Reducing agency costs reduces results: Aprais study

Study investigates 21,000 cases which relates remuneration and its impact on the service an agency delivers

Feb 25, 2020 04:06:00 AM | Article | Campaign India Team

Clients should seek cost savings from their agency but they need to be clever about it

According to a study undertaken by Aprais, financially considerate marketers get better results from their agencies. 
The agency investigated 21,000 cases to check whether a marketer's regard for its agency’s remuneration impacts the service it delivers.
The analysis revealed that clients rated in the top 10 per cent for their sensitivity to their agency’s finances received a much better (21 per cent) staff allocation to their business than the least considerate counterparts.
Top scoring clients achieved 16 per cent better creative performance from their agency compared to the low scorers. 
Key messages for agencies
Be transparent about the relationship between fees and the resources it buys - especially the access to senior-level agency personnel. 
Ensure your team contains at least one trained and experienced negotiator. Don’t confuse the skills of ‘selling’ and ‘negotiating’.
Key messages for marketers 
Agency agreements should be negotiated in two stages. Marketers should first decide the required involvement of the agency’s senior management. The first negotiation is between marketing and procurement to create a workable fee package. Only then can the client-agency negotiation take place.        
Clients should seek cost savings from their agency, but these should be achieved through the optimisation of work processes and reducing the number of stakeholders rather than by reducing the input of key staff.