The Costly Business of Agency Reviews: When Should You Use Them to Evaluating the Timing

In the ever-evolving landscape of marketing and advertising, agency reviews have become a common occurrence. Alcohol marketer Mast-Jägermeister, for example, has found agency reviews to be an effective tool for consolidation and efficiency as they focus on on-premise events. With a global presence, it is crucial for Mast-Jägermeister to have an agency that understands the international complexity while designing U.S.-based content. But just how costly are these agency reviews, and when should companies consider using them?

The Need for Consolidation and Efficiency

Mast-Jägermeister, known for its iconic Jägermeister brand, once had its on-site presence handled by a staggering 19 different agencies. This fragmented network made it challenging to have a unified marketing strategy. If a particular approach wasn’t working, the company found it difficult to pivot quickly and uniformly. However, by streamlining their roster of agencies, Mast-Jägermeister has been able to achieve better coordination and alignment.

Charles Littlefield, the company’s Chief Marketing Officer, highlighted the importance of collective decision-making and swift adjustments. He stated, “If the concept that we all love isn’t working 30 or 60 days in, how can we pivot collectively…how can we make it go?” Mast-Jägermeister’s experience underscores the importance of consolidation and efficiency in marketing efforts.

The Global Presence Challenge

For brands with a global footprint, like Mast-Jägermeister, having an agency that can navigate international complexity while designing region-specific content is a top priority. While Mother handles Mast-Jägermeister’s global marketing efforts, it is essential to have an agency that understands the nuances of different markets. What works in one country may not necessarily resonate in another, especially in culturally diverse regions like the United States.

Having a deep understanding of both the global brand vision and the local market dynamics is crucial for success. Mast-Jägermeister’s emphasis on finding an agency that can strike this balance highlights the challenges faced by companies with an international presence.

The Costly Reality of Agency Reviews

Agency reviews can be a significant financial investment for both the defending agency and non-incumbents vying for the account. Marla Kaplowitz, President and CEO of the American Association of Advertising Agencies (4A’s), revealed that defending accounts can spend an average of $400,000, while non-incumbents may spend $200,000 just to participate in a review. These costs include various expenses such as research, presentations, and consultations.

Kaplowitz emphasized the importance of constant communication in maintaining a strong marketer-agency relationship. While agency reviews can be triggered by factors such as a new Chief Marketing Officer or declining sales, complacency is often the primary driver. When an agency becomes complacent, or the marketer perceives complacency, it creates a sense of unease. This unease can ultimately lead to the decision to conduct an agency review.

The Cost of Poor Communication

A study conducted jointly by the 4A’s and the Association of National Advertisers (ANA) shed light on the high costs and lengthy timelines associated with agency reviews. Surprisingly, the study revealed that incumbent agencies were retained approximately two-thirds of the time. This statistic suggests that better communication between marketers and agencies could have prevented the need for a review in many cases.

Kaplowitz expressed disappointment at the wasted time and resources spent on agency reviews that could have been avoided with open dialogue. “That’s really disappointing that a client is spending money to do a review when they could have had a conversation about what their needs were,” she remarked. The study further revealed that the average agency review process spans over three months, with incumbent agencies participating for at least two of those months.

Treating Agencies as Partners

To achieve optimal results, agencies should be treated as an extension of the marketing team. While agency reviews can be expensive and time-consuming, they should only be pursued when necessary. The statistics showing the high retention rate of incumbent agencies suggest that they may not be as replaceable as companies often believe.

Kaplowitz emphasized the importance of fostering strong partnerships with agencies. When agencies are treated as partners, rather than mere service providers, the results are transformative. She stated, “The problem is when you don’t treat that group like an extension of your team and like a partner, you don’t get the best.” Strong partnerships foster a sense of shared responsibility and commitment, leading to exceptional outcomes for both the client and the agency.

Conclusion

Agency reviews are costly endeavors that should be approached with caution. While consolidation and efficiency are critical in marketing efforts, it is equally important to find an agency that understands the global brand vision while crafting region-specific content. The expenses associated with agency reviews, coupled with the high retention rate of incumbent agencies, highlight the need for better communication between marketers and agencies. By treating agencies as partners and fostering strong relationships, companies can achieve remarkable results without the need for costly and time-consuming agency reviews.

Remember, agency reviews should be used judiciously, and the decision to engage in one should be based on careful consideration of the specific needs and circumstances of each company. Effective communication and collaboration between marketers and agencies can lead to successful partnerships and ultimately drive business growth.

Table 1: Costs Associated with Agency Reviews

Table 2: Agency Review Timeline