With the marketing and advertising budgets under pressure, Procurement are looking for new solutions to managing costs. Here’s your guide to Marketing Agency Costs.
What are Marketing Agency Costs?
Marketing agency costs is the money a business pays to outsource all or some of its marketing to a specialist agency.
Some businesses will say it is a commodity, and others will categorically disagree with this, but it is undeniable that marketing agency costs are an investment.
Marketing, done well, delivers measurable returns to the business. If a company sees marketing agency costs as just another line on the budget sheet, it can negatively impact the efficiency of marketing.
Restrictive budgets and poor line of sight into an overall business strategy can often result in lacklustre campaigns. And budget definitely impacts marketing strategy and creativity.
When marketing is seen as an investment into the growth of the business, as a cost centre that delivers a return on investment, internal attitudes and strategic approaches also tend to reflect this view.
It is, therefore, vital that the business measures and tracks its expenditure to be able to see what its marketing agency costs are and what its return on investment is. What exactly are you paying your marketing agency for?
How can I manage my Marketing Agency costs?
Analyse your spend. Make it accurate!
The first step is to look at every element of your marketing expenditure. Breaking down your projects and looking at every detail, where is each dollar spent?
Without the oversight of your costs, you won’t be able to manage them efficiently.
WHY Should I compare my marketing agency costs?
It is important to compare your marketing agency costs in order to provide you with the bigger picture.
To start, you must look at the detail of what has been agreed upon with each marketing agency on your roster.
The next step is to look at how each of your marketing agencies compare against each other.
And, then crucially, how do they compare against benchmark?
Why is benchmarking my marketing agency costs important?
Comparing your marketing agency costs against benchmark will give you the insight needed to find ways to make your budget go further.
Imagine you have an advertising budget of $100m; when you compare this against the benchmark, you find you’re paying one of your marketing agencies 20% over the industry average. That means you’re losing the opportunity to extract $20m of additional marketing – and that’s just from one agency.
This scenario is a reality for RightSpend clients, as 20% is the average we’re helping clients extract from their marketing costs.
Benchmarking is at the root of cost savings.
Procurement teams will often use an internal database of marketing agency costs to benchmark against. The issue with this is that the data goes out of date quickly, is often industry-specific, and is only based on rate cards – not negotiated rates. Whilst it’s better than not benchmarking at all, you’re not getting a good reflection of the position of your agencies.
It’s widely acknowledged that specific industries will be charged more by marketing agencies – luxury brands, financial services, gambling companies, etc. So if you’re only benchmarking your marketing agency costs against your direct competitors, you’re getting a skewed result. You’re not seeing how you compare to the broader world. You may be happy to accept a premium on your fees, but is it justified? And that’s where comparing against benchmark can help you negotiate with your agencies.
How can I be more efficient with Marketing Agency Costs?
RightSpend provides you with all the data and analytics you need to be more efficient with your Marketing Agency costs and extract additional value.
Marketing and Procurement are two very different teams with different agendas and goals. To extract the most value, it’s essential to work together. Sometimes there is a level of knowledge sharing that is needed to bridge the gap.
Procurement can use RightSpend’s data and insights to demonstrate to the Marketing team why marketing agency costs need to be looked at in more detail. Procurement are often perceived to squeeze agencies too hard, focusing only on cutting costs and protracting contractual negotiations. We believe this perception must change in order for companies to be more efficient with their Marketing Agency costs.
Marketing teams can also be guilty of driving their marketing agencies into the ground with tight deadlines and last-minute requests, which only increase rates, negating any work done to be more efficient and mindful of spend.
RightSpend shines a light on these internal issues and identifies areas of improvement that can lead to better relationships internally with colleagues and externally with the marketing agencies themselves.
The result is a streamlined process that provides opportunities to extract additional value.
Clients tell us that RightSpend is more than just a procurement tool.
Yes, they are achieving millions of dollars of savings in marketing agency costs.
Yes, they have better procurement processes.
But RightSpend also enables a way to demonstrate additional value tangibly to the business.
Find out more about how RightSpend can benefit your business and help you to manage your Marketing Agency costs.
So, how can you reduce your marketing agency costs?
By using the right tools, asking the right questions, and analysing the right data. All of which are delivered by RightSpend.
WANT TO KNOW MORE?
Find out how to save advertising spend with RightSpend.