The Digital Difference: Best practices for selecting and managing digital agency partners

BEST PRACTICES FOR ACQUIRING AND MANAGING
AGENCY PARTNERS IN THE DIGITAL SPACE
Content contributors: Jane Bedford, Jon Cook, Rob Crigler, Kerry Kielb. Art direction: Dan Searle
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical,
photocopying, recording, or otherwise — without the permission of The Bedford Group. This document provides an outline of a presentation and is
incomplete without the accompanying oral commentary and discussion.

Online ad spend has increased more than 53% over the last 5 years and
continues to climb with growth projected to top $50 billion by 2015.
DIGITAL MARKETING
EXPLOSION
© 2013. Production (reproduction) of content strictly prohibited. | 3
2002 2003 2004 2005 2006 2007
ANNUAL REVENUE IN BILLIONS1
2008 2009 2010 2011
0
5
10
$6.0
$7.3
$9.6
$12.5
$16.9
$21.2
$23.4
$22.7
$26.0
$31.7CAGR: 20.3%
15
20
25
30
2010 2011 2012 2013
U.S. ONLINE AD SPENDING, 2010 - 2015 (BILLIONS)2
ONLINE AD SPENDING % CHANGE
2014 2015
0
10
20
30
40
50
50
$26.0
$31.3
$36.8
$41.2
$45.5
$49.5

Technology is Fast;
Consumer Adoption is Faster
Ever increasing consumer
connectedness
• 53% U.S. smartphone penetration and
continuing to increase
• 42% of US adults are “ultraconnected”
(3 devices/3x/day) and expected to be
the global majority by year end
Digital Marketing is of primary
importance to the C-suite
• 68% of C-suite executives identify
digital marketing (and social tools) as a
top 10 corporate priority
• More than 70% of marketers are already
taking budget out of traditional
channels to fund new interactive spend
DIGITAL MARKETING
EXPLOSION
3
4
5
6
4© 2013. Production (reproduction) of content strictly prohibited. |

Adaptive Marketing is the New Norm
DIGITAL MARKETING
EXPLOSION
OLD
BRAND TARGET
MEDIA
CHANNELS
DATA
Agency challenge to adapt
• Mass media is no longer the foundation
• Data Analysts, Technologists and
Developers have become a necessary
part of the core Creative team
• Consumers are the new publishers and
influencing them is as important as
media spend

DIGITAL MARKETING
EXPLOSION
NEW
DATA
BRAND TARGET
MEDIA
CHANNELS
Adaptive Marketing is the New Norm
Agency challenge to adapt
• Mass media is no longer the foundation
• Data Analysts, Technologists and
Developers have become a necessary
part of the core Creative team
• Consumers are the new publishers and
influencing them is as important as
media spend

The agency world has been evolving to
better suit the new era it is operating in.
The structure and function is as unique as
the marketing they manage.
THE DIGITAL
DIFFERENCE

TOPICS:
The digital agency difference
Knowing when you need a new digital partner
Steps for a successful selection process
Readying for a new partner
Negotiating a relationship that lasts
Summary
Q&A
THE DIGITAL
DIFFERENCE

Common agency roles & responsibilities have emerged over the past decade...
THE DIGITAL AGENCY
DIFFERENCE
ADVERTISING AGENCY DIGITAL AGENCY
MEDIA AGENCY
BRANDED
CONTENT
DIGITAL
ADVERTISING
MEDIA
STRATEGY
TRADITIONAL
MEDIA
DIGITAL
MEDIA
SEO
BRAND STRATEGY
ACCOUNT LEADERSHIP
TELEVISION
PRINT
RADIO
OUTDOOR
DIGITAL STRATEGY
WEBSITES
TECHNOLOGY
DEVELOPMENT
DIGITAL PLATFORMS
MOBILITY
SOCIAL
MEDIA

This model is loaded
with exceptions.
It is in rapid
evolution and
deconstruction.

The ownership of
branded content and
digital advertising are
areas of highest contest
between ad and digital
agencies.
1 3
As digital agencies have
strengthened, matured
and grown in scope and
sophistication - the
“AOR” position is in play
for many agency types.
2 4
Ad agencies saw a decline in position
and revenue as digital broke out as a
specialty to other agencies. That same
thing is happening to digital agencies as
many clients prefer to send key
elements of their scope to specialists.
Holding companies centralizing
digital media away from ad and
digital agencies leaves a major
question on where key relationships/
decisions with digital properties
should live (e.g. Facebook).
THE DIGITAL AGENCY
DIFFERENCE
Specialization
Effect
Media Agencies
Stake Claim
The
Battleground
Leadership
Evolution
1
2
3
4

DIGITAL AGENCY
EVOLUTION
LOOK OF THE LEADER
Acquisition of key agency lead skill sets
creates “permission” to serve as lead agency
KNOWLEDGE IS POWER
Harnessing data and
intelligence drives customer
relationships.
KEYS TO THE KINGDOM
The owner of brand strategy
often is the owner of the AOR
position. As digital agencies are
more armed with this skill set,
the AOR role has evolved.
GENERAL CONTRACTOR
Digital agencies are learning to
be the force that brings
together the other components
of marketing - a role once
reserved for and embraced only
by ad agencies.
COMMITMENT TO THE
BASICS
Embracing core ad
agency marketing skills (a
premium on messaging,
creative briefs,
target audiences, brand
planning) allows
digital agencies to play in the
bigger game.

KNOWING WHEN YOU
NEED A NEW DIGITAL
PARTNER

KNOWING WHEN YOU NEED
A NEW DIGITAL PARTNER
History shows that while decisions are varied, the most common predictors of a shift fall
into one of five categories.
Triggers for a digital agency search
Marketplace changes
• New opportunities require new specialized skills
• Austerity program
• Want to consolidate to leverage size/optimize
efficiencies
Business/Strategy changes
• Company direction no longer matches with
agency skills
• You’ve outgrown your present team
Need for fresh thinking
• Creative disagreements
• Dissatisfaction with results
Relationship difficulties/People changes
• Discontinuity of team
• Chemistry clash
• New marketing team
Compensation
• Question the value for the spend
• SOW disagreement
01:
02:
03:
04:
05:

The first and most important step is to assess and evaluate your current partnership. If
there are concerns, it may be possible to institute remedies to make existing resources
more suitable.
Ask yourself these questions:
?
Does your current agency partner have the bandwidth and skills necessary to help your
brand compete in the digital space?
Is your agency keeping up with
new technology?
Does your agency help you to
capture the right data and use it to
regularly optimize?
?
? Is your program continually
improving?
Has your company made a
significant shift since you hired
your agency ?
?

Gain consensus among key
stakeholders on key issues:
• To search or not
• The right agency model
• Selection criteria
• Foremost goals and
objectives
• Reduce required time of
corporate staff member so
they can stay focused on
their every-day business
• Provide metrics and
analysis of each step
• Manage difficult logistics
• Robust ongoing research
and agency database
• Counsel on what to look for
and expect
• Customized evaluation tools
that mirror needs and
processes for focused choice
• Total documentation of the
pros and cons of each
candidate along the way
• Offer “confidence” for the
“rightness” of the decision
based on process and research
• Say the hard things client
doesn't want to say
• Create “ground rules” for
agency/client interaction
• Help unlock mysteries
of costs/contract negotiations
• Rigorous benchmarking
• Deep-dive reference report
CLARIFY IMPLEMENTSIMPLIFY REDUCE RISK
Often it’s helpful to have a third party consultant help you to determine your needs and, if
a search is necessary, help you to select the right partner.
DON’T GO AT IT ALONE

A SUCCESSFUL
SELECTION PROCESS

SELECTION PROCESS
STEPS TO SUCCESS
Don’t treat “Digital” as an island.
The Integration challenge begins
internally.
• Too often siloed by “online” and “offline”
departments and leadership
• Digital marketing partner will influence
success of all efforts so key marketing
stakeholders must be involved
Break down the barriers by reaching
consensus on key issues.
• What is the role of digital marketing in
building brand perception?
• What metrics should be used to judge its
success?
• What are the strategic priorities for the brand
in the digital space?
• How will digital marketing impact the growth
of a brand?
• How will a digital program help achieve the
organization’s business objectives?

A SUCCESSFUL
SELECTION PROCESS
AGENCY SELECTION LIFE CYCLE
ELIMINATING CONSIDERING EMBRACING
OBJECTIVE INFORMATION
SUBJECTIVE INFORMATION
QUALITY ASSURING TRIAL SAMPLING SELECTINGSCANNING

Defining needs/setting goals,
criteria needs assessment
Scanning: Getting down to a
short list
Quality assuring
Trial: Evaluating finalists
Selection
Creating a winning partnership
THE FUNNEL
A SUCCESSFUL
SELECTION PROCESS

READYING FOR
A NEW PARTNER
Digital has added to an already extensive marketing landscape where brands fight for
attention among hundreds of consumer touch points.
Increasing fragmentation of channels means
that marketers must closely evaluate how
they allocate resources.
DIGITAL
DATA
ANALYTICS/
QUANTITATIVE
WEBSITE/
ECOMMERCE
ONLINE
DISPLAY/
BRANDING
SEO/SEM
SOCIAL
MOBILE
LOCAL

READYING FOR
A NEW PARTNER
Marketing organizational structure of old
may not be designed to meet the digital
opportunities of today.
IT infrastructure and technology may need an upgrade.
• Make friends with your IT department
- Digital initiatives require cooperative alliances
• Set mandates of how you will interact with each other
• Agree on a new structure and rules of engagement
Data and analytics disciplines should be given the prominence they deserve.
• This function is the linchpin for helping to drive smarter, more informed strategies and
results-oriented programs
Make hiring and retention of talent a priority

READYING FOR
A NEW PARTNER
Make your digital system flexible.
• Business processes must keep up with the
rapidly changing channel landscape to
facilitate smooth integration and
adaptation/adoption of the new order
• A robust case management is key
- Digital is binary, either it works well
or it doesn't at all
• Millions of tiny details so, you must ensure
an infallible method of workflow tracking
Breakdown the siloes to ensure
integration is across all consumer/
customer touch points.
• Establish clear definitions of who does
what and how each discipline will integrate
WEBDEV/ECOMMERCE
PRINTMEDIA
MOBILE
PUBLICRELATIONS
SEO/SEM
CRM
SOCIAL
BROADCASTMEDIA
DATAANALYTICS
DIGITAL TRADITIONAL
CROSS-CHANNEL INTEGRATION
DIGITAL/TRADITIONAL: TYPICAL SILOES

Recognize that the
pace has changed
and counsel in the
adoption/expectations
for this reality.

READYING FOR
A NEW PARTNER
The Importance of Integration
The enterprise must be on board
whether they like it or not.
• Create a climate for a faster paced
environment
• Educate leadership on opportunities and
how to harness them
• Bring traditional counterparts up to speed
ITOPERATIONS
TRADITIONAL
MARKETING
DIGITAL
MARKETING

READYING FOR
A NEW PARTNER
• Define delegation paths and appropriate
level of authority to ensure reasonable
response, eg:
‣ Develop a social media action plan that
considers route by issue (PR, legal,
customer Service)
‣ Select technology needed to best handle
routing (integrated platform support)
• Establish protocols for how agencies will
work together
ITOPERATIONS
TRADITIONAL
MARKETING
DIGITAL
MARKETING
The Importance of Integration

SUCCESSFUL
DIGITAL AGENCY
COMPENSATION
APPROACH

DESCRIPTION SOLUTION
TECHNOLOGY
ROLE
DUPLICATION
DYNAMIC
EMBRACE
DISCOVERY
PRODUCTION
INDEMNIFICATION
Level of technology involvement is one of the largest
drivers to size of agency scope, rate structure, team
make up. And one of the largest sources of friction
when not established early.
Critical to establish role of client IT department in
technology planning, development and ongoing
maintenance.
There is a common question when employing a
digital and ad agency on whether there is duplication
between creative leadership, account management
and strategy.
Successful digital agency relationships allow for
interactive-specific roles in these key positions.
Common mistake in digital agency scoping is the
establishment of final fees for all technical
development at the outset of relationship.
Important to fund and schedule for proper discovery
and collaboration for the technology component
before final fees are established.
Obviously, there are increased options for offshore
rates as a component of overall digital scope.
Allow digital agency to staff for the much-needed
quality assurance and project management of
production.
Quickly rising on the list of elements that cause the
most negotiation delay and heartache between digital
agencies and brands, because of patent troll claim
increases.
Look for reasonable parameters on what types of
technologies should be covered and that the agency
has impact on, and look to find a reasonable cap to
indemnification level.
Key differences to consider when creating a successful digital agency
master services agreement.
SUCCESSFUL DIGITAL AGENCY
COMPENSATION APPROACH

SUCCESSFUL DIGITAL AGENCY
COMPENSATION APPROACH
Core pillars of digital agency master SOW best practice ...
INCENTIVE
LABOR BASED
VALUE BASED
PRODUCTION
Digital agency’s ability and remit to provide specific metrics of engagement,
commerce, transaction, etc. makes this a compelling and key incentive
consideration. Rewards effectiveness and partnership.
Increasing in both need, frequency and priority, value-based compensation allows
for compensation for the market or fiscal impact of an output rather than the time
it took to create. Rewards big ideas, business-penetrating thought process.
Standard method of compensating any agency type remains an important part of
the compensation mix. Successful rate-based labor important for standard digital
agency work. Optimal if a mix of two core types:
• Retained Resources: Enables agency to provide optimal team continuity to
client partner, allows agency to provide level of firm forecast for a core portion
of overall scope.
• Scope of Work Based Resources: Provides flexibility for portions of scope
that are less confirmed at outset of year/relationship. Best when working
against an overall aggregate budget target / forecast, even if not guaranteed.
It is important that digital agency commits - as relevant - to a solution for X% of
overall scope to be handled in sub-premium or standard rate structures. Offshore
production is a common solution or form of production.
Proportions of the boxes in the diagram are not meant to be an exact
recommendation. Each relationship requires an independent review
of appropriate mix.

SUMMARY
TEN THINGS TO REMEMBER
Agency role structure is in massive evolution,
especially on where the point of leadership lies.01:
Digital agencies are quickly gaining the skills
required for being the brand AOR.02:
Evaluate your current partnerships first.03:
Include all stakeholders in determining
needs, not just the "digital" team.04:
Bring in some marketing management help
for optimal results.05:
Gain consensus on strategic needs, not just
tactical skills.06:
Get your team ready – make data analytics
the foundation.07:
Break down the internal siloes to achieve
partner integration.08:
You cannot be too descriptive when defining
roles and mapping workflow.09:
Recognize and discuss key differences in agency
types when defining digital agency comp.10:

FOR MORE INFORMATION, CONTACT:
Kerry Kielb
Senior Consultant
The Bedford Group
404.237.4565
kkielb@bedfordgroupconsulting.com
Jon Cook
CEO and President
VML
816.218.2800
jcook@vml.com
SUMMARY
Jane Bedford
Principal and Founder
The Bedford Group
404.237.4565
bedford@bedfordgroupconsulting.com
Rob Crigler
VP Digital Marketing
Rooms to Go
678.475.0499
rcrigler@roomstogo.com

1. IAB Internet Advertising Revenue Report conducted by PricewaterhouseCoopers, 4/2012
2. Emarketer, US Online Ad Spending Forecast, 6/2011
3. Nielsen, The Mobile Consumer, A Global Snapshot, 2/2013
4. Forrester report: 2013 Interactive Marketing Predictions, 8/2012
5. McKinsey and Company, Global Executive Survey, 5/2012
6. The Bedford Group Database Extract, 2/2013
Related Research Documents
The Bedford Group Agency Selection Process © 1986-2013
SOURCES

The Digital Difference: Best practices for selecting and managing digital agency partners

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