Eyeing Agency Spend? Use a Low-Risk Approach to Cut the Overlap
Customer Experience Research Team
Dec 12, 2019
When Procter & Gamble announced in 2018 that it had cut $750 million in media agency spending, marketers were impressed, though not entirely surprised. Marketing leaders had voiced interest in reducing reliance on agencies. Data from the Gartner CMO Spend Survey 2019-2020 suggests that goal is more talk than reality, given that agencies still absorb about a quarter of marketing budgets. That spending is nonetheless an attractive target for cost conscious marketing leaders. How can they cost optimize agency spending and still protect key relationships? Two ways: consolidation and efficiency.
Consolidation is a worthwhile pursuit for marketing organizations with multiple agency relationships. Depending on the size and structure of the organization, there may be more than one agency providing the same capabilities, or accountable for the same outputs.
To find out, create an inventory of capabilities your marketing organization needs to execute its strategy, as well as deliverables identified in agency statements of work. Then map your roster of agencies against these capabilities and deliverables. Include marketing technology vendors and service providers that do some of the same work as agencies. Look for points of overlap to identify opportunities to consolidate. Fee, media and technology spending often contain redundancies, as do marketing strategy and project management. Be careful how you reconcile any overlap. Agency staff often become critical resources, so be mindful to protect the people you rely on — losing them may negate any consolidation benefits.
Marketing leaders should also look for ways to be more efficient in their work with agencies. Involve agencies in this effort to identify underperforming programs and highlight processes that are a source of bottlenecks. Agency partners have an up-close view of your organization and processes and experience first-hand when communication breaks down. They can work with you to reduce waste and streamline the work for better marketing returns at a lower cost.