Are You Maximizing the Value of Your Investment in Agency Partners?

In a rapidly evolving marketing landscape and a tight talent market, many organizations rely on agency partners to bolster their marketing efforts. However, few organizations have a well-defined agency strategy that dictates when and how they select agency partners or the optimal type and mix of partners. Further, marketing teams need a clear operating model for how they work with agencies and how agencies work with each other. This ensures that marketing efforts are orchestrated across multiple channels and audiences and that marketing investment is being driven to the most impactful efforts.

Lack of a Deliberate Agency Engagement Strategy

Without a clear plan, companies often approach agency relationships on an ad-hoc basis, leading to inconsistent and inefficient outcomes. A well-defined strategy should establish criteria for selecting the right partners, outline the specific roles and responsibilities of agencies, and identify key performance indicators.

During my time as a CMO, I asked myself a series of questions when approaching a potential agency engagement:

1. Is the function critically important to my marketing objectives and business strategy?
2. How available is talent in the marketplace, and at what price point?
3. Is this type of work going to be repeated and ongoing, or will there be significant volatility in demand?
4. Do the necessary internal processes and technology exist to support an in-sourced model?

I used these questions to understand the trade-offs of developing and managing an internal capability versus outsourcing the work to an agency partner. After going through this process, if we decided that an agency partner was appropriate, we leveraged a simple framework for evaluating potential partners:

• Relevant industry experience
• Size and scale of team and capabilities
• Perceived speed to market
• Cultural Fit
• Cost

We placed a relatively high premium on finding a partner that fit us culturally and could deliver the right level of quality and cost.

More Isn’t Always More

Adding more agency partners, particularly specialty firms, may seem like an opportunity to get deep, specialized knowledge and experience. And while that may be true, adding to your agency roster comes with inherent challenges. First, you are paying for overhead multiple times as each agency has its own support teams and processes, such as billing, that will be duplicative. Further, as you add more partners, the cost of integration becomes higher and has to fall to either a lead agency or your internal team. Often, internal teams lack the bandwidth or skill to effectively integrate multiple partners, leading to sub-optimal results.

So, how do you decide when you should add another partner? While there is no single formula or rule, here are some things to consider:

1. How much of my budget do I expect to allocate to that particular partner?
2. Are there specific improvements in KPIs that are expected for leveraging a specialty agency? Does that improvement offset any expected increase in cost?
3. How will adding another agency partner impact your current team’s energy map, and will you have to add new talent or deprioritize other efforts to manage a new relationship?

In my experience, it is easy to overestimate the benefit while downplaying the cost, leading to a proliferation of partners.

Poorly Designed Operating Models

Agency partnerships run best when there is a well-understood set of expectations on how the partnership is going to work. This includes basic guidelines around status meetings, reporting cadence, scoping documents, business reviews, etc. This clarity reduces misunderstandings between the team and agency partners while making it easier and quicker to onboard new teammates. Establishing a single project management tool and method for initiating, routing, and deploying work will help streamline working with external partners.

If you decide to have multiple agency partners, it is important to establish expectations of how you will collaborate between agencies and whether or not these agencies will work directly with each other. In my experience, we encouraged partners to work with each other on specific integration efforts and to ensure that the brand is being articulated consistently across channels and that we are maximizing the value of our investment. To make this work, we gave our agency partners clear direction on when and how we wanted this collaboration to occur and monitored over time to ensure those expectations were being met. Just remember, these agencies are potential competitors, and there may be some resistance to collaborating directly and providing necessary transparency.

Conclusion

A well-defined agency strategy can improve speed to market, reduce non-working costs, and create greater impact through integrated marketing efforts. In addition, it will make it a more enjoyable experience for both parties and create a durable partnership.