Post on 22-Dec-2015
transcript
Evaluating Agency Performance
To evaluate existing agency (review) To evaluate potential agency (selection)
Underlying change in philosophy:
Move away from presumption of agency competence, only evaluating when problems occur, to regular measure to ensure accountability
Evaluation ProcessDecide & weight your ideal attributes
Determine questions which will elicit info on attributes from agency (agree them with
agency!)
Rate agency against these attributes
Analyse the results
Decide & weight your ideal attributes
Importance*
Creativity .20 Media planning & buying .20 Account management .15 Services provided .15 Chemistry .10 Track record .10 Compatibility .10
1.00* figures for illustration only
Determine questions to elicit info on attributes
eg Compatibility
Does the agency personnel have knowledge of our industry? Complete knowledge .5 Good knowledge .4 Average knowledge .3 Poor knowledge .2 No knowledge .1
Are the backgrounds of the agency people compatible with our needs, marketing qualified, planning expertise? Completely compatible .5 Good compatibility .4 Average compatibility .3 Poor compatibility .2 No compatibility .1
Rate each agencyAttribute A Importance rating B Agency performance A x B
ABC agency 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1Creativity 0.2 X 0.12Media 0.2 X 0.08Acc Man 0.15 X 0.105Services 0.15 X 0.075Chemistry 0.1 X 0.08Track record 0.1 X 0.05Compatability 0.1 X 0.07
1 0.58
XYZ agency 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1Creativity 0.2 X 0.18Media 0.2 X 0.16Acc Man 0.15 X 0.09Services 0.15 X 0.075Chemistry 0.1 X 0.03Track record 0.1 X 0.03Compatability 0.1 X 0.03
1 0.595
Selecting an advertising agency
Requirements Agency v Agencies v In-house Selection Criteria - prioritised Questionnaire / Checklist Preliminary List Short List Briefing Short List Credentials, strategy pitch or Full (creative) Pitch Assessment against Criteria Appoint and Contract
Why clients change agencies “New broom” “Follow my leader” “Our policy on global alignment” “But we always do that with your
account” “We just can’t see eye to eye”
The Agency Register Agency scorecards Client counselling Agency de-briefing Assessing your needs Conflict issues Existing relationships Agency profiles Strict confidentiality Capabilities presentation Presentation schedules Stage managing presentations
Agency remuneration Commission system - historical Level of commission = 10% Service fee = 7.5% Example
Gross media cost (agency bills client) 1000 Less 10% commission 100 Net media cost (agency remits net to media) 900 agency keeps 10% 100
+ 7.5% GMC or 75
19.44% of NMC 175
Production billed as net to client + Service Fee of 19.44% !!!
Alternatives to Commission System
Hourly rates Fixed fee (Cost + Profit) Sliding Scale Performance based
Commission System
Disadvantages - Advertiser Agency overspending in
commissionable media Commission + Service Fee on high
media spend prohibitive Good, Bad, Indifferent get commission
Commission System
Disadvantages - Agency Media spend = Servicing cost??? Immediate work but not income Works for buyer, paid by seller Exceptional skills not rewarded
Commission System
Advantages - Media
Prompt payment via agency Ease of communication (200 accredited
agencies) “Acceptable” ads (Codes & technical)
Commission System
Advantages - Agency Guaranteed income from media Well known More effective advertising more
commission more effective advertising...
Advantages - Advertiser Agency co-ordinates Agency bears cost of media upfront
How clients pay agenciesRemuneration method % 93 95 96 97
Service fee only 34 44 24 19
Comm + serv fee 34 31 23 29
Flat fee 8 9 13 14
Person hours 5 3 6 7
Comm + flat fee 10 5 18 15
Performance incent 1 1 4 3
Comm only - - 7 12
Other 8 7 8 9Source: AMR Quantum Harris/Aus Street Cons
What clients pay agenciesLevel of service fee % 93 95 96 97
Over 10% 8 8 15 6
7.6-10% 5 13 9 5
7.5% 65 48 35 44
5.1-7.4% 6 16 20 16
2.6-5% 10 6 10 12
Up to 2.5% 3 2 1 4
Refused/DK 4 3 10 13Source: AMR Quantum Harris/Aus Street Cons
Reasons for appointing a media agency To take advantage of greater expertise in media
planning & buying 39% To get better rates from the media 24% To reduce the cost of planning & buying media
16% Need to appoint a global ad agency 8% To gain more creativity in media
buying 8% Other 6%
The Ten-Point Pitch Guide for Advertisers (AFA 98)
1 The Background Information identifying agency capabilities you need
2 The Initial Prospect List no competitors, size compatibility, ‘chat’,
questionnaire eg appendix 3 The Pitch List
3-4 agencies on strength of questionnaire, media release
The Ten-Point Pitch Guide for Advertisers(cont’d)
4 The Brief Quality of brief = quality of pitch
5 Financial Compensation Payment for strategic/creative (?)
6 Confidentiality & Copyright Agreement for protecting both parties
7 The Evaluation System Agreed criteria with all decision-makers