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Can do better: how clients want to improve agency performance measures
28/10/2011
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Clients spend a lot of time thinking about how best to measure the performance of their communications agencies. In Spring 2011, WFA conducted research to help members understand the broad trends shaping current business practices.
Conducted in May 2011, 42 companies took part in this global research, representing 14 different categories. The study is unique in that respondents are all global or regional client-side marketers from large multinationals, not SMEs.
Our research pointed to a performance gap in this area. Over 93% of respondents state that “Measuring Agency Performance is Important”, yet 85% do not score their performance in this area highly. No surprise then that 65% of respondents say they are considering making changes to the way they assess agency performance.
Below the line agencies not measured
Around 90% of respondents assess agency performance once or twice per year. However it is common (62% of cases) that this assessment varies depending on the type of agency in question. Digging deeper we see that often this means only the advertising and media agencies are getting formally evaluated, with other agencies not covered, even those with considerable spend such as digital. Notably, those not covered are often where the majority of spend and contracts are local, such as Events, PR etc.
Linking agency performance to business performance
Given the difficulty of linking a company's business performance (sales, volume growth, profit) with creative or media agency performance it is not surprising that “hard” measures are less common as agency metrics. Most common are the “soft” metrics that are more subjective (service delivery, budget management, collaboration). But there is a trend towards respondents linking hard measures to agency bonus payments - 67% of respondents do this and 10% are considering moving in this direction
How to weight the performance measures?
Often weighting the measures depends on the type of agency being assessed: the closer the agency service is to the end consumer the higher the share of hard and intermediate measures. For one member, there is more emphasis on hard metrics with media agencies, whereas for creative they are more evenly weighted. For another, only their media agencies have a bonus linked to performance, as the client feels only this type of agency service can be properly linked to business results.
Recommendations for change
The research shows that two important changes could be made to the way agency performance is assessed:
1. Assessments should not remain one-way (which it is in 55% of cases) but become a genuine 2-way approach where the client assesses the agency but also vice-versa.
2. Assessments should be accurately benchmarked to provide absolute as well as relative performance measures which are actionable and statistically robust. The survey data shows only 31% of cases where agency performance is externally benchmarked.
“We feel the agency performance review, and SRM as an overarching model, is one of the major improvement areas needed within our company.”
Global Marketing Procurement Director, Global FMCG company
WFA members can download the full results in our Global Knowledge Base. For further information please contact Steve Lightfoot [email protected]
Sign up to monthly WFA news
Conducted in May 2011, 42 companies took part in this global research, representing 14 different categories. The study is unique in that respondents are all global or regional client-side marketers from large multinationals, not SMEs.
Our research pointed to a performance gap in this area. Over 93% of respondents state that “Measuring Agency Performance is Important”, yet 85% do not score their performance in this area highly. No surprise then that 65% of respondents say they are considering making changes to the way they assess agency performance.
Below the line agencies not measured
Around 90% of respondents assess agency performance once or twice per year. However it is common (62% of cases) that this assessment varies depending on the type of agency in question. Digging deeper we see that often this means only the advertising and media agencies are getting formally evaluated, with other agencies not covered, even those with considerable spend such as digital. Notably, those not covered are often where the majority of spend and contracts are local, such as Events, PR etc.
Linking agency performance to business performance
Given the difficulty of linking a company's business performance (sales, volume growth, profit) with creative or media agency performance it is not surprising that “hard” measures are less common as agency metrics. Most common are the “soft” metrics that are more subjective (service delivery, budget management, collaboration). But there is a trend towards respondents linking hard measures to agency bonus payments - 67% of respondents do this and 10% are considering moving in this direction
How to weight the performance measures?
Often weighting the measures depends on the type of agency being assessed: the closer the agency service is to the end consumer the higher the share of hard and intermediate measures. For one member, there is more emphasis on hard metrics with media agencies, whereas for creative they are more evenly weighted. For another, only their media agencies have a bonus linked to performance, as the client feels only this type of agency service can be properly linked to business results.
Recommendations for change
The research shows that two important changes could be made to the way agency performance is assessed:
1. Assessments should not remain one-way (which it is in 55% of cases) but become a genuine 2-way approach where the client assesses the agency but also vice-versa.
2. Assessments should be accurately benchmarked to provide absolute as well as relative performance measures which are actionable and statistically robust. The survey data shows only 31% of cases where agency performance is externally benchmarked.
“We feel the agency performance review, and SRM as an overarching model, is one of the major improvement areas needed within our company.”
Global Marketing Procurement Director, Global FMCG company
WFA members can download the full results in our Global Knowledge Base. For further information please contact Steve Lightfoot [email protected]
Sign up to monthly WFA news
