/agency relationship, it might also enhance the Chief Marketing Officer's job and give shareholder value a boost.

The answer to accountability is relevance and measurement. We are drowning in a sea of numbers we now call metrics, which makes them seem very important. While there is a story in almost every set of numbers, the story does not always relate to accountability.

To measure accountability we need to focus on marketplace outcomes and how cost efficient it is to get there. This includes agency operating efficiency, media efficiency and how the agency handles accountability in establishing results.

To learn more about us and read other points of view that our company has expressed, please visit out site at www.drexlerfajenpartners.com.

Mike Drexler and Steve Fajen have managed media planning, buying, research and integration at general and media agencies for more than 40 years. They have also founded or run a media talent recruiting firm, a media management consultancy and a media research company. Mike Drexler has guest lectured on media at the Harvard Business School and been published by the Harvard Business Press, while Steve Fajen has been published in the Harvard Business Review and was twice recognized among the top 100 most influential media people by Mediapost Magazine.

Steve can be reached atsteve@drexlerfajen.com.