Presentation from Procurecon Marketing and Digital in London on June 3, 2014. Presented by Jason Heller. Digital is changing the way clients and agencies operate, and as a result, the approach to compensation and agency relationship and performance evaluation and management is changing as well. Marketing and procurement organizations take heed -- the most important challenges to solve for are within your own organization. As procurement identifies ways to truly engage and partner with marketing - earning a seat at the proverbial table, the matrix structure that allows close collaboration between the marketing procurement function (marketing investment manager) and the CMO, CIO and CFO is more important than ever. Beyond the organizational challenge, aligning on a combination of weighted KPI's is needed to facilitate proper evaluation and incentivize the best digital work from your agencies. Different contract terms are often necessary in digital to address growing data and technology needs as well as to encourage innovation and enable nimbleness. Digital has nuances and complexity, but not nearly the amount of complexity that the ecosystem would leave you to believe. Managing the digital marketing procurement process should not be taken lightly as it can unlock a significant amount of value.

1. Developing
Effec.ve
Compensa.on
and
Agency
Performance
Measurement
in
Digital
Jason
Heller
1
Confiden'al
June
3,
2014

2. § 20
year
digital
veteran
§ Agency
leadership
background
(knows
where
the
skeletons
are
buried)
§ Last
12
months
-­‐-­‐
involved
in
$500MM+
in
digital
agency
reviews,
compensa.on
structuring
,
and
media.on
§ Works
closely
with
enterprise
marke.ng
and
procurement
leadership
2
Why should we pay attention to Jason?

3. Confiden'al
3
Everyone
shares the
same pain and
frustration…

4. 4
How to wrangle the
complexity of digital
§ Are
we
inves.ng
properly?
§ Are
we
working
with
the
right
agencies?
§ Are
we
paying
the
right
rates?
§ Are
we
evalua.ng
the
right
metrics?
§ Are
we
moving
the
needle?

5. Today’s consumer is …
Connected
Empowered
Distracted

6. Confiden'al
6
Digital
marke.ng
is
equal
parts
Mad
Men
and
Minority
Report

7. Agencies have a big task
§ Beyond design, UX of everything
§ Creating great content, and a lot of it
§ Managing a complex media ecosystem
§ Providing advanced analytics and insights
§ Collaboration and playing nicely with others

8. Marketing procurement has an equally big task
§ Create a win-win relationship
§ Motivate agencies to do their best work
§ Unlock and create value – beyond cost savings
and cost avoidance
§ Create accountability within internal teams
§ Support internal stakeholders while developing
subject matter knowledge

9. 9

10. Marketers struggle with various levels of accountability
Quan.ta.ve
measures
Qualita.ve
measures
Performance
marke.ng
Difficult
to
.e
back
to
value
Easy
to
.e
back
to
value
CRM
Content
Website
Social
media
Mobile
apps
Mobile
adver.sing
Video
adver.sing
Brand
display
SEO
Social
listening
Crea.ve
CRM
Performance
marke.ng
Website
SEO
*
Not
exhaus've
Content
Social
media
Mobile
apps
Video
adver.sing
Brand
display
Social
listening

11. Digital requires both a quantitative and qualitative lens
Reach,
exposure
Engagement
Sales
/
ROI
Branding
effecDveness
CompeDDve
SOV,
social
buzz
Quan.ta.ve
measures
Qualita.ve
measures
Discoverability
Visibility

12. Your agency relationship toolkit
§ QualitaDve
review
of
performance
against
goals
§ IteraDve
strategy
reviews
§ SeOng
goals
for
the
following
quarter
§ Support
marketers
in
ways
that
they
cannot
support
themselves
§ DoRed
line
to
the
CMO
§ Internal
assessments
and
capability
development
§ Brands
evaluate
agency
§ Agency
evaluates
itself
§ Agency
evaluates
brands
Quarterly
Business
Reviews
(QBR)
Evalua.on
Scorecards
Marke.ng
engagement
A
FOUNDATION
OF
KNOWLEDGE:
Landscape,
best
prac.ces,
processes,
technology

13. Evaluating your agencies on traditional
quantitative measures alone is misguided
Quan.ta.ve
measures
Qualita.ve
measures
§ FTE
rates
and
alloca.on
§ Comparison
against
benchmarked
FTE
rates
§ Working
vs.
non-­‐working
media
spend
§ Analy.cs
output
§ Investment
performance
§ Account
leadership
and
strategy
§ Thought
leadership
and
innova.on
§ Crea.ve
and
technical
work
§ Staffing
appropriateness

14. Establish
goals
and
forecasts
14
Confiden'al
1
2
3
Review
performance
against
goals
and
benchmarks
Iterate
strategy
and
op.mize
marke.ng
investments
Enforce
a
simple
process

15. Develop a weighted scorecard
Account
leadership,
strategy
• Rank
each
criteria,
N/A=0,
1=Must
Improve,
2=Could
be
beRer,
3=Good,
4=
Very
Good,
5=Excellent
• Provide
raDonale
for
each
score
under
3
Thought
leadership
and
innovaDon
• Rank
each
criteria,
N/A=0,
1=Must
Improve,
2=Could
be
beRer,
3=Good,
4=
Very
Good,
5=Excellent
• Provide
raDonale
for
each
score
under
3
CreaDve
and
technical
work
• Rank
each
criteria,
N/A=0,
1=Must
Improve,
2=Could
be
beRer,
3=Good,
4=
Very
Good,
5=Excellent
• Provide
raDonale
for
each
score
under
3
Staffing
• Rank
each
criteria,
N/A=0,
1=Must
Improve,
2=Could
be
beRer,
3=Good,
4=
Very
Good,
5=Excellent
• Provide
raDonale
for
each
score
under
3
AnalyDcs
and
performance
• Rank
each
criteria,
N/A=0,
1=Must
Improve,
2=Could
be
beRer,
3=Good,
4=
Very
Good,
5=Excellent
• Provide
raDonale
for
each
score
under
3
Financial
• Rank
each
criteria,
N/A=0,
1=Must
Improve,
2=Could
be
beRer,
3=Good,
4=
Very
Good,
5=Excellent
• Provide
raDonale
for
each
score
under
3
Average
score
Weighted
score
Weight
Average
score
Weighted
score
Weight
Average
score
Weighted
score
Weight
Average
score
Weighted
score
Weight
Average
score
Weighted
score
Weight
Average
score
Weighted
score
Weight
Total
score

16. Understands
our
business,
brand(s),
culture,
our
category,
and
our
compeDtors
Communicates
clearly,
keeps
us
informed,
follows
up
thoroughly,
idenDfies
potenDal
issues
early,
and
limits
assumpDons
AnDcipates
our
needs
proacDvely
Account
leaders
are
advocates
and
stewards
for
our
brands
within
the
agency
and
the
market
Manages
Dmelines,
provides
adequate
Dme
for
internal
coordinaDon,
and
delivers
commiRed
work
on
Dme
UDlizes
a
project
management
system,
which
we
have
access
to
and
it
is
easy
to
use
RecepDve
to
and
follows
our
feedback
and
direcDon
Challenges
us
when
needed
Challenges
and
quesDons
their
internal
teams
to
drive
performance
UDlizes
our
Dme
and
their
Dme
effecDvely
and
producDvely
Develops
and
iterates
effecDve
digital
strategies
for
our
brand(s)
Collaborates
producDvely
with
our
other
agencies
Manages
problems
and
difficult
situaDons
swidly
and
effecDvely
Account
leadership,
strategy,
project
management
Sample criteria …

17. Agency
evaluates
client
Briefs
clearly
define
projects,
objecDves
and
definiDons
of
success
ExpectaDons
are
reasonably
aligned
with
budget
levels
Use
our
Dme/resources
well
Leverage
our
thought
leadership
and
POV's
Provide
clear
feedback,
and
follow
planned
iteraDon
cycles
Sets
reasonable
due
dates
giving
agency
adequate
Dme
to
deploy
its
best
resources;
if
deadlines
are
Dght,
explains
why
and
works
with
team
to
agree
to
feasible
deliverables
within
compressed
Dmeframe
Regularly
share
business
info,
company
prioriDes,
challenges,
trends,
insights
or
other
informaDon
that
can
help
us
Decision
making
process
is
streamlined
and
effecDve
Has
the
bandwidth
to
coordinate
effecDvely
internally
and
externally
to
move
projects
along
Educated
on
digital
topics
and
stays
up
to
date
on
trends,
and
can
effecDvely
collaborate
with
us
to
develop
best
in
class
digital
programs
Raise
issues
to
senior
management
when
appropriate
Appropriate
and
acceptable
turnaround
Dme
on
decisions
and
approvals
Treat
us
like
partners
Fair
aOtude
when
things
go
wrong;
displays
flexibility
and
understanding
when
problems
arise
Pays
us
on
Dme
Team
is
treated
well
and
enjoys
working
on
the
account
Top
talent
asks
to
work
on
our
account
Sample agency 360 evaluation criteria

18. 18
Confiden'al
§ Where
does
the
agency
excel?
What
should
the
agency
conDnue
to
do
in
terms
of
how
they
manage
the
relaDonship?
§ How
can
we
challenge
the
agency
to
improve
this
even
further?
Con.nue
1.
________________________
__________________________
__________________________
__________________________
2.
________________________
__________________________
__________________________
__________________________
3.
________________________
__________________________
__________________________
__________________________
Con.nue

19. 19
Confiden'al
§ What
should
the
agency
start
doing
that
they
are
not
currently?
§ Where
are
there
gaps
in
how
the
agency
manages
the
relaDonship
and/or
your
investments?
Start
1.
________________________
__________________________
__________________________
__________________________
2.
________________________
__________________________
__________________________
__________________________
3.
________________________
__________________________
__________________________
__________________________
Start

20. 20
Confiden'al
§ What
does
the
agency
need
to
stop
doing?
§ What
are
the
sore
spots
or
negaDve
factors
in
how
the
agency
is
managing
the
relaDonship
and/or
investments
that
need
to
change?
Stop
1.
________________________
__________________________
__________________________
__________________________
2.
________________________
__________________________
__________________________
__________________________
3.
________________________
__________________________
__________________________
__________________________
Stop

21. § FTE
+
Overhead
+
Profit
model
provides
transparency
and
a
founda.on
for
a
successful
rela.onship
§ Review
FTE
proposals
and
scope
of
work
very
carefully
§ Never
accept
“zero
margin”
21
Negotiating agency compensation and contracts

22.
§ Include
risk/reward
bonus
structures
where
appropriate
§ Analyze
overhead
costs;
expect
overhead
to
be
close
to
100%
of
FTE
costs
§ Profit
margins
range
from
~10%-­‐20%,
depending
on
scale
and
scope
22
Negotiating agency compensation and contracts

23. § Ownership
of
work
and
source
files
§ Ownership
of
all
data
§ Pass-­‐through
of
all
discounts
and
rebates
§ Full
transparency
on
net
costs
§ Monthly
reconcilia.on
/
burn
repor.ng
for
retainers
§ Acceptance
clause
§ Address
approach
to
staffing
shiis
23
Contracts: general digital nuances

24. § Iden.fy
as
much
of
the
tech
stack
as
possible
going
in
§ Direct
contracts
with
key
marke.ng
technology
plajorms
§ Nego.ate
an
extension
of
agency
rates
where
possible
§ Agency
to
manage
use
of
plajorms
24
Contracts: marketing technologies

25. Consolidation vs. diversity in your agency portfolio
▪ Where
scale
creates
aggregate
data
opportuni.es
▪ Eg:
Media,
Social
media,
CRM
▪ The
same
digital
fundamentals
services
are
managed
and
produced
across
mul.ple
agencies
▪ Front-­‐end
producDon
▪ Social
community
management
▪ Marke.ng
technology
categories
with
minimal
differences
or
clear
market
leaders
When
to
consider
consolida.on
When
to
consider
diversifica.on
▪ Specialized
capabili.es
that
require
best-­‐in-­‐class
specialists
▪ Crea.ve
vision
varies
from
agency
to
agency,
and
diversity
allows
for
the
development
of
unique
brands
and
campaigns
▪ Some.mes
smaller
and
more
nimble
agencies
can
provide
services
at
lower
costs

26. Confiden'al
26
Structuring
resources
to
maximise
output
in
the
digital
area
–
SEO,
social
media,
apps,
mobile
–how
much
investment
should
go
where?
How will we maximize the output of digital spending?
§ Develop
subject
maler
knowledge
§ Collaborate
with
marke.ng
§ Help
support
rigorous
data-­‐driven
decision
making
§ Establish
goals
§ Review,
evaluate,
and
iterate
frequently

27. Thank
you
for
listening!
You
have
a
lot
of
work
ahead
of
you.
Jason
Heller
27
Confiden'al
jason@agiliDpartners.com
@jasonheller