Measuring agency performance is important: WFA Survey

By Ashwini Gangal , afaqs!, Mumbai | In Advertising | July 22, 2011
The survey conducted by Global Compag and Aprais showed that an accurately benchmarked, two-way evaluation process of agency, as well as client performance is necessary.

Part of the WFA (World Federation of Advertisers), Global Compag -- with the help of global relationship appraisal service, Aprais -- has released the results of a survey that addresses the issue of the client-agency relationship. The study was about the importance of evaluating the performance of communications agencies.

The study, conducted in May this year, saw the participation of multi-national respondents from 42 companies, representing 14 different categories. The respondents were all global or regional marketers on the client-side (that is, belonging to corporates), from large multinationals, and not from SMEs.

For this study, almost all responses were sourced from companies spending over $500 million, with over 32 per cent spending more than $2 billion. A questionnaire bearing 16 questions was specifically designed for this survey.

Crux of the findings

Over 93 per cent of the respondents stated that "measuring agency performance is important". However, 85 per cent do not rate their own performance in this area as high! Little wonder then, that 65 per cent consider "making changes to the way they assess agency performance".

Aprais thus infers that there are two important areas of change -- firstly, these assessments should not remain one-way and must become a genuine two-way process. Secondly, the assessment should be accurately benchmarked to provide absolute, as well as relative performance measures, which are actionable and statistically robust. The survey data shows that only in 31 per cent of cases is the agency performance externally benchmarked. Further, it is found that client performance is benchmarked only in 13 per cent of the cases.

Overall, the results indicate that good client process and behaviour increases agency performance by up to 33 per cent, and that it is essential that clients open themselves up to being assessed and benchmarked as this will improve outcome for both parties.

Sunil Gupta, regional director, South West Asia, Aprais Worldwide, underscores the importance of research on the agency-client relationship. He tells afaqs!, "If marketers believe that they'd like to see improvement on part of their marketing communication service providers and if these communication agencies desire longevity with their clients, professional evaluation of their relationship is critical."

Detailed Findings

Questions asked:

Thinking of your top 20 markets, on an average, how many communication agencies do you currently have actively working with you in each, considering all types of communications services covering creative, media, digital, PR, design, event, etc?

It was found that there is a split between respondents using five to ten (32 per cent of the respondents) and those using more than 50 (29 per cent of the respondents).

Rate (on a scale of ten) the importance of measuring agency performance.

It was found that 93 per cent of the respondents rank this as eight.

How well do you do it?

It was found that only 15 per cent of the respondents give themselves eight or higher. The implication is that there is room for improvement. Aprais notes that the stark contrast between the importance and current capability is one of the most important findings of the survey.

Do you formally assess the performance of the communication agencies and the contribution they make to your business?

Thirty eight per cent said yes, while 62 per cent said it depends on the kind of agency it is. Digging deeper, it was found that only advertising and media agencies are getting formally evaluated.

Does the agency also review client team performance?

It was found that 72 per cent of the respondents use a simple two-way evaluation process to assess performance. Interestingly, 15 per cent of the respondents do not have agencies evaluate their performance.

Regarding these findings, Aprais notes, "Clients are admitting that even if nominally assessments are called 'two-way', they are, in fact, 'one-way'. Thus effectively, 55 per cent of the assessments are 'client on agency' in nature."

Interestingly, this rules out the possibility for a powerful feedback loop to clients as to how their actions and behaviour can drive the success of an agency's output.

The survey also tried to ascertain which criteria or metrics companies use to measure agency performance; it was found that all respondents use soft measures such as 'service delivery' or 'strategic thinking' to measure agency performance. Probing further into these soft metrics, it was found that most respondents have indicated that their approach is formal (75 per cent), global (65 per cent), well-established and regular (65 per cent), and variable (55per cent), depending on the agency in question. Also, around 62 per cent of the respondents use a formal dedicated review meeting to assess agency performance.

Further, 67 per cent of the respondents linked hard measures to agency bonus payments and over ten per cent indicated that they were considering moving in this direction. Regarding the frequency of measuring agency performance, the survey revealed that around 90 per cent of the respondents assess agency performance once or twice per year.

As regards the outcome of agency evaluation procedures, the survey showed that most of the time the outcome is a formal evaluation meeting with the agency team and client team. The survey also showed that 74 per cent of respondents are using internally designed, paper-based and excel-based systems for evaluation. Companies that are using standardised third party methodology are also commonly using four-way evaluation techniques. It was further revealed that it is common for marketing and procurement to jointly manage this evaluation process.

If you use an online questionnaire, does this assessment tool serve other categories (for example travel, IT, etc.)?

To this, 66 per cent said no, 30 per cent said yes, and 4 per cent said don't know. When asked whether there are plans to change the way that agencies' performance is measured, in the next 12-18 months, 65 per cent of the respondents said they may make changes to the way their performance assessments are carried out in the short term.

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