Consequences of an Agency Review: What Every Client Should Consider First - Joanne Davis

Photo by UX Indonesia on Unsplash
Photo by UX Indonesia on Unsplash
Photo by UX Indonesia on Unsplash

Prevalent Reasons for Agency Reviews for Mitigation, and Realities:

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Review of One

If a marketer believes changing an agency might result in savings, we suggest the marketer consider a “review of one” first:

  1. Provide expectations to the incumbent agency — in writing

Costs to Change Agencies and Productivity for the Marketer

If you cannot find a suitable solution with your current agency, carefully consider the following before you start a review for a new agency.

Changing agencies requires time, money and patience. It also requires understanding of the loss of productivity during a review and during a new agency ramp up (even a change to an agency within the same holding company as one potential outcome from a “Review of One” results in loss of productivity). And keep in mind the risk of your proprietary knowledge being transferred to potential competitors if your incumbent goes to work for a competitor (despite NDAs and contractual requirements (i.e., team can’t work on a competitor for six months), it is difficult to enforce and avoid mistakes that an incumbent agency might make in sharing your future plans).

Below I have listed assumptions and numbers to illustrate the hard costs.

Marketing department costs — hard costs and loss of productivity:

  • Full up agency review (that includes spec creative) usually takes at least three months

Don’t forget there is almost always at least a month’s overlap between the old agency being paid and the new agency being paid. If the fee is $12mm per year, that’s two months of double paying $1mm.

Loss of institutional knowledge of the old agency is harder to quantify. It’s more serious if there is limited history at the client. Ways to mitigate loss include:

  • Prepare for change by ensuring that client has historical copies of all materials

Hidden Costs for a New Agency Starting

Dollar value of time it takes for new agency to ramp up and get to full speed depends on how large, how many brands, client governance of the agency (how many clients can “ask” for work) and how complex the client’s business is. A consumer product is a lot easier to learn than financial services, technology, pharma, etc.

It usually takes about three months for client companies to feel a new agency is ramped up fully.

We strongly urge every client to think through the risks and the costs and work harder with your current agency before conducting a review.

The bottom line: only conduct an agency review if you are pushed to do so and there are no other suitable alternatives.

Visit Joanne Davis Consulting or connect with Joanne on LinkedIn.

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