Reviewing the Review Process
- “If the relationship isn’t working, there are many, many agencies out there and it’s in your best interest to make a switch, as opposed to tolerating underperformance.”
Tiger 21 Holdings
If you’re reading this book in a linear progression, you just heard from Terri Funk Graham about the intricacies of working with an outside agency. (If you’re not, be sure to check out Terri’s interview immediately preceding this one.) In any case, you must understand that forging a strong, profitable relationship with an outside agency takes significant time and effort invested from all sides.
So changing agencies, thereby starting the whole process over again from the beginning, is not something a marketing executive can take lightly. To understand why such a change can become imperative and how to get the most out of the process, I reached out to Barbara Goodstein. Currently the CEO of Tiger 21 Holdings, Barbara led agency reviews during her recent tenure as CMO of Vonage and before that as CMO of AXA Equitable.
You’ve initiated agency reviews a couple of times. What are top reasons for needing to change agencies?
In the case of AXA, we didn’t have a full-service advertising agency. We had a small promotional firm that was doing brochures and sales information, but they were never doing a complete positioning and they didn’t take us through a full process to understand what we were trying to accomplish. So, I upgraded the whole process by bringing in a very sophisticated agency with loads of creative talent.
So this was not about replacing as much as it was upgrading, right?
I identified that there was an upside opportunity if we improved the quality of the creative and the advertising. So nobody said, “We need to bring in an advertising agency.” I just said, “Oh my gosh, think about how much better things would be if we brought in a strategically sound creative agency.”
What was the reason for the switch at Vonage?
At Vonage there were multiple agencies. When I arrived, it was clear that the CEO was frustrated by the lack of strategy and planning at the primary ad agency. We would have quarterly business reviews and the CEO was miserable with what he was getting back. I said to him, “If you’re that unhappy, let’s start an agency search.” Initially, he was very reticent to do so because he thought it could derail our whole program and he really had no confidence that it was going to work. He was most concerned about there being horrible switching costs. But, as it turns out, there weren’t any. The handoff between agencies was completely smooth. Absolutely nothing bad happened.
What were the keys to making a switch like that work?
Because we did a whole review process, we had basically identified the creative that we wanted to move to. As part of the agency review process, multiple agencies prepared very well-thought-out, deliberate strategies. The pieces that we were missing with the incumbents were delivered even in the pitch process. And as we were buying into the strategy, we were being led down the road to buy into the creative, simultaneously. By the time we made the decision, we had strategy and creative ready to go. What also helped was that the future agency started working for us for about a month while we were winding down incumbents, and we did the same thing with both the media agency and the creative agency.
When managing reviews, how helpful to you was it to have a search consultant involved? What value did they add to the process?
I used Dick Roth Associates and he was fantastic. I used him both with AXA and at Vonage because we had such a good experience with him at AXA. He was able to identify all of the potential agencies that could help us. We then narrowed it down. We said we wanted an agency of a certain size because we wanted to be important, but not swamp the agency. Then we pinpointed what experience they needed to have. He also did a scan for the ones that had account conflicts. In the case of Vonage, it was particularly difficult because phone companies spend so much on advertising that it’s hard to find an agency that’s not already booked.
What are some of the lessons you learned about managing the review process that other CMOs might want to do (or not do)?
I think we did it the right way. I think that the “don’t” is don’t hesitate. If the relationship isn’t working, there are many, many agencies out there and it’s in your best interest to make a switch, as opposed to tolerating underperformance. That really became clear after we switched and we were getting everything that we previously wanted. People were thinking why didn’t we do that sooner. It just wasn’t as painful as people had anticipated.
How did you persuade these agencies to invest so much during the pitch process before you’d made your decision?
In the case of Vonage, there was so much value and so much upside to them that they were all willing to make the investment. Vonage was a very significant size opportunity for the agencies, so everyone did it on spec.
Would you recommend including creative development in the pitch process? Does seeing actual ideas make a big difference?
Yes. Because I think that if you don’t include the creative you don’t really know who you’re “marrying.” That’s a big part of what you’re buying. And in both cases we ended up running the creative that was developed during the pitch process.
At what stage of the review process would you recommend including the financial negotiations?
We started in each case with multiple agencies, then narrowed it down to about five, then from five to two. Once we got down to the two, that’s when we would start pushing them on costs. Because at this point we knew who we wanted to hire and we had to make sure that the costs worked. It’s just a lot easier to negotiate the cost down before anyone knows the final decision.
You’ve done the review. You’ve hired the agency. How do you make sure that the new relationship takes?
I think that you have to have a rapport with the people that you’re working with and you figure that out during the pitch process. And then you have to stay close to them during the creation of the first round of advertising. Everyone needs to be connected at the hip when you start because you still don’t know each other. You’ve only been dating for a while. So I think it’s mainly about time spent.
Agencies are notorious for bringing out all of their senior people for the pitch who never show up again. Has this been the case for you?
We pushed on that during all of the upfront conversation. Are you the people we’re going to be working with going forward? And we cemented it. So they were on our account until they left the agency. But, while they were at the agency, they were the people that we worked with.
Once the decision is made to go into a review, all parties involved want to speed things along. Are there some steps that you think could be eliminated in the typical process?
Not really. The first step was the comparisons—the capabilities presentation and knowing who you’re dealing with. The next step was explaining our business to them. Then we had multiple rounds of reviews with them. I don’t think that there’s anything in this process that you could or should cut out.
As part of this process, I think that every client would love to hold their agency accountable based on performance. Is that possible?
I don’t know if it’s really possible because there are so many things that are happening concurrent with advertising. Let’s say measures like awareness and Net Promoter Score go up with the new campaign, yet sales went down. Sales might have gone down because a competitor introduced new functionality.
You’re not going to give your agency a big round of applause as sales are collapsing nor can you blame them since the competitive activity was out of their control.
So let’s flip this and go back to the AXA situation in which the “800-Pound Gorilla” campaign you introduced was super-effective by just about any measure. At that point, could the agency have been rewarded more?
We didn’t specifically reward them but we were winning awards and so were they. So the reward was that everyone was getting external recognition. In this case, the sales were going up and it was partially because of the Gorilla campaign, but then the question becomes, how do you attribute it to the agency?
So here I thought the agency was driving the sales, but others within AXA felt they deserved the credit. Which is predictable. At AXA, I think it was truly the advertising campaign that drove a lot of the success.
Sounds like the agency just can’t win!
The advertising agency is always at the short end of the straw. When they’re successful someone else takes the credit, and when they’re not successful, they’re responsible, even when it’s out of their control.
Fred S. Goldberg, The Insanity of Advertising: Memoirs of a Mad Man