Consultants Rising

How Agency Management & Search Consultants Are Helping Marketers Navigate Today’s Global Decisions Plus Consultants’ Views of Where the Industry is Headed

"Using a search consultant may not be perfect but it is the most accurate and documented way to select an agency. On top of having a strong experience of the business, I cannot see any other third party that spends its days learning about agencies. Procurement brings a unique expertise in negotiating the value, but great Advertising is about cultural fit and the right expertise. The winning card is when Procurement and Search Consultants cooperate."

Herve DeClerck, Founder — AdForum

A few months ago, just 33 Agency Management and Search Consultants from around the world

gathered in New York for the 9th Annual AdForum CEO Summit. The participating consultants

represented more than 350 agency searches over the past year or the equivalent of $5 billion in billings

from marketers around the globe looking to find agencies with the right chemistry for their needs.

The Consultants spent a full week meeting with top executives from two dozen ad agencies—from

global networks to creative boutiques to specialist shops for digital strategy or media solutions. Each

Agency CEO presented views of a changing marketplace and how their shop was responding with

better client solutions. Designed to highlight the expanded roles agencies now play for marketers, the

CEO Summit offered a dizzying array of ideas and new thinking.

FEEDBACK ON SEARCH CONSULTANTS

There are no bodies to regulate the performance or behavior of Agency Management and Search Consultants, and there is little research on their effectiveness. Nonetheless, both the ANA (Association of National Advertisers) and the AAAA (American Association of Advertising Agencies) in the US offer “Rules of the Road” for Agency Consultants. Those details can be found here http://www2.aaaa.org/pubs/position/Pages/120600_rules.aspx

The AAAA also provides a 2009 study on its website by Mirren Business Development (a New Business Training & Recruiting Specialist). Mirren asked 108 ad agencies to evaluate Search Consultants in an online survey in order to provide feedback and dialogue between agencies and consultants.

The study’s introduction spells out the details:

» “Agency Search Consultants play an important role in the world of new business. Part of their goal is to bring order to the process of selecting the best agency to accomplish the objectives at hand.

» However, as their influence impacts billions of dollars in new business every year, it also impacts a tremendous amount of agency resources. As agencies attempt to capture some of this shifting business, they invest their hard-earned time, money and morale.

» As an agency, you know this. You've invested resources staying top of mind, completing their database profiles, responding to RFIs, making capabilities presentations and ultimately making final pitch presentations. Each step of the way, you've experienced intense scrutiny and evaluation.

» Well, now it's time for you to evaluate the Search Consultants.”

Key Trends

Here are some of the key trends that agencies noted as it relates to Search Consultants and new business:

» There are more client-run reviews (less Search Consultants), particularly with procurement becoming more involved.

» There is more review process, and within shorter timelines: “less respect for agency resources.”

» There is a growing lack of client boundaries: clients asking for more throughout the pitch process and then ultimately asking for more work for a smaller fee.

» By making everything so process-oriented, Search Consultants are contributing to agency commoditization.

» More agencies feel obligated to pay for Search Consultant services.

» There are more cattle calls: too many agencies invited to each review. While all agencies take new business very seriously, the week also underscored the importance of communicating new strategies to an elite consultant community.

As a result, The Internationalist saw this as a perfect time to explore the expanded role that Agency Management and Search Consultants now play in influencing how global marketers best allocate their budgets across an expanding mosaic of agency services.Despite some of the issues that arise from the involvement of procurement departments, an increasing number of clients are finding that their best insurance in making the right agency decisions in today’s complex and specialized world is working with consultants who help them navigate choices, trends and best practices.

We surveyed twenty leading, internationally-conversant agency consultants based in the US, the UK, France, Spain, Australia and China who represent work in nearly 100 countries. With five open-ended questions, our goal was to gauge their views on where our industry is headed and why their services are now critical to marketing’s top management. Those questioned included:

1. Are Agency Management and Search Consultants Entering Their Prime Now?

2. How have the responsibilities of CMOs changed so that consultants are becoming a more important answer to their needs?

3. Where do you see the Marketing & Advertising Industry Going?

4. How do you see the role of the agency consultant evolving globally over the next 3-5 years?

5. As a corporation’s procurement department increases its involvement in advertising is there potential for

understanding, cooperation and respect for the value a consultant offers? 

The majority of the consultants surveyed are not only involved in Agency Reviews, but also Agency Relationship Management, Global Agency Management, Compensation and Contracts and Mergers & Acquisitions.

Are Agency Management and Search Consultants Entering Their Prime Now?

Although a number of agency consultants have been around since the 1970’s, several major trends are occurring that underscore how management and search consultants are now playing a larger role in a more global, yet communication fractured world.

» Marketing is becoming more complex.

» Marketing teams are leaner at a time when they are charged with more responsibilities. As a result, there is a greater need to outsource.

» The year-round offerings of major consultants are growing in sophistication.

Joanne Davis of Joanne Davis Consulting in New York and part of SCAN International acknowledges that “Many clients know that everyone can’t be expert in everything. Clients are experts in marketing; procurement executives are experts in procurement. Agency consultants are experts in agencies. We speak agencies as a first language, and clients look to us as SMEs (Subject Matter Experts) for our fluency in agencies.”

She adds that “Client-side companies are trying to do more with less don’t have the time to be current on all the changes happening with agencies, especially on a global basis. There are new agencies and new offerings every day, and consultants spend time learning and meeting with hundreds of new agencies ofll different types each year.”

Darren Wooley of Trinity P3 in Australia suggests that “Just as the marketing landscape has become increasingly complex, the requirements of service providers are also becoming increasingly complex. Consultants have become more important in offering a market view of solutions to this complexity.” “After all,” says Wooley, “most consultants will work across multiple categories and across multiple brands in each category. They gather a view of what is working, as well as what is not working from a local, regional and global perspective. This is a valuable insight as many marketers will often only have experience within their category or within their company without the wider outlook a consultant provides.”

Ann Billock of Ark Advisors in New York sees the roles of consultants as “iterative. ”She explains: “We keep learning and getting better. Certainly the volume of searches is continuing to grow, but there are many other areas where we offer help by genuinely fulfilling the role of advisors.” Her colleague, Ken Robinson, also of Ark Advisors in New York, adds: “We are become more valuable partners especially at a time when many marketers have lost part of their team to the recession. Few can afford to manage a process like an agency review that’s both time consuming and involves great intellectual capital, particularly in our current environment with higher standards of due diligence.”

Florence Garnier of Marketing Efficiency in France believes the consultants are increasingly sought because “a new generation of consultants is now operating with a better knowledge of new technologies and market complexities.” She also recognizes that two polar trends have lead to a greater reliance on consultants.

The effect of more communications channels and more specialist agencies is exacerbated by slimmer marketing teams under greater budget pressure. This creates opportunities for experts.

David Wethey of London-based Agency Assessments notes he started in 1988 with the first consulting model based entirely on funding by the clients whocommissioned the pitches, rather then relying on agency registration fees or success fees. Wethey feels that consultants play no different a role today than they have done in past decades. He reminds us that Al Achenbaum of Kantor Achenbaum invented the client-side consultancy in New York around 1973 and Lyndy Payne launched AAR in London around 1978.

Stuart Pocock of The Observatory in London is another veteran of the agency consulting business and agrees with David Wethey’s viewpoint. “There are a number of very established consultants around who have being doing this for over 20 years. I think there has been a sudden growth of consultants indeveloped markets (which has perhaps created a sense of greater visibility) formed by either people leaving existing consultancies to start their own, or by ex-agency staffers of a certain age who see this as a business opportunity. Not all are equipped to deliver A+ service.”

Yet, Stuart Pocock notes, “We've found with our APAC, Africa and Eastern Europe offices that there is a genuine need in these markets and a real desire by clients to learn best practice and adopt it accordingly.”

How have the responsibilities of CMOs changed so that consultants are becoming a more important answer to their needs?

Jeff Estok of Navigare in Australia believes that “Three of the biggest challenges facing CMOs are issues of ROI; Transparency; and Governance.”

He explains: “Client organizations and CFOs, in particular, are pressuring CMOs to deliver greater ROI. CMOs are focusing on all areas of marketing spend, including agency remuneration. Agency fees can account for up to 20% of a client’s total spend with an agency, yet all too frequently are not measured to the same degree as, say, their media spend. Clients are increasingly using Partner Engagement Programs to derive better ROI and ROE (Return On Effort) from their service providers.

Agencies, too, are putting pressure on CMOs in terms of transparency and governance. Even with self-managed pitches, the trend is toward retaining consultants that offer software-enabled ‘scrutinizing’ services to ensure that the pitch process is fair and objective, and avoids any potential for damage to the client’s reputation. Similarly, with existing relationships, agencies are demanding less subjectivity, and greater transparency, in relation to the achievement of their PBR metrics. Consultants play a valuable role here as well, in terms of transparency and governance.”

Darren Wooley of Trinity P3 in Australia finds that “CMOs are increasingly focused on the delivery of a measurably effective and coordinated marketing plan across multiple disparate markets. With this increasing focus on ROI the role of consultants is “Marketers are charged with building brands NOW — not over time — in an environment that stresses increased sales TODAY. Working in “real time”with accelerated decision-making and instant data feedback demands that a smart marketer execute and evaluate simultaneously in a world that demands immediate responses.

This is best illustrated by an example. Darren Wooley explains, “I was recently discussing the service provider portfolio with a CMO in Asia who initially felt he had 3 agencies on his roster-- immediately thinking of his regionally-aligned media and two creative agencies. Within a few minutes of discussion we had mapped that he engaged 12 companies across digital services, retail, PR and the like-- and that was just in China alone. Across the region he had more than 50 agencies working on one brand. How does this happen? It is because service providers are often added on a needs or ad-hoc basis and not in response to a strategic plan. Many marketers will align their media agencies for the buying power and alignment, and then have a web of content providers-- becoming bogged down in trying to manage and align them. This is where consultants offer maximum value due to their independence, their expansive view of the marketplace and their deep understanding of the marketing–agency process and potential.”

Stuart Pocock of The Observatory in London puts a marketer’s division of work-time into perspective: “Agencies fail to understand that most senior Marketers dedicate less then 10% of their time on Agency Matters, and most will be dealing with multiple Marcomms suppliers-- so many will not get that much attention! Agencies always believe that the client fraternity has an outstanding understanding of the Agency landscape. In truth, very few do. They have a day job, and are less than inclined to focus on what the Agency world is up to. That's why they need consultants to guide them through the Agency jungle.”

Where do you see the Marketing & Advertising Industry Going?

The answers to this question may be among the most interesting in the series, especially when one views consultants as key to understanding marketer needs and agency deliverables. In doing so, they also recognize the importance of organizational structure.

A majority of consultants discussed issues of agency re-bundling as a critical area of concern; not all thought that we’ll see an exact return to past agency structure, but certainly better collaboration among specialist areas is crucial. Others talked about the effects of today’s digital world on agencies — not only in terms of metrics and the potential of technology, but in terms of creativity.

ArkAdvisors’ Ann Billock agrees. She has noticed that media agencies can be quite creative when they pitch on their own “When we have joint reviews with both creative and media agencies, we notice that the creativity of the media agency can be stifled. The creative agency still believes it owns the creative idea.” Ann predicts that creative and media will stay separate, although general agencies will do more to be better integrated. Ken Robinson of ArkAdvisors says that he sees more independent start-ups. “Highly sought-after creatives are going out on their own again. This is a sign that that the industry is doing better and it can support more independent shops.”

“There is no doubt that there is a blurring of the lines, as well as a move ‘forward to the past,’’ says Jeff Estok of Australia’s Navigare. “After almost a decade of focus on‘channel’—the separation of media from creative; an emphasis on channel planning; and the proliferation of specialist business units; many Agencies have come full circle, and offer a one-stop, through the line solution.”

He continues, “At the recent B&T Agency of the Year Awards here in Australia, ‘traditional’ Agencies were finalists in the specialist categories of DM Agency; Promotional Agency; and Experiential Agency of the Year; and won for Interactive Agency; and Best Digital Campaign. 

This blurring of the lines increases the complexity of Agency portfolio management for the CMO, and demands that Clients and Agencies embrace a culture of collaboration.”

Estok sees another major trend emerging from this new collaborative spirit. “Clients want to leverage the intellectual capital residing within their Agency roster, and tap into it for the greater good of their business. Collaboration requires Agencies to focus more on the sharing of inputs, and often times collectively co-creating outputs—a significant organizational, cultural, and behavioral change for the industry. This concept is foreign to Agencies, as they see each other as competitors. But as Clients demand more collaborative behavior, Agencies are going to have to learn how to play nicely with each other.”

Partners Greg Paull and Dave Beals of R3:JLB agree that “There's going to be more and more demand on accountability, particularly as the digital environment offers more metrics than ever before. Contrary to this, there's also going to be additional pressure on creativity-- as consumers become more time poor and bombarded with messages. So the lookout will always be on agencies that balance and deliver both.”

Agency Assessements’ David Wethey offers a broad outlook: “Fragmentation is the name of the game. Specialist agencies of all types spring up all the time. And there will be more. That’s not to say that established players won’t be offering integration and one-stop shopping across all frontiers.” He adds that he finds digital really interesting. “The Digital Agency, I think, will be a tautology [an unnecessary repetition] within a few short years. It’s going to be tough for these agencies, unless they are really good or differentiated. The real test is going to be the durability — or otherwise — of the holding group model. Provided they carry on growing and showing good profits, there will be endless opportunities for independents to cash in their chips.”

Joanne Davis also believes this to be true. “We will see new start up specialists for new digital applications and when they reach a critical mass, the holding companies will buy them or build them.” On another note, she adds, “We expect to see production decoupling so lower value work can be more economically managed in lower cost markets with educated, tech savvy talent like India, Moriches, Costa Rica, etc., especiallyfor multi-nationals with needs for translations/transcreation.”

Avi Dan offers his perspective on one of the most sweeping issues ahead. “There's a lot of talk about ‘ideas’ or ‘digital vs. traditional’ and ‘ROI,’ but I think that the biggest problem for agencies, especially the big, holding company ones, is financial. Accelerated pressures will reshape the agency landscape.”

“During the recession,” he points out, “the 100 top advertisers maintained their margin, while their agencies lost 2 points to 10.5%. (Note: Ten years ago, agencies posted margins of 16-17%.) Performance-based compensation, already implemented by the likes of Procter & Gamble and Coca-Cola, will further erode agency profitability. This will have dire implications for the kind of talent agency hire and how much they can invest in training. It will also have implications for the number of offices around the world an agency maintains. Especially with today's technology, more would move to a hub structure, driving savings by abandoning unnecessary real estate.”

How do you see the role of the agency consultant evolving globally over the next 3-5 years?

Agency Management and Search Consultants agree on two main issues as they

look to the future:

1. They must become increasingly global in their perspectives and their offerings

2. There are significant advisory needs to be filled beyond agency reviews and

searches.

The global theme was specifically mentioned by several consultants. When referring to the near future, Dave Beals said, “We will have more stakeholders within companies to work with – from procurement to finance and digital teams. And increasingly, we will need to be more global. That's why we merged with R3 this year to create R3:JLB, and we're both now investing together in a global consulting solution.”

Marketing Efficiency’s Florence Garnier notes that today’s clients seek greater cooperation as they recognize how they need the global vision supported by the holding companies as well as skilled local agencies conversant in new technologies.

Stuart Pocock, whose London company, The Observatory, is part of Roth Observatory International, raises an interesting issue. “The problem is there are few truly Global Consultants. There are those who will take on Global assignments, but who do not have the true insight into 'local markets'-- and that can be to the Marketers detriment in the long term. Some consultants purport to have multi-country links, but these are all very loose and generally a collection of people doing their own thing in market and doing it differently.

We set up our global network so you get the same product, quality of insight and proprietary metrics regardless of which of our offices you're dealing with. Unless Consultants are prepared to invest heavily in developing a true Global offering with all that entails, the Global consultant offering will not materialize.”

Yet, she also adds that some of her proudest consulting work has been saving

client-agency relationships. “We’ll see more consulting firms embrace a model of

specialized consulting rather than just offering agency reviews.”

Avi Dan says it in a slightly different way. “With CMOs becoming more concerned with the complexity of managing their global advertising assets, consultants will be asked to go beyond search and devise an architecture for collaboration. Specifically, CMOs will look at consultants to go beyond subject matter involvement in their business, to an on-going broad leadership role with the agencies, ensuring collaboration.”

Both Jeff Estok and Cam Carter of Navigare would agree. “Our business has seen tremendous growth in strategic advisory services, and we anticipate this growth will continue. Our relationships have evolved from quarterly and half-yearly Engagement assessment and reporting to retained consulting projects—Engagement planning and monitoring; SOW build; collaborating with Procurement and Marketing on retainers and PBR; and being engaged by Agencies to mediate where significant barriers to excellence threaten a relationship. As Clients opt for longer Agency relationships, and fewer reviews, strategicadvisory will no doubt continue to be a growth segment for consultants.”

Trinity P3’s Darren Wooley elaborates by presenting a broader viewpoint: “Many consultants have fulfilled a largely tactical role, fulfilling the immediate needs of their marketing clients: a creative agency here, a media agency there. It is largely a needs-fulfillment process with the consultant value based on their market knowledge allowing them to quickly fulfill these tactical needs. In the next 3-5 years this role will become increasingly more strategic, providing marketers with advice on the 3 Ps — purpose, people and process.”

Wooley defines this as:

» Identifying the requirements of the marketing team to deliver their purpose in the short-to-long term.

» Assisting in selecting and developing the people capabilities internally and externally.

» Creating structures and process to deliver the marketing purpose as effectively and efficiently as possible. By way of example, he says, “Currently we are working with a FMCG company, who through mergers and acquisition have found themselves with almost ten creative agencies and innumerable other content service providers including sales promotion, research, public relations, sponsorship, digital of various types, graphic design agencies, print management, media, and POP. This represents almost 100 suppliers in total. Largely this is because across a multitude of brands, supplier selection and management beyond the creative and media agency has been on an ad-hoc basis. We are working with marketing and procurement to define the 3-year needs of the marketing team and then build a strategic supplier alignment plan to achieve their needs.This requires a more sophisticated approach than simply selecting the ‘right’agency and involves looking at structures, supplier contracts, compensation /remuneration, process optimization and relationship management designed to deliver the strategic needs of the marketers to maximize their outputs and results, while minimizing wastage, duplication and administration: Increased effectiveness and efficiency. Simply knowing and understanding the business will no longer cut it. Consulting n this category will be driven by strategic innovation.”

As a corporation’s procurement department increases its involvement in advertising is there potential for understanding the value a consultant offers?

There’s no question that a company’s procurement department will become more involved in all aspects of the marketing and advertising process. Most consultants admit that they can derive benefits from working with procurement professionals who are open to understanding more about the role marketing plays within the corporation. Yet, consultants are also aware that strong procurement departments may feel there is no need for outside experts. There is certainly a need for evolution…

Avi Dan puts the role of procurement into perspective with a view that spans the past decade. “Marketing procurement,” he says, “initially focused on putting pressure on agency fees.” He continues:“As they started to understand the agency business better, procurement departments shifted their attention to develop efficiencies in more significant areas: media investment, agency operations, production and research. These areas yield higher savings than simply cutting the agency's fees.

Understanding the agency better means that Procurement will continue to increase its respect of the consultant's role. Marketing

procurement people have come a long way in the last 10 years. But they are still outsiders when it comes to agencies. Procurement is not a replacement during a search; it is a complimentary, especially during compensation and contract negotiation.”

R3’s Greg Paull concurs. “Where they understand marketing, procurement have been great partners for us in our work. Our core roles, as always, will be to provide agency expertise and insight and to provide industry-relevant benchmarks beyond an individual company. Where procurement does not fully understand marketing, we can provide a valuable “educational” role and in helping bridge the gap between a client’s marketing and procurement groups, leveraging the respective strengths of each part of the client organization.”

David Wethey of London-based Agency Assessments states the procurement dilemma clearly. “Some marketing procurement people seem determined to discourage marketers from using us. Others understand, and some of our most interesting consultancy assignments are procurement-driven.”

So what’s next for agency consultants in an increasingly global industry?

Cathy Cohan, Executive Vice President of Roth Associates, recognizes that in moving forward globally, there may be more questions to consider than current answers. “Of course, consultants minimize the day-to-day disruption that any search generates while bringing expertise and objectivity. However, marketers, especially global ones, need to better understand the value of search consultants and assess whether they can benefit from such help. Unfortunately, a good number of marketers misunderstand the role of agency consultants or are simply unaware of what they can offer. And there are marketers who want to use consultants, but procurement departments can veto the decision. It’s our job to the raise of the value of what we do—not only in the eyes of procurement, but in the eyes of marketers, agencies and all others associated with the industry.

I’d suggest, particularly in global searches, that a client asks the following of their consulting team:

» What do see as the largest benefits you bring to a multinational marketer who’s embarking on a global search?

» What are your areas of specialization and core competencies?

» Which of your current/past assignments are global?

» At what point would you advise a client to use a search consultant? At what size?

» Where are management and search consultancies going in our fastchanging

digital, global world?

» Which is your growth area — search or other consulting disciplines?"

Participating Agency Management & Search Consultants:

Cam Carter Navigare PtyLtd Australia carter@navigare.com.au

Jeff Estok Navigare PtyLtd Australia jeff.estok@navigare.com.au

Darren Wooley Trinity P3 Australia darren@p3.com.au

Greg Paull R3 China greg@rthree.com

Florence Garnier Marketing Efficiency France fgarnier@marketingefficiency.fr

Verónica Samblás Grupo Consultores Spain ksamblas@grupoconsultores.com

Cesar Vacchiano Grupo Consultores Spain cvacchiano@grupoconsultores.com

David Wethey Agency Assessments Int. UK davidw@agencyassessments.com

Stuart Pocock The Observatory International Ltd UK stuartp@observatoryltd.com

Suki Thompson The Oystercatchers UK suki@theoystercatchers.com

Ann Billock Ark Advisors USA annb@ark-advisors.com

Ken Robinson Ark Advisors USA russelw@ark-advisors.com

Avi Dan Avidan Strategies USA avi@avidanstrategies.com

David Beals JLB USA david.beals@jlbeals.com

Joanne Davis Joanne Davis Consulting USA joanne@joannedavisconsulting.com

Cathy Cohan Roth Associates USA ccohan@askroth.com

Dick Roth Roth Associates USA rroth@askroth.com