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Focus on Managing Capabilities Over Managing Agencies

By Laurel Erickson | September 01, 2020 | 0 Comments

MarketingMarketing Organization and Talent

In recent years, the traditional agency of record relationship where a select agency handles the complete scope of assigned marketing and advertising functions has given way to more of a project-based approach across multiple agencies. This includes not only the growing number of in-house agencies (Gartner’s 2020 Marketing Operations and Organization Survey found that in-house agencies are used by 34% of marketing leaders), but also a portfolio of specialty agencies – from creative and media agencies to digital and SEO agencies.

Managing a broader set of agency relationships comes with its own challenges. The strategic vision maintained by the account team in traditional AOR relationships must now be coordinated across multiple agencies. However, managing a portfolio of agencies is about more than multiple contacts. Matching the right agencies to the right capabilities across coordinated initiatives requires a different way of working with and across agencies. You must continually assess if you have the right resources for the right type of work.

The budget-pressures that Covid-19 has brought is forcing marketers to do more with less, and many marketers are assessing their current agency lists to identify opportunities to optimize costs. They inventory their agencies and their agency spend, looking for clear targets to cut.  This exercise often turns out to be more difficult than anticipated, however, as each agency offers capabilities that are still important and needed.

One of the biggest pieces of advice we give to clients when assessing their agency portfolios is to shift their focus from managing agencies to managing the capabilities that they need their agencies to provide. Rather than inventory agencies and the capabilities they offer, inventory the full list of capabilities you need to deliver your marketing strategy, and identify which agencies are responsible for delivering what.

From an optimization standpoint, this exercise will help identify zones of overlap where multiple agencies may be delivering to the same capability. One area where there is often redundancy is in defining your overall marketing strategy, with each agency defining the target audience, competitive landscape and strategic goals from the point of view of their specific expertise. Focusing on capabilities can also help you identify opportunities to consolidate. If an agency is delivering a single capability that could be covered just as well by another agency in your roster, consider streamlining the number of agencies you must manage and support.

Managing a portfolio of agencies isn’t easy, but Gartner is here to help. For more on managing to capabilities, see “Manage Agency Portfolios With Capabilities-Focused Scorecards”. For more on how to optimize agency spend, see “Agency Cost Optimization the Right Way”.

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