Efficiency is the Lubricant of Sustained Investment
Efficiency is the lubricant of
sustained relationship investment
by Charles Lockyer
Executive Chairman – POP Tracker LLC
Tom Denford and David Indo, of ID Comms, recently released a very thoughtful video How to evaluate media agency performance: #MediaSnack 150 on avoiding disruptive agency reviews by investing more in existing client relationships. “It’s never been more important to be able to invest in the relationships that you have with your agencies and also for agencies to be investing more in the long-term health of the relationship with their advertiser clients.” They argue that investing in monitoring and measuring the relationship facilitates a forum for ongoing honest discussion and assessment, thereby rebuilding trust, and resulting in more productive media outcomes for the advertiser and fewer costly clients reviews for the agency.
efficiency can be the “flywheel” that generates value for both advertiser and agency and moves the relationship beyond the zero sum
Efficiency, however, is an essential ingredient in driving sustained investment in relationships given the many short-term pressures facing both advertisers and agencies. Implemented properly, together with a mutual relationship of continuous improvement, efficiency can be the “flywheel” that generates value for both OOH advertiser and agency and moves the relationship beyond the zero sum mentality often seen today. Ideally, the value generated from ongoing efficiency gains is shared and re-invested by both parties to further strengthen the relationship and value proposition on each side.
The biggest impediment to establishing a partnership relationship is often who takes the first step (and makes the investment) with no short-term payoff in sight.
The biggest impediment to establishing a partnership relationship is often who takes the first step (and makes the investment) with no short-term payoff in sight. However, advertisers and their agencies move slowly on investing in technology tools and process improvements at their peril. The best manufacturing companies learned this lesson decades ago while the more modern technology behemoths have incorporated efficiency re-investment into their business models from the beginning. Many of the most innovative technology companies, like Apple and Amazon, are also known for a relentless focus on efficiency, gains from which are constantly reinvested in the customer experience (adding to their value proposition). In the case of manufacturing companies, like Boeing or 3M, the savings from continuous improvements of underlying business processes are reinvested in product innovation and research and development reinforcing competitive advantages sustained for decades.
At the Mumbrella360 conference Matt Baxter, the global CEO of Initiative, issued a call for the end of the current pitch process given the resource requirements, deteriorating economics, and unreasonable client demands. While these impacts are surely negative for agencies, and the overall relationship, many would argue that if agencies were more focused on investing time and resources in adding value to their existing clients then there would be fewer costly agency reviews and less undercutting of one another in a race to the bottom on costs.
Investing now in the tools and processes required to drive transparency, efficiency and overall value to the advertising customer is critical to changing the current dynamic and is a move that agencies should be willing to make first. There are good reasons why I will not close my Prime account when Amazon inevitably increases the cost or the fact I have never flown on an airplane built in China. In both cases, investments were made and sustained long before the immediate payoff was obvious.
Executive Chairman – POP Tracker LLC