There’s an old adage that we all know: always compare apples with apples. It sounds simple, until some know-it-all points out that there are 7,500 varieties of apple in the world! So, there are layers of complexity even within this simple matter of choice.
The same is true of benchmarking agency costs. Many companies have compiled their own internal lists of agency rates from rate cards, and from that worked out average fees for various activities. Marketing procurers then use this average as a benchmark, to inform negotiations with agency suppliers and ensure they get the best deal.
Are they really comparing like with like though?
Is the data up to date? How can an average like this ever reflect the often less tangible value that agencies claim to provide – the ideas and strategy – let alone the investments they may have made in top talent?
There are other factors too. Is an agency that charges less per hour for its time necessarily a better option than one with a higher hourly rate but able to do a better job in less time? And what store can even be placed in rate card fees, when, as any media buyer will tell you, no-one ever pays rate card?
Getting meaningful results from agency benchmarking exercises starts with the client inputting the right information: a granular Scopes of Work that sets out what needs to be done and on what basis, whether project/deliverable or retainer-based.
Having established these parameters, the pricing intelligence exercise should then proceed using live data – the agency costs that are actually being used in the market, not those published in a range of agency rate cards.
By comparing RightSpend’s externally-sourced, live market data – real data compiled from more than 75 global markets and 10 different agency disciplines – marketers and procurers can have a meaningful conversation about the costs and the nuances that differentiate one agency from another. Working with RightSpend’s experienced consultants, who have backgrounds ranging from production to procurement, they can investigate where the added value is for the price being quoted, whether this is in the creative talent or in the technology being deployed, in the efficiency of production technologies or the extensive scaling of assets that makes the price so competitive.
Using this data and these insights, marketing procurement can sit down with agencies and have transparent conversations, leading to greater understanding on both sides as to exactly what will be required to deliver on the brief and meet all stakeholders’ expectations. Transparency is the key word here: agencies might fear that benchmarking is purely intended to commoditise their offering and drive down their prices; this is not the intention; what should happen is that marketing procurement have access to more accurate data, understand what their agency colleagues can deliver, and make better, more informed decisions.
Agencies, like apples, are not all the same, and RightSpend’s data-driven marketing procurement platform seeks to emphasise their unique value.