Three pillars upon which CMOs can create a successful agency model

We are currently facing interesting times – consumers are beginning to rethink old patterns and reinvent themselves. We can see a shift in how people converse, socialize, communicate, and collaborate. A “new normal” is emerging that also impacts the way companies create value and communicate it to their customers. More than ever, companies need to provide Marketing@Scale that matches the changing media usage and communication style, as well as the interests and priorities of their customers.

As a result, marketing is becoming increasingly complex and requirements on the professionalism of service providers are growing accordingly. To ensure a rapid and direct exchange at expert level, closer cooperation between companies and agencies is necessary. A prerequisite for this is a cooperation model with dedicated roles and responsibilities that organizes the complex relationships between the marketing department and its agencies – a so-called agency model! We define an agency model as the cooperation between a client and one or more agencies.

However, collaboration with agencies often means the occurrence of well-known problems for CMOs. High coordination efforts and a lack of transparency about the agencies’ work processes often lead to more work and redundant responsibilities that go undetected for a long time. In addition, there are inefficiencies due to competitive mindsets and a culture of elbowing, which prevent synergies. Good ideas are reluctantly shared, and results received are subject to mandatory revision. All these factors mean strong cost drivers for CMOs. A revision of their agency model is therefore worthwhile.

An efficient and effective agency model is based on three elementary pillars:

• The strategy and value proposition
• Partner management
• The cooperation model.

The foundation of good cooperation is the strategic ambition and the definition of the required capabilities

The foundation for a successful agency model is the strategy and the value proposition of the desired collaboration. CMOs need to define what the strategic ambition of their agency model is, i.e. “What is the goal of collaboration with agencies?,” “What benefits can be achieved if external partners are involved instead of in-house capabilities?” Developing an agency model strategy not only helps operationalize the company’s goals, it also enables the right selection of partners that contribute to these goals.

Building on their strategy, a clear value proposition must be developed that describes how additional value can be created for customers. This value proposition must be broken down into value drivers that provide insight into the required capabilities, e.g., data collection, social listening, creative concepts. A capability map helps to reveal gaps and redundancies in the marketing department as well as the (existing or planned) agency model which can eventually help to identify synergy potentials between agencies.

Partner Management starts at the agency selection and reduces the ongoing management effort for CMOs 

Partner management represents the second pillar of the agency model and deals with the right selection of partners. CMOs must decide which type of agencies and what specific capabilities are needed to close the identified gaps in the capability map and to realize the established value proposition.

With the help of clear selection criteria, suitable agencies can be identified for the marketing organization and the task at hand. Moreover, technical skills and strategic considerations are relevant, such as the impact of potential partners on the company’s own market opportunities and customer loyalty. Since uniqueness is the most important factor in marketing, it makes sense to specifically consider working with partners beyond the traditional boundaries of the industry. This increases creativity and the ability to innovate.

In a volatile market environment, it is crucial to carefully plan firm and long-term alliances or joint ventures. This applies to the collaboration itself as well as the degree of partner involvement (e.g., in terms of the scope of contractual arrangements) and the level of involvement required (e.g., in terms of investments, specializations, and exclusivity). Accordingly, agency models need to be agile enough to foster shared growth and sufficiently cohesive to ensure quality and control.

There is a wide range of common constellations of commissioning parties, service providers, special agencies, and consultants, which are suitable depending on the complexity of the task and the maturity of the marketing department. The more complex the marketing task is, the more specialized agencies are needed for implementation. The maturity level of the marketing department determines the extent of specialization desired by the client and required for coordination.

A full-service agency, for example, is particularly well suited for young marketing teams with marketing tasks of limited complexity that are covered by a single agency through a total package. The full-service agency offers CMOs a broad portfolio of competencies and services which avoids the costly coordination of several agencies. In practice, such an agency model can be found at Pepsico, among others. Here, the entire digital media budget for the DACH region, including a data-driven analytics concept for measuring the success of campaigns, is covered by the agency pilot [1].

In contrast, the “Specialist Roster” is an agency model in which the client coordinates and manages several specialist agencies himself, each with specific areas of expertise. It allows CMOs to directly access the individual agencies, but also requires the necessary know-how for coordination. This model is therefore particularly suitable for highly professional marketing teams, such as the pharmaceutical group GlaxoSmithKline Consumer Healthcare (GSK) working with a total of nine agencies [2].

A new agency model is the “customized agency,” whereby an agency is set up exclusively for a single client. An example of this is the agency “The Game Group,” which is operated by Jung von Matt and Experience One, each with a 50% share. The Looping Group is an additional partner without ownership [3]. The advantage of this agency model is, on the one hand, the expertise of the large agencies and, on the other, exclusivity. Nevertheless, this format (just like an in-house agency) has the disadvantage of a lack of competition and consequently a lack of pressure to innovate. In terms of suitability, customized agencies can be ideally used by more experienced marketing departments for marketing tasks with limited complexity.

In addition to selecting the right agency model, building a long-term partnership requires an exchange that promises added value to all partners and thereby motivates a long-term existence of the alliance. CMOs must strike a balance between optimizing their own marketing performance through the agency model and the benefits to the participating agencies. This is not just about monetary concessions, but also includes benefits such as access to data, technology, and business opportunities. These considerations are important for both new and existing partnerships.

For an ideal collaboration model between agencies and marketing departments, the roles and processes of all partners must be clearly distributed

Once the right partners have been identified, they must be integrated seamlessly into the existing processes and structures of the marketing department. This includes not only the allocation of roles, but also the technical integration and cultural onboarding of partners. Since agency models should be designed for long-term (but scalable) partnerships, system interfaces to the MarTech landscape must be ensured, taking into account clearly defined access rights (e.g., via APIs, SDKs, OPCs). The definition of access rights should be aligned with the agency’s role in order to make sure that the respective technical competencies can be fully utilized to implement the assigned subtasks.

By establishing workflows, a lean management model can be created that clearly structures collaboration between agencies and facilitates agency management for CMOs. Processes play an important role here, in which agencies are integrated or which must be redefined according to the partner structure.

For higher-level integration of agencies, it is recommended to proceed according to the Minimal Viable Organization© method, in which the agency model is initially integrated for a dedicated pilot marketing task and the scope is successively expanded after successful evaluation including collected empirical values.

By consistently focusing on these three pillars, our experts support you in building your agency model, which allows you to efficiently manage your service providers and achieve Marketing@Scale.

The integration into your marketing processes will not only liberate your team from time-consuming tasks but will also enable them to develop content at high speed- in a professional and personalized way.

This blog post is with reference to Capgemini’s Connected Marketing offering.

Thanks to the author Laura Dahlhaus, Consultant for Brand & Experience at Capgemini Invent. Feel free to get in touch if you have any questions.

More information:

Pilot wins digital budget from Pepsico for the DACH region

Pharmaceutical company GSK selects nine global agencies

Jung von Matt and Liganova mother Experience One set up an exclusive agency for BMW

Author

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Laura Dahlhaus

Consultant for Brand & Experience at Capgemini Invent