Incentivising success...the way forward!
One of the hot topics that gets a good deal of airtime at conferences and in the trade press is the use of incentive-based payments when engaging advertising and media agencies.
Recently, in the US there has been some opposition to the use of incentives voiced by industry groups such as the 4As and some of the agency search consultants that operate in the market. Much of the concern from these parties is around the fairness of the process and stems from stories of agencies not getting paid what they feel they are owed. Whilst this should never be the outcome, there are many stories of successful use of incentives and I'd like to see more focus on these.
Part of the challenge originates from the lens that you view incentive payments through...procurement and search consultants don't tend to have the same starting point.
Procurement professionals are grounded in the ability to understand the commercial realities that agencies and clients are driven by as businesses. Key performance indicators, service level agreements and the like are our bread and butter. Using this standard procurement approach and tailoring it to the marketing spend category allows us to satisfy all three of our key stakeholders: Marketing, finance, and the agency
By utilizing a commercial mindset from the outset, we are able to ensure that the successful agency in any pitch is aligned with the client’s objectives throughout the business. Focusing on the agency’s unique ability to deliver from an advertising perspective is essential but having a keen eye on the fundamentals of a successful commercial relationship is just as important.
There is little benefit to anyone in finding an agency that meets the needs of only one set of stakeholders – that path leads to conflict from the start. Gone are the days when procurement blundered into marketing with a lack of knowledge of the category and a focus on cost alone. The transformation of marketing procurement has gathered pace over the past five years and we are now seeing many more procurement professionals (in-house or consultants) working hand in hand with their marketing stakeholders to support the delivery of great advertising for their brands.
For a long time clients have turned to search consultants when they were on the hunt for a new agency – I believe its time they started considering how procurement can approach the challenge and embracing the outcome of this change.
What's your thoughts on this topic?
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