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Tips on managing global agency rosters
30/11/2012
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WFA has conducted a survey within its global network of marketing, media and procurement professionals on how companies manage their global agency rosters.
25 companies took part in this global research, representing 11 different categories. Whilst results are not statistically relevant, they are indicative of the thoughts and actions of global multinationals within WFA membership.
Below are some further observations on different segments of those supplier rosters, as well as some recommendations for companies embarking on roster consolidation.
Media agencies
Around half the respondents have between 2-5 media agencies running their business globally, not surprising given the use of large agency networks by many WFA members. However, clearly very different strategies are being employed: some respondents spending in excess of $1 billion on global marketing and media are highly centralised with one supplier. Conversely, two respondents who have a comparatively low spend (less than $200 million) are using upwards of 6 agencies globally, suggesting that they could benefit from consolidation.
Creative agencies
Globally, the cut off seems to be at around 15 creative agencies. Very few respondents are using more than this number. But as always, different business strategies are at play, and so it is not uncommon for companies with highly diversified brand portfolios to have very large creative agency rosters (in excess of 50 agencies).
Digital agencies
As expected, the nature of digital supply chains means that several respondents (with varying levels of marketing and media spend) are using in excess of 100 digital agencies globally. Although one might expect lower spending respondents to be using fewer digital suppliers, given the likelihood that their spend is more concentrated due to their business presence in fewer markets, we have found that a handful that are spending less than $200 million globally still have over 20 digital agencies managing their business. In parallel, those spending more than $800 million globally and with a bigger justification for examination of this spend frequently have larger supply chains of over 100 digital agencies. It is clear that digital rosters are one area where roster consolidation or spend concentration may help drive process management (and cost) efficiencies.
Recommendations for managing supplier numbers via consolidation
- Efficient collaboration between marketing and purchasing, and if possible the formulation of a jointly owned agency roster consolidation strategy/team.
- Focus on largest spend to deliver the biggest savings, and look for where suppliers are really able to deliver down to market level.
- Using bundling programs to see where spend can be consolidated using competences or capabilities that exist in suppliers that may be currently untapped.
- Start with the big global/regional brands first to make transitions more logical (if they are managed centrally/regionally). Also generates success stories internally.
- Define success. What is the project goal? To generate cost savings? To maintain delivery quality of relevant global communications? To reduce the number of suppliers? Ultimately any project in this sphere should be about driving cost competitiveness on a multi-market and macro scale.
This research was conducted in response to a member request. WFA members request a copy of the full results. For more information please contact Steve Lightfoot [email protected]
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25 companies took part in this global research, representing 11 different categories. Whilst results are not statistically relevant, they are indicative of the thoughts and actions of global multinationals within WFA membership.
Below are some further observations on different segments of those supplier rosters, as well as some recommendations for companies embarking on roster consolidation.
Media agencies
Around half the respondents have between 2-5 media agencies running their business globally, not surprising given the use of large agency networks by many WFA members. However, clearly very different strategies are being employed: some respondents spending in excess of $1 billion on global marketing and media are highly centralised with one supplier. Conversely, two respondents who have a comparatively low spend (less than $200 million) are using upwards of 6 agencies globally, suggesting that they could benefit from consolidation.
Creative agencies
Globally, the cut off seems to be at around 15 creative agencies. Very few respondents are using more than this number. But as always, different business strategies are at play, and so it is not uncommon for companies with highly diversified brand portfolios to have very large creative agency rosters (in excess of 50 agencies).
Digital agencies
As expected, the nature of digital supply chains means that several respondents (with varying levels of marketing and media spend) are using in excess of 100 digital agencies globally. Although one might expect lower spending respondents to be using fewer digital suppliers, given the likelihood that their spend is more concentrated due to their business presence in fewer markets, we have found that a handful that are spending less than $200 million globally still have over 20 digital agencies managing their business. In parallel, those spending more than $800 million globally and with a bigger justification for examination of this spend frequently have larger supply chains of over 100 digital agencies. It is clear that digital rosters are one area where roster consolidation or spend concentration may help drive process management (and cost) efficiencies.
Recommendations for managing supplier numbers via consolidation
- Efficient collaboration between marketing and purchasing, and if possible the formulation of a jointly owned agency roster consolidation strategy/team.
- Focus on largest spend to deliver the biggest savings, and look for where suppliers are really able to deliver down to market level.
- Using bundling programs to see where spend can be consolidated using competences or capabilities that exist in suppliers that may be currently untapped.
- Start with the big global/regional brands first to make transitions more logical (if they are managed centrally/regionally). Also generates success stories internally.
- Define success. What is the project goal? To generate cost savings? To maintain delivery quality of relevant global communications? To reduce the number of suppliers? Ultimately any project in this sphere should be about driving cost competitiveness on a multi-market and macro scale.
This research was conducted in response to a member request. WFA members request a copy of the full results. For more information please contact Steve Lightfoot [email protected]
Sign up to monthly WFA news
