Something like when The Sun printed the classic 'Freddie Star ate my hamster', I am referring to the headline in this week's Campaign. 'Adland hit as billings collapse'. The Nielsen Company data for 2009 has been published and shows that there were rare examples of billings growth for agencies.
Obviously the driving factor of this is the reduction in client income (obvious statement of the week there sorry about that) but we are (and hopefully) starting to come out of a recession, and it is unsurprising that clients have had to reign expenditure in, but it will bounce back. I think the thing that got me about this article was that it was all quite dramatic and only really refers to the fact that things have been tough for clients and agencies in Claire Beale's Perspective column.
Good clients (Procurement and Marketing) will have been open and honest (as many of my clients have been) with their partner agencies to say this is where we are, let's ride this out together and come out the other side all the better for it. I still see bad examples of commercial ways of working from both sides. The Scope of Work is the starting point of all discussions - but whose responsibility is this ? I would think it is the clients but I see agencies completing on behalf of their clients - any views on this (go on - let me know that I have at least one reader for this blog!)
Iris are running their 3rd in their series of Procurement Breakfasts on the subject of Payment by Results. It is on Thursday 11th March, and if you are interested in going, please contact Nicola Osmond on 020 7654 7343, email: nicola.osmond@iris-worldwide.com.
27 February 2010
19 February 2010
Coke and KFC together
No, not my lunch today !- they are both in this week's Campaign magazine.
Claire Beale has written her perspective on the new remuneration model that Coke are rolling out, as briefly mentioned in a blog posting last year. She feels that it is a real gauntlet for traditional agencies and other advertisers, as it is about rewarding on performance and not on time sheet info (which having had to do one myself we all know is not 100% accurate). Claire feels that it is good to have both the risk and reward element in (good old PBR schemes etc) but feels that there are many wrinkles to sort out first.
Page 17 then has a whole page devoted to it with a number of quotes from 'insiders' - which makes me laugh. At least Coke are getting a lot of press out of this. I do like the different approach and I do encourage agencies that I work with to be creative. Put a safe fee structure on the table but give me something that rewards exceptional performance as well. The main sticking point to the latter is having a brave marketing person to speculate with their marketing budget.
Then on page 19 there is an interview with the KFC Marketing Chief. She says that she keeps procurement at arm's length. She is happy that they negotiate with suppliers such as Pepsi but not her agencies. Every one is different and entitled to their view of course. But saying 'marketing services is my territory' I feel is a bit short sighted as I am sure that her procurement team could really help her in all manner of areas - maybe I should contact them !!
Also there is an interview in Media Week from October 2008 where she was asked "What role does procurement play?". The answer was "In the current economic climate, it plays an increasingly important role in the selection of agencies.".
What changed in a year ?
Claire Beale has written her perspective on the new remuneration model that Coke are rolling out, as briefly mentioned in a blog posting last year. She feels that it is a real gauntlet for traditional agencies and other advertisers, as it is about rewarding on performance and not on time sheet info (which having had to do one myself we all know is not 100% accurate). Claire feels that it is good to have both the risk and reward element in (good old PBR schemes etc) but feels that there are many wrinkles to sort out first.
Page 17 then has a whole page devoted to it with a number of quotes from 'insiders' - which makes me laugh. At least Coke are getting a lot of press out of this. I do like the different approach and I do encourage agencies that I work with to be creative. Put a safe fee structure on the table but give me something that rewards exceptional performance as well. The main sticking point to the latter is having a brave marketing person to speculate with their marketing budget.
Then on page 19 there is an interview with the KFC Marketing Chief. She says that she keeps procurement at arm's length. She is happy that they negotiate with suppliers such as Pepsi but not her agencies. Every one is different and entitled to their view of course. But saying 'marketing services is my territory' I feel is a bit short sighted as I am sure that her procurement team could really help her in all manner of areas - maybe I should contact them !!
Also there is an interview in Media Week from October 2008 where she was asked "What role does procurement play?". The answer was "In the current economic climate, it plays an increasingly important role in the selection of agencies.".
What changed in a year ?
17 February 2010
The video to go with the article
I have just come across this video of the Ad Age view on Procurement that was all in the press last November. It is only 3 minutes long and it is interesting to hear their view of the procurement with no real suggestion on how to develop and improve the relationships that they feel are damaging to the ad industry. Click here to see the video.
09 February 2010
Dealing with Procurement is chic!
As one of my clients said to me when I sent him the headline 'Procurement Pain: TBWA Anoints a Chief Compensation Officer '.
As Ad Age reported :
Rising tensions between agencies and marketing procurement have birthed a new role in the agency C-suite: the chief compensation officer.
Omnicom Group's TBWA/Chiat/Day has appointed Neal Grossman, as its first global chief compensation officer.
The role -- which is distinct from TBWA's chief financial officer -- means Mr. Grossman will be the one leading contract renegotiations with clients and procurement officers, and overseeing fee discussions during new-business pitches. He'll also be tasked with developing value-based compensation models that are mutually beneficial to the agency and its clients.
But as my client said when he was appointed 5.5 years ago there was not this type of headline, but these days is it trendy ? or is it a necessity ? Certainly in the UK market, since I worked at Grey and Lowe, and Emma Nussey at AMV, there has been no significant agency appointments to be that focal point in dealing with procurement.
So I think it is a good sign, as long as they understand both sides and are collaborative in their approach. A defensive stance will not help the commercial relationship to work.
As Ad Age reported :
Rising tensions between agencies and marketing procurement have birthed a new role in the agency C-suite: the chief compensation officer.
Omnicom Group's TBWA/Chiat/Day has appointed Neal Grossman, as its first global chief compensation officer.
The role -- which is distinct from TBWA's chief financial officer -- means Mr. Grossman will be the one leading contract renegotiations with clients and procurement officers, and overseeing fee discussions during new-business pitches. He'll also be tasked with developing value-based compensation models that are mutually beneficial to the agency and its clients.
But as my client said when he was appointed 5.5 years ago there was not this type of headline, but these days is it trendy ? or is it a necessity ? Certainly in the UK market, since I worked at Grey and Lowe, and Emma Nussey at AMV, there has been no significant agency appointments to be that focal point in dealing with procurement.
So I think it is a good sign, as long as they understand both sides and are collaborative in their approach. A defensive stance will not help the commercial relationship to work.
08 February 2010
Another cartoon for you
Thanks Paul for sending me this from Win without Pitching. I think I have mentioned this company before. They do a lot of work with the DBA over here and strongly advocate against the need for agencies to pitch for work.
I am not sure if he likes procurement, judging by this cartoon. Click here to see it.
I am not sure if he likes procurement, judging by this cartoon. Click here to see it.
Missive being sent
I love that word - missive, used in a friendly procurement sort of way. The 4A's in the USA have sent out a letter (aka a missive) last week to 30 major industry consultants (like the AAR, Haystack). The letter asks them to adopt contract language that reflects advertising agencies' right to retain creative ideas presented during new-business pitches.
The 4A's letter was endorsed by around 50 Madison Avenue agencies, such as JWT, Anomaly and R/GA.
Apparently there has been an increase recently in agencies complaining about clients' desire to own ideas and work shown during the new-business process. They cynically say that it is usually hidden as a clause at the very back of a 14 page NDA (that is a very long NDA).
I have heard of this happening once in a big pitch for a retailer, where the procurement folks asked if they paid a nominal pitch fee of £5k to all the losing agencies, could they have the right to own the creative work developed for the pitch !. I thought that this was not in the spirit of things (I would have offered half that - joke). Also what would the winning agency think ? We like your idea but here is one that we prepared earlier?
I have an agency at the moment asking for a similar type clause to be added into their contract (they have been appointed by the client). But they want it quite clear that for any development work taken in any potential pitch process they want to own it. I have never seen this before and it seems reasonable to me.
Do you think that this is the year of agencies being stronger about owning their IPR?
The 4A's letter was endorsed by around 50 Madison Avenue agencies, such as JWT, Anomaly and R/GA.
Apparently there has been an increase recently in agencies complaining about clients' desire to own ideas and work shown during the new-business process. They cynically say that it is usually hidden as a clause at the very back of a 14 page NDA (that is a very long NDA).
I have heard of this happening once in a big pitch for a retailer, where the procurement folks asked if they paid a nominal pitch fee of £5k to all the losing agencies, could they have the right to own the creative work developed for the pitch !. I thought that this was not in the spirit of things (I would have offered half that - joke). Also what would the winning agency think ? We like your idea but here is one that we prepared earlier?
I have an agency at the moment asking for a similar type clause to be added into their contract (they have been appointed by the client). But they want it quite clear that for any development work taken in any potential pitch process they want to own it. I have never seen this before and it seems reasonable to me.
Do you think that this is the year of agencies being stronger about owning their IPR?
01 February 2010
Following on from the cartoon
Someone (thanks to Nick W) kindly pointed out this video link that was on one of the comments underneath the cartoon. It is called The Vendor Client Relationship - in real world situations. It is very good and sums up some form of negotiations that could happen in a restaurant, a record store and a hairdresser. Watch it and tell me that you don't think "oh sugar" at some of the things that they say.
Click HERE for the link to it and let me know if you think you recognise any behaviour in it !.
Click HERE for the link to it and let me know if you think you recognise any behaviour in it !.
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