Is The Traditional AOR History?

 

Clients frequently ask about our views on the benefits of consolidating activities into one agency and whether an Agency of Record is still relevant in an age where specialty services are so pervasive.  And does this mean the traditional AOR is history?

It’s unlikely there’s a ‘one-size-fits-all’ solution that can answer that question.  But while AOR agencies have work to do to step up their game and hold on to coveted, multi-disciplinary businesses, marketers have to ask themselves fundamental questions of t to work out whether centralized or decentralized models will work best – long term.

Here are few introspective questions worth considering:

Who drives strategy? Marketers with dedicated digital teams can sometimes find themselves undermined when their internal brand teams believe they should directing digital agency work because they understand the brand better.

If that leadership isn’t clear, or there are varying strategic directives – that question needs to be resolved before any AOR question can be addressed.

What’s your process for integration?  Do you have a defined process to integrate all activities? Is there a defined process or playbook? Do you have online tools to help manage communication between teams or proposed tools to help manage multiple agencies?

Even if you don’t have a defined process today, you need a vision for how it’s going to work in the future in order to be able to coordinate activities between groups or indeed brands.

What kind of marketer are you? Are your needs primarily strategic to help you define new consumer channels and touch-points – something your media agency may well be adept at helping you work through, for example? Are your requirements highly technical? Focused on social? Or are your needs more akin to that of a production line – turning out thousands of online ads a year?

Marketers have to define their own specific operational needs – not only for today – but for what lies ahead, to help understand how best to operationalize their needs with an agency partner or partners.

How complex are your digital requirements? We’ve seen agency relationships fall apart because the marketer has unrealistic digital expectations of their agency so it’s important to define what those expectations are and to really understand whether you’ve got the right agency for your particular needs.

If, for example, your digital ecosystem is one that’s highly reliant on sophisticated technologies to drive revenue, chances are you need to be looking at a specialized agency.

If you’re needs are more strategic or more focused on online advertising, then it could be your AOR is capable of helping you navigate the digital ecosystem.

What’s your collaboration model? Your ability to set and facilitate collaboration expectations is also an important question to answer to help you decide whether an AOR or specialist agency model is the right approach.

Much like your process for integration internally, you have to be able to set expectations around agency collaboration. Some marketers are now appointing “lead agencies” in specialist agency models, to help ensure everyone plays nice in the sandbox.

How do you measure agency performance? Whether you have an AOR or are leaning towards a specialist agency model, marketers need to proactively measure and manage their agency’s performance.

Without effective measurement, the chances of agency turf squabbles or disconnects in strategy or execution will cause headaches in your ability to manage your agencies and their output.

A 360, third party evaluation system is the best way to look at how your marketing and agency teams are working together.

Do you have the right financial model for your agencies? If you’re using an AOR agency to fulfill specialist needs – can they be truly media agnostic? (Are you sure?) Do you know their relative profit margins between say a television campaign and building an online advertising campaign with a dedicated micro-site?

Shifting marketing dollars towards specialist initiatives that may increase resources required, lower profit margins within the same financial framework as other brand activities, isn’t realistic or sustainable.

How does your internal support system work? Marketers often leverage multiple agency relationships in pursuit of cost savings or to get round headcount issues that can’t be supported within their own organizations.

Internal support systems that can help identify, support and make the case for internal organizational change, increased or revised headcount all play a part in the decision to stick with an AOR, unbundle into specialized agencies, or specialized functions through internal resources.

Where are your marketing and agency needs heading? Understanding where you are today is a great start and will, if nothing else, provoke useful discussion among internal stakeholders on what’s right for your business.

As those discussions unfold marketers also need a perspective on where their digital needs and requirements are heading and how and what digital solutions will be required to support their needs in the next two or three years.

So does this mean the traditional AOR relationship is a thing of the past?  You tell us.

STEPHAN ARGENT

 

Stephan Argent is founding partner of The Argedia Group, Canada’s leading agency search and management consultancy. Read more like this on our blog ‘Marketing Unscrewed’. Follow me on Twitter @ArgediaGroup

Photo: Kamal Hamid

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