Marketing organizations have been growing rapidly over the last decade to meet the changing demands of the market and their consumers. They’ve had to adopt new and quickly evolving channels and advanced technologies. As a result, they have been filling a lot of skill gaps by partnering with agency partners. And while marketers are always assessing the value and efficacy of their marketing initiatives, they rarely pause to evaluate their agency portfolios. If you can’t recall the last time you stopped to map out your agencies, their capabilities and scopes of work, you may be missing real cost savings opportunities and a chance to reimagine how your agency ecosystem can better serve your marketing needs.
Assessing your agency ecosystem
Your agency ecosystem refers to your full portfolio of agency partners and what they do for you, as well as how you work with them and why. Often, we see clients with an arsenal of agency partners. For some, marketers aren’t even sure what they are contracted to complete; they have bolted on agency after agency, year over year, to address short-term or reactive needs. At some point, marketers look up and realize they don’t have enough clarity around who does what, how much they’re spending, and whether their agency partners are even still meeting their business and brand objectives.
Does this sound familiar?
It’s easy to see why it happens. The rise of decentralized marketing functions certainly plays a role. Marketing managers of different specialties will hire and manage their preferred agencies, leaving agency governance at the whim of each manager and that leads to a lack of consistency. Add in rapidly changing customer sentiment and influence, emerging channels and technologies. Surprisingly quickly, you will have built a large, and potentially unwieldy agency portfolio in the quest to address all of these dynamics.
Marketing teams need an agency management strategy that defines working principles, maps agency capabilities, tracks scopes of work, defines onboarding and strategy briefing approaches, and establishes performance metrics,
As you look at your agency portfolio, you may be wondering:
- Is our particular mix of agencies meeting our needs? If not, what are we missing? Are there any redundancies we can trim? Gaps that need filling?
- How do we measure each agency’s performance? Are we focused only on external metrics, like leads, clicks, impressions, and the like? Or are we also paying attention to “softer” factors, like fiscal responsibility, responsiveness, creativity, and innovation?
- Is each agency’s scope still appropriate given our current needs?
Taking the time to create agency evaluation criteria is the only way to answer these (and other) important questions.
How to perform an agency portfolio optimization assessment
Assessing your ecosystem means more than just reviewing your agencies’ individual and collective performance. It’s about creating a strategy that enables you to manage your agency portfolio more effectively. By doing that, you can dramatically reduce your costs, improve your marketing ROI, and inspire the best work from each of your agency partners. Take the following steps to perform an agency portfolio optimization assessment.
- Identify the agencies in your ecosystem. The first step is to make sure you have a full understanding of all the agencies in your portfolio. Identify each of your agency partners and document their fees, current scope of work, and pinpoint their core competencies. Many agencies claim to “do it all,” but all agencies have strengths and weaknesses. Take note of agencies with overlapping capabilities and consider rationalizing if appropriate.
- Map capabilities to your objectives. Next, map your agencies’ capabilities to your current business and marketing goals. What are your biggest priorities? And to what extent do your agencies serve those objectives? Connecting your agencies’ capabilities to your most pressing priorities may reveal legacy engagements that no longer serve your true needs or uncover gaps in your agency mix that you may need to address with a new partner.
- Establish working principles. Your working principles are your organization’s core values related to how you partner with external agencies. Do you prefer to collaborate as partners to develop strategy? Or do you take a more directive approach, where your agencies are more executional? Is speed to market more important than being fiscally tight? How would you prefer to communicate and how often? By getting your entire marketing team aligned, you can ensure that your approach to partnering with agencies is consistent. In addition, working principles help your agencies understand your expectations and gives them a chance to adapt their approach to suit your needs.
- Document processes. If your marketing managers are individually in charge of managing agency relationships, you’re sure to find a wide range of approaches and processes. By centralizing and documenting common processes such as communication and document sharing platforms, project status and escalation points, and review and approval processes, you can streamline the way that everyone works with your partners, reducing duplicative work and gaining more resource and time efficiency.
- Build a formal performance evaluation process. Assessing your agency’s performance on a regular basis is the key to getting the best work out of your partners. Consider the following evaluation criteria, in addition to the external performance metrics of the campaigns or initiatives they build:
- Innovation and ‘out of the box’ thinking
- Industry and market knowledge
- Execution and project management
- Financial stewardship
- Strategic thinking and planning
- Communication and responsiveness
Use these agency “scorecards” to initiate an open dialogue about how your partners are performing and what they can do to improve their ratings. You can even use your performance evaluations as an incentive to expand their scope (for example, you might agree to increase their margin by 1% each year if they continue to perform).
- Rationalize and renegotiate. Finally, look for opportunities to rationalize agencies that are redundant, underperforming, or no longer serving your primary business objectives. And, consider renegotiating contracts with agencies you do continue to partner with – especially if their scope of work has inched up without revisiting your contract terms. It’s also a great time to re-engage all of your partners on any new strategic direction or guidance that may have developed since they came on board.
By gaining a holistic understanding of your agency ecosystem, you can build a more efficient and agile agency portfolio — and reap the rewards in the form of reduced spend, and higher returns on much more impactful work.