It was a very interesting 2008 for the ad business. The positive energy associated with the presidential primaries, the Beijing Olympics and the explosive growth of all things digital resulted in solid growth during the beginning of the year…and then came Labor Day. Credit markets ceased, financial institutions failed, stocks tumbled, consumer confidence tanked and unemployment rates soared. The ramifications of the Crash of ‘08 on our industry in 2009 and beyond are yet to be determined.
Throughout the year, the 4A’s Agency Management Services Division evolved programs, benchmarks and thought leadership to help members wrestle with business development, client compensation, intellectual property and strategies for surviving in this challenging economy.
The association’s Agency Search online database was revitalized and integrated within the new, improved 4A’s Web site in 2008. Agency Search is a proven source of new business leads that is only available to 4A’s members. When a client, search consultant or job seeker is looking for an agency, 4A’s Agency Search is the go-to industry source; the service provided agency and new business information to more than 50,000 visitors in 2008.
The 4A’s also launched a new Business Development Blog. The goal for the blog is to provide a vehicle for 4A’s members to establish an interactive community, share suggestions and recommend best practices to improve the effectiveness and efficiency of industry business development and agency search activities. Blog discussions have included “The Search and Selection Process,” “Extending the New Business Mindset Into the Larger Agency Culture,” “New Business and Small/Independent Agencies,” “Conflicts,” “Winning RFP Proposals” and a whole lot more.
The popular 4A’s C-Suite “Tips, Tools, and Tactics” Webinar series was expanded in 2008. Thought-leading presenters included Catherine Bension (Select Resources), Brian Martin (Source Martin), Don Sexton, PhD (Columbia University), Dave Beals (Jones Lundin Beals), Lorraine Rojek (Rojek Consulting) and numerous other agency and client experts.
Agency Management Services helped to spearhead a number of other important business development and agency management initiative as well. At a Leadership Conference workshop, Mark Schnurman (Filament Consulting) discussed “Common Pitch Problems” and suggested critical areas where pitches can be won and lost. A month later, the River States Council held a “New Business Gladiators” event that featured leading industry search consultants: Steve Boehler suggested that agencies turn the new business process upside down, Jan Boyle provided prospecting suggestions and encouraged agencies to qualify clients by asking questions early in the process, and Mike Bogda reviewed top-10 winning suggestions.
The aggressive 4A’s business development slate will continue in 2009 with an exciting line up of Webinar programs, regional new business workshops and increased activity and debate on the blog.
Client Compensation and Monetization of Agency Ideas & Work
The association expanded discussion on client compensation trends, created additional best practice tools, communicated benchmarks and fostered thought leadership on new models and monetization of agency intellectual property to help members learn how to get paid what they are worth.
Consultant David Beals participated in the 4A’s Finance Committee meeting Webinar “Value-Based Compensation: The Myths, The Promise, and The Challenges.” Dave advocated an elevated focus on value and a reduced emphasis on agency cost in compensation discussions with clients. At the start of an agency review, he recommends that agencies asks client three sets of value-oriented questions:
- How do you expect the agency to add value to your business and how will you measure that value?
- Is there something specific to your marketing efforts where the agency is expected to add value and how will you measure the marketing value?
- How can an agency add value to day to day relations and how do you measure this component of value?
Sales coach Tim Brenton conducted Negotiating 2.0 seminars to help members prepare for the “Contract Renegotiation Season.” Tim encouraged members to adopt the 4A’s Compensation Dialogue Process as their negotiating operating system and recommended negotiating strategies including:
- Forming an agency negotiating team
- Agreeing on agency objectives and requirements in advance
- Detailing the agency’s negotiation plan.
The workshop provided members with negotiating tools and tactics such as questions to ask, procurement mapping, power moves responses, concession menus, etc.
To help 4A’s members understand procurement’s objectives, Francisco Escobar provided “The Procurement Perspective” at a 4A’s Finance Committee meeting and Webinar. Francisco shared his perspectives on effective ways to interact with procurement. He provided background on procurement’s role, suggested rules for interacting with procurement (focus on long term gains…play to “win/win”) and tactics for effective negotiation (initiate the dialogue on value before talking about money and provide alternatives on major sticking points).
In addition, the 4A’s developed an “Ownership and Monetization of Agency Ideas and Work” video. The video features:
- Rick Kurnit reviewing essential background on the legal aspects of I.P. ownership and use (Patents, Trademarks, Copyright, Indemnification, etc)
- Joseph Lewczak discussing compensation models in other creative industries (music, publishing, photography, fine arts, movies, video games, etc)
- Candice Kersh talking about structuring usage rights and compensation agreements with new business prospects and established clients
- Ron Urbach providing an illustrative client discussion/negotiation on intellectual property usage and compensation.
4A’s efforts to elevate the dialogue related to the importance of agencies preserving ownership of new business ideas and work gained traction in 2008. During an Advertising Week ANA Agency/Client Forum, the panel moderator cited the 4A’s position paper that “recommends that agencies preserve ownership of new business-search ideas, plans and work product.” During the ensuing discussion, each of the panelists endorsed the 4A’s position paper and one high-profile client panelist indicated that they have modified their agency search NDA to adhere to the best practice approach recommended by 4A’s.
4A’s member experimentation with Value-Added/Benefits-Based Pricing (Value Pricing) continued to evolve in 2008. Awareness of value pricing experiments and case studies expanded during the past year as executives from BBDO, BBH, The Gate, Anomaly and other 4A’s members shared their value principles and compensation models at industry events.
Benchmarks and Best Practices
Benchmarks and surveys are a hallmark and highly valued 4A’s member service. In 2008, the 4A’s updated the traditional salary, annual analysis of agency costs and economic trends surveys. The association also initiated new information exchanges related to media compensation, payment and billing terms, compensation consultant net promoter score rankings, and new business expense budgets, along with a pilot survey comparing offline and online compensation ratios. In 2009, the 4A’s will evolve new surveys in the areas of value pricing, agency performance evaluations and talent management.
To assist members with operations best practices in the rapidly expanding digital universe the association created two new communities—a Digital Production Committee and a Project Management Roundtable. These groups are focusing on development of training tools initially for agencies and then subsequently for marketers.
The association’s 2008 initiatives to expand industry best practices focused on marketing accountability, media audits, talent , media (and other vendors’) liability, confidentiality as well as agency operations fundamentals, i.e., the blocking and tackling that is essential to survival in a gnarly business climate. Deliverables included publications on media audits and interviewing, a revamp of the 4A’s Career Center job listings site, bulletins on contract provisions and sequential liability, and Webinars on marketing accountability and local broadcast buying automation.
Surviving in this Challenging Economy
The Agency Management Services Division shared tips, tools and tactics to help members prepare for 2009 and survive in this challenging economy. Suggestions pertained to business development, client spending commitments, agency compensation, payment terms, vendor liability and talent optimization.
The 4A’s noted that while the economic news has indeed been grim, there is a broad range of growth initiatives, servicing improvements, talent enhancements and efficiency steps that members can take to weather this dark period. Management services suggested that agencies that lean forward to pro-actively explore new possibilities and remain aggressive have the opportunity to come through this downturn in a stronger competitive position than those businesses that sit back, slash and cut or are too afraid to change.