How Ad Agencies Can Help CMO’s Succeed.

September 9, 2009

CMO innovation

With an average tenure of only 17 months, CMO’s need all the help they can get, not only to succeed but to survive. There has never been a better opportunity for ad agencies to step up and take on the role of strategic partner!

There is not a CMO out there right now who has not already cut his overhead costs as deep as realistically possible. For the past 18 months or more, their game plan has been batten down the hatches and unload as much overhead as possible, as they try to survive the economic recession.

Well, the game is changing and changing quickly. The C-Suite is already shifting its focus from cost cutting to recovering market share and top-line growth. This shift is starting to put increased pressure on these CMO’s as the corporation looks to them for growth leadership.

To be successful they must be able to understand both current and potential customers better than anyone else. The next critical step is to take those insights and translate them into unique and powerful new products and customer experiences. Finally, and perhaps most importantly, they must create more effective and efficient ways to market their products or services. Communications innovation is absolutely critical to achieve success and who better to provide that innovation leadership than the right ad agency?

While breakthrough product innovation is a fundamental requirement and remains an essential component of every company’s go to market strategy, there are many communications innovations that are equally as powerful and effective.  It could be as simple as innovating the customer experience, discovering new customer segments or needs, innovative pricing or new payment options or leveraging networking and building a brand following and community.  

The opportunities are out there and the time is now! Whether you are the incumbent agency or one that is looking for an opportunity to break into that new client, there has never been a better time than now. However, a quick word of caution.  Do not go rushing in without doing your homework and armed only with traditional marketing ideas and solutions. To succeed you will need to demonstrate exceptional insights, creativity and media/channel delivery innovation.

This is your opportunity to establish your rightful place as a valued strategic partner. Focus your approach on how you can help the CMO recover top-line growth and avoid the temptation to deliver another one of those presentations about how talented your agency is. Remember Radio WIFM (What’s in it for me?).

 

 

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Naked Brits Lead Current Ad Agency Communications Planning Trend

August 26, 2009

british_invasion

The days of brand agencies aspiring to be the “Lead Agency” are fast disappearing. Clients are increasingly turning to specialist communications planning agencies, to help them take a more informed approach to their integrated marketing initiatives. In many instances, the work of these truly media neutral agencies informs and directs all other roster agency assignments and work.

In the US we experienced the “British Invasion” from a music perspective during 1964-66, with bands like The Beatles, Rolling Stones and The Kinks. Right now we are experiencing another British Invasion of a different sort: Brand Communications Planning agencies.

These agencies do no creative work or execution whatsoever. Some have developed very powerful planning tools/models, powered by a significant database of both quantitative and qualitative data, related to over 90 distinct marketing channels. They are channel planning experts and are probably the only breed of agencies who can honestly claim to be media neutral.  

One of the leaders of this invasion is a company called Naked Communications. A quick word of warning, do not go to Naked.com after reading this post. It will only help to put you on the radar screen of your IT and HR department for improper use of the internet. (They have two distinct websites: www.nakedcomms.com and www.houseofnaked.com). There are a number of others out there that all hale from the UK and have similarly bizarre names.

While most other agencies are out there running around claiming to be full service, fully integrated, media neutral and 360 degree agencies, specialist communications planning agencies, like Naked, are quietly and effectively taking control of more and more large advertising and marketing accounts. Early in 2008 Naked made the trade media headlines when they were awarded the Kimberley-Clark account. Take a look at what K-C said about the appointment in their press statement.

Tony Palmer, CMO at K-C, said in a statement that producing marketing efforts built around TV commercials is no longer relevant in today’s business environment. “It is incumbent on clients to take an active role in reshaping the model,” he said, adding that hiring Naked is a step in this direction. Naked’s role is to help K-C and its agency partners identify the best communications channels it can leverage, to execute specific brand programs.

Agencies like Naked usually do not replace the client’s lineup of creative and media buying agencies. Instead, Naked works like a consulting firm, advising on how to best use the roster agencies. This may cut into the revenue of traditional agencies. Kimberly-Clark, for example, did not increase its ad agency budget in order to pay for Naked’s services. Instead, the company “reallocated the spending” according to Hedy Lukas, Vice President for Integrated Marketing at Kimberly-Clark.

Not long after Naked’s appointment came the announcement from Kimberley Clark that it had decided to move a quarter of its spending into non-traditional media.

Not something a “traditional lead agency” would be likely to recommend.

 

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Client Churn Causes 70% Of Ad Agencies To Miss Their Numbers!

August 24, 2009

miss their numbers final

If your agency has previously omitted preparing “Key Account Plans” as part of your overall agency growth strategy, these recent survey findings may convince you to do otherwise!  

In my recent national online survey (Ad Agency Business Growth Strategy Survey), I found that 57% of respondents admitted to having missed their financial numbers over the last three years due to an unexpected client loss. Another 12% claimed that while they had hit their goals, the client loss had significantly impacted their overall performance for the year.  

Based on in depth analysis of the survey information, I found conclusively that failure on the part of the agency to include “key client account plans” in their agency growth strategies, was a major contributing factor. Here are some additional findings and supporting details.

50% of total survey respondents indicated that they currently do not have “key Account Plans” in place for their top 5 agency clients. Interestingly, there is a very high correlation between these respondents and those agencies that indicated they had missed their numbers due to unexpected client churn. In fact, 87% of the respondents who said they did not have “Key Account Plans” for their top 5 clients, all had instances where they missed their financial numbers over the last 3 years!

Next, I took a deeper look at those respondents (62% of total sample) who answered yes to having clients within their agency that either run at a loss or alternatively break even at best. Just over 70% of this group also answered “no” to having key client plans in place.  

Finally, I took a look at the respondents (31% of total respondents) that answered affirmatively to having a nightmare client in the agency that their staff hates to work on. In this case, 84% of this group did not have key account plans in place for their top 5 clients.

These survey findings clearly indicate that, the omission of key client plans from an ad agency’s growth strategy can have a significant impact on its financial performance. Absence of these key client plans substantially increases the risk of the agency losing a key client, as well as increasing the incidence of poor performing clients within the agency client roster.

 If you really think about it, this should come as no surprise to any of us! In the absence of a plan how do we:

  • Plan and focus the resources needed to support our clients?
  • Consistently stay pro-active and deliver innovation?
  • Maintain client satisfaction levels, keep ahead in their category and deliver incremental value?
  • Plan and execute against organic growth targets and opportunities?
  • Integrate metrics, measurement and results into our work?
  • Optimize resource allocation and management. Making sure that we do not either under or over service the account?
  • Focus resources and effort in the areas that THE CLIENT deems of value versus what the agency values?

Bottom line! Client retention and churn management is without doubt one of, if not the most important pillar of any agency’s growth strategy. Unfortunately, most agencies do not allocate anywhere near as much focus and resources to it as they do new business. Many even overlook it altogether.

My 5 pillar agency growth strategy approach enables you to consistently deliver superior agency growth and profitability.

 

 

 

 

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What Sparks An Ad Agency Review?

August 14, 2009

Ad Agency review

The most feared event for every ad agency leader is that dreaded call from a key client, informing you that they have decided to put their advertising account into review. Behind the decision are normally numerous factors, some controllable from an agency perspective and some not.

If you have been following my blog, by now you will have heard me go on about minimizing client churn ad nauseam. That’s because I consider it, without doubt, one of the most important pillars in my “Five Pillar Agency Growth Strategy” approach. Churn has to be proactively managed and supported by robust “Key Account Strategies”.

Some of the causes that lead to a review are beyond the agency’s control. In such cases there is really nothing you can do to prevent it from happening. There are others though, that fall into the controllable category and can therefore be minimized or at least influenced by agency management.

Let’s start with some examples of the uncontrollable.

  • New CMO comes on Board
  • Client company merger or acquisition (change in control)
  • Global ad agency realignment
  • Disappointing business results
  • Geographic relocation
  • Term of contract expires and regulations require it to go out to tender
  • Unprofessional behavior on the part of a client or agency staff member.

Now let’s focus on some of those that are controllable.

  • Lack of pro-active thinking and fresh ideas
  • Lack of integration of ideas. The agency works in silos versus working for the greater benefit of the client/brand.
  • Lack luster work that fails to deliver the expected results.
  • Client driven by ROI, analytics and measurement, while the agency remains focused on creative, gut feel and fails to embrace metrics and measurement.
  • Excessive turnover within the account service team leading to client dissatisfaction.
  • The need for new or additional capabilities, channels or media that the agency is perceived to or does not have.
  • Disconnect between the brand strategy and the creative execution.
  • Perceived gap in the client/agency relationship from a price/value perspective.
  • Noticeable lack of innovation and innovative thinking around the brand.
  • Agency perceived as not flexible or agile enough.

Every one of the causes listed above can help trigger the decision to put the account up for review. The biggest contributor however, (although not always stated directly), is the clients perception that the agency does not share their worries and ultimately does not care if they succeed or not.

Leslie Winthrop from AAR Partners tells this amazing story about a client company that approached her about conducting an agency review for their advertising account. On further questioning the client told Leslie that they were happy with the work and results, liked the people and enjoyed working with them. Surprised by the answers Leslie asked why then did they want to hold a review? The clients answer was simply, “Because I do not think they share my worries and it does not appear to matter to them if I succeed or not. I feel that I am out there on my own.”

Makes you think doesn’t it?  

 

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Survey Finds Ad Agency Growth Strategies Missing Critical Elements

August 13, 2009

My recent survey, targeted at senior agency leadership of small to medium size agencies, found that many were missing critical elements required to deliver consistently superior results. Over two thirds of respondents disclosed that during the last three years, unexpected client turnover has caused them to miss their budgeted agency growth goals.

The purpose of the survey was to gain insight into:

  • What tools and approaches are currently being utilized to support agency business growth and profitability?
  • Do current agency business growth strategies address five specific growth pillars? (client retention, organic growth, new business development, resource management & optimization and new capability development and cross-sell)

The response profile was very interesting. 45% came from an Integrated Agency, 40% from Advertising Agencies, just under 7% from Interactive Agencies and nearly 9% from other. (Promotion, PR etc.) It was very surprising that not one response was received from a Direct Marketing Agency.

It is apparent from the survey results, that very few of the agencies who responded have a “Comprehensive Agency Growth Strategy Plan”. Most appear to be taking a more tactical approach, implementing various initiatives on an ad-hock basis, with little to no innovation. This appears to have resulted in inconsistent growth and erratic financial performance. The survey demonstrates clearly that when certain of the key elements of an agency growth strategy are omitted, (The 5 Key Pillars) it results in a direct negative impact on their ability to consistently deliver above average results.

Please take some time to review the survey detail. I am certain that you will find it very informative.

 

 

 

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Words of Wisdom from The Ad Agency Pitch Consultants

August 12, 2009

words of wisdom 2

The other day, I came across a collection of notes I had taken during various presentations, given by some of the top names amongst pitch consultants. The tips contained in them are as pertinent today as they were then, so I decided to aggregate a selection of them in one post and share them with all of you.

  • Think very carefully before deciding to defend when your client decides to put their account up for review. On average you have only a 1/18 chance of winning, so the odds are heavily weighted against you. (Dave Beals – Jones, Lundin, Beals)
  • If you believe that the client RFP is requesting excessive information, go ahead and push back, and submit what you are comfortable with. The most important thing you can do is look at the issues within the questions and adequately address them. ( Ann Billock – Ark Advisors)
  • Does size matter? It all depends. If the business being awarded is likely to overwhelm your agency, then yes it does. If the client needs an international network, yes. It’s about horses for courses. In some instances smaller can compete with big if they are able to leverage strategic partnerships. (Hasan Ramusevic – Hasan & Co.)
  • Every agency claims to have a proprietary process or philosophy. Bottom line is that there is just too much BS out there, as the agency world drinks its own Kool-Aid. Show them ideas backed by research and validate how you intend to produce results. (Lisa Colantuono – AAR Partners)
  • Do clients who ask for it really want and buy cutting edge work? Seldom does a counter a culture approach prevail. Ask more questions and try to validate their requests. If you are still unsure, then give them one of each so you are covered. (Ann Billock – Ark Advisors)
  •  Never stretch the truth when answering an RFP. If you feel that you have to in order to be competitive then pull out. Define what you cannot answer truthfully and ask the client or consultant why you were included on the list. It might be something specific you have that interests them, in which case focus there and leave out answers where you have to. (Lorraine Rojek – RCG Consulting)
  • How do we crack the clutter with our new business prospecting? The letter should address a specific challenge or opportunity. The supporting materials should do exactly that. Support the letter with a clear and consistent message based on actionable insights. The materials should also effectively differentiate your agency brand. Simple, easy to read and direct. No coffee table books, gimmicks or tchotchke! (Leslie Winthrop – AAR Partners)
  • Never include the prospects title in your new business materials unless you know it to be accurate. Titles change all the time and often many of the compiled lists are already out of date when you use them. (Cleve Langton – New Business 3.0)

Rocket science…No. Worth remembering…Yes

 

 

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Ad Agency Creativity to Cash Flow. What Clients Rate as Important

August 4, 2009

 

Blank freeway sign 1

Ad agencies often do not realize just how important it is to have a full understanding of both the client’s business and personal goals. This often results in wrong or inappropriate ideas and solutions, leading to lost opportunities with both existing and new business clients alike.

Too often I have seen client briefs or new business opportunities come into the agency and everybody immediately jumps straight into the assignment. Everyone forgets to take the time up front, to understand the broader business opportunity and corporate goals. I know that agencies are expected to address and execute against specific strategies, but each one of those is judged and measured against how it contributes to overall company success.

Recently, Click Z held their digital marketing summit in Seattle. Their three guest panelists shared extremely valuable client perspectives about what they look for and expect from a digital agency. The points they raised were refreshing and the issues covered could affect all agencies as they attempt to balance growing the business at the same time as nurturing client relationships.

The fours key insights highlighted by the panelists:

  • Understand the overall business opportunity. Panelists stressed the need for agencies to keep the larger goals in mind.
  • Play well together. Focus on the common good of the company/brand versus competing against one another.
  • Solutions should begin with a business insight. Too often agencies jump right into creative without having any actionable insights on which to base the work.
  • Never get complacent. Sure you did a good job yesterday, but what about tomorrow.

 The importance of understanding the individual client’s personal goals also cannot be over emphasized. Where did they come from? What is their current role and breadth of influence within the company? Who hired them? What is their support base within the company? Are they a turnaround expert charged with turning the brand around? Are they a “shiny” individual where ego and peer perception is of paramount importance?  What are their past achievements and what previous work was created under their leadership?

Answers to questions like these can have a marked influence on your approach to the assignment. So next time, before rushing head long into the specific client opportunity. Why not take a moment to think about the client’s broader business and personal goals and how they might affect your agency approach. I am certain that you will find it is time well spent through a noticeable improvement in your agency new business close ratio.

 

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