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Graham Nelson

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3 Questions You Should Be Asking Your Agency

Originally Published in iMediaConnection The trades are amuck with headlines around the need for a "new agency model" fueled by the rise of ad tech and digital media. These types of headlines have riddled publications since the dot-com era. Don't get me wrong -- there is some truth in the speculation. Underlying the latest wave of headlines is the theme of technology changing the brand and agency dynamic: Are brands and agency willing to adapt together? Question No. 1: What's your fee structure? You deserve to understand what your agency's money is doing for you. And agencies deserve to make a fair-market profit. (You'll know if you're working with the right agency if it strategically reinvested that profit back into the costly business of building excellence in evolving digital media space.) As planning and buying platforms evolve, so to do compensation structures. Programmatic ad spending topped $10 billion in 2014 and is projected to double to more than $20 billion by 2016. This represents 63 percent of total digital display advertising, according to eMarketer. The increase in programmatic spend begs a simple question: What should agencies be charging to provide the optimal return to marketers? Transparency is crucial. Fees should be fully visible to the client through a fixed commission-based compensation model or a flat retainer. With this approach, the client benefits from buying efficiencies given an increased yield from the media budget. Be cautious of agencies that provide costs based on aggregate Cost Per Thousand Impressions (CPM) or Dynamic CPMs. By providing only the agreed upon CPM, agencies are masking the cost of the working media and the commission charged on the media -- thereby decreasing the media buyer's incentive to drive a marketer's CPM down to provide more return for the investment. Takeaway: The fee structure should enable the agency to reduce complexity and drive performance for the client. As in any good relationship, transparency and open communication will allow the agency to achieve these goals for the client. Question No. 2: What's the role of data in planning? There's no debating that businesses have an insatiable appetite for data. According to an Accenture report, 89 percent of executives reported they thought big data would "revolutionize the way we do business" as much as the advent of the internet had done. There's no lack of tools and subject matter experts to collect, manage, synthesize, and activate the data. But just because an agency positions itself as a big data Ninja does not mean they are the right fit. (The self-appointed "Ninja" title should raise concerns.) When working with agencies that manage the tools, platforms, and analysis, ask about the data compliance, governance, and process. Then dig deeper and ask about the rationale for the partners, tools, and processes employed. Look for agency partners who build out a customized plan given client needs. Three key parts of the planning process to look for include: The integration of first-party to build look-a-like models Use of multiple data sources to build profiles Creative messaging aligned with customer profile and desired behavior Takeaway: With the constantly evolving digital media space, marketers and agencies should continue to test multiple methods, tech, and vendors to find the right recipe. As true business partners, marketers and agencies should learn and build together. Question No. 3: Can I trust you with my data? According to eMarketer, "If data is digital marketing's currency, then the Data Management Platform (DMP) is its bank." Similar to a financial institution, DMPs have a mountain of rules and regulations. As agencies play a more pivotal role in sifting through the rules and regulations to help build DMPs, help them integrate within your company's digital ecosystem. Agencies are well-positioned to bridge the gap between technology, service, and data, and you need to play an active role in the process. Asking your agency "who owns the data" means more than contractual obligations. It means: "How can we access and interpret the data to become smarter about our customer, our brand, and our business?" Takeaway: It's time to rid ourselves of "I don't trust the data." Sabotaging your company's ability to clean and leverage its data is no different than sabotaging your own ability to activate on that data. Like any good relationship, you should be with someone who makes you better. A participatory process helps improve both agency and marketer fluency in the space, leading to a better understanding of and sophistication within digital media. Conclusion Technology -- particularly the mass adoption of ad tech and rising emphasis on programmatic buying -- has forced brands and agencies to take a hard look at their relationship and ask: "Is this working?" However, every headline and every article appear to miss the point. It's not about placing the blame -- it's about asking the right questions. Is the relationship built on trust, open communication, and mutual respect? Will we weather the latest "storm" together? Are we willing to learn together? If the answer is yes, then have conviction when managing your agencies. When they see you lead with conviction, they will believe in you and deliver incredible things for you. Read more at http://www.imediaconnection.com/content/38786.asp#singleview#yoK0GSK8IHtH0IPM.99

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