How to incentivise advertising agencies

How to incentivise advertising agencies

Steven Sargent Blog, Marketing

There are a number of different methods that companies can use to measure marketing performance.  A good way to think about these is to divide them into three categories – Advertising Performance, client Account Performance and Business Performance – these then cover all the metrics considered to be of key importance.

As part of your regular advertising activity you will be tracking the advertising campaign awareness through market research conducted pre-and post the campaign, so this should be used as the way of establishing a target for Advertising Performance and measuring against it.

Account Performance is measured through a scorecard completed by the client.  It is also possible to get a two-way feedback system for the agency to score and provide feedback to the client – I wonder how many of us are doing that?

Business Performance, on the other hand, can be measured by the sales revenue.  Here firms could, for example, focus on the sales performance of specific brands that have been advertised. One of the most famous example that springs to my mind here are the John Lewis Christmas adverts.  Over the past years John Lewis’ advertising has been said to have resulted in a sales increase of 44% online and 14% overall for this retailer.

When to solely focus on the sales impacts of marketing?

To answer this question, we need to insert the word ‘short-term’.  Now, when we ask, “When does it not make sense to solely focus on the short-terms sales impacts of marketing?”, the answer is: ‘for a strategic brand advertising campaigns’.  Any campaign that aims to advertise a brand should be aiming for a long-term impact which builds over a number of years.  Apple’s advertising is legendary for focusing on the emotional impact and not majoring on product detail, creating advertising which has built the global brand over decades.

The right incentives

The most efficient way of turning agency-client relationships around from a failure situation to a thriving relationship is to implement the right incentives.

Indeed, 4C’s extensive marketing procurement experience with its clients has shown that companies have been able to improve their marketing performance to a great extent by simply changing the way they manage and incentivise marketing agencies.

Here the aim should be getting the best out of both agency and client teams. The above measures should first incentivise the right people the right way, leading to better results, and second, help the agencies to work better with the client whilst actively delivering good account management, advertising results, and last but not least, good sales revenues.