Issue 108 - 03/02/09

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With a flurry of pitching activity going on over the summer period, many marketers are using this traditionally quiet time to review their advertising suppliers (media, creative, digital etc) in an attempt to reduce their advertising costs by going to competitive tender. In this edtion of TrinityP3 e-news, we review the possible outcomes of such plans and warn of the consequences when cost cutting goes too far...

Pitching not the way to reduce fees

There is a pitching frenzy going on, with many marketers attempting to reduce their costs by going to competitive tender.

Not surprisingly, agencies are responding, with some marketers reporting agencies offering retainers with discounts of up to 50% and more on overhead and the offer of senior resources at no cost. There is a lot to be said for the old saying, "if something appears too good to be true, it probably is".

With heavily reduced retainer proposals and discounts, there are 3 likely outcomes, none particularly good for the advertiser long-term.

1. The agency remuneration is unsustainable. Within 6 - 9 months the agency will be complaining about the low level of remuneration, the higher than expected level of work and the drain on human resources. By this stage the agency will be bedded into the relationship and so pitching again is not a preferred option. But not addressed, this situation leads to high staff turnover at the agency and a fall in the morale and the relationship between the two parties.

2. The agency is recouping the shortfall in the retainer, but liberally applying the rate card to all activities. While the rates under the retainer may be heavily discounted with salary multiples of 1.3 - 1.5 times, significantly lower than the 2 and 2.4 times often quoted, the rate card is often calculated at 3 and 4 times the cost. By simply upping the number of hours required for each job, many agencies will quickly make up the short fall in the retainer, without the client being aware.

3. The agency places under qualified and less experienced staff on the business. While the 'gun' staff chosen at the pitch may turn up for meetings, to minimise the impact on their bottom line the work behind the scenes is being done by less experienced staff who take longer and are more likely to make mistakes.

Of course, none of this is the agencies fault. They are in business to win business and make a profit. If price is the main driver of your selection process, then no-one wants to lose for the sake of a few thousand dollars here and there. But as they say "Do you want to drink the scotch you pay for, or the one you enjoy?" It's the same with agencies. You will end up getting what you pay for in the medium term, as there are no real bargains. The ideal agency relationship is one where the agency is so aligned to your business they are thinking about it 24/7 and not worried about if they are getting paid enough.

To find out what you should be paying your agency, contact TrinityP3 in Sydney on 02 8399 0922 or Melbourne on 03 9682 6800 or email Darren Woolley to discuss a remuneration benchmarking assessment. It provides advice on the right level of resourcing, remuneration and the best model for long term, sustainable relationships.

Budget Workshops - LAST CHANCE

TrinityP3's Budget Maximisation Workshops
Melbourne: Wednesday 11th February
Sydney: Wednesday 18th February
$190 per person, $170 for AANA/AMI members

Take control of your marketing budget in 2009. Empower yourself with insights into making creativity work harder - a tighter budget does not have to affect your marketing impact.

When economies get tight, don't slash your budget, think smarter and review how you are working. Click here to download your Booking Form or email georgia@trinityp3.com for more details.

Evalu8 your relationships

The new Evalu8ing On-line Survey System allows you to evaluate and identify the collaboration and quality of the relationships with people working internally or externally across a number of organisations.

Evalu8ing is a self managed, low cost online system set to revolutionise the evaluation of relationships:
• intuitive, flexible interface
• coloured graphical reports show relationship status
• accommodates up to eight defined parties
• flexible to accommodate your own questions
• or use any one of the standardised panels

Evalu8ing. Collaboration. Relationships. Performance.
For more information, click here for the Evalu8ing pdf presentation
or visit the Evalu8ing website

Making smart media choices

Australia Post's Carbon, Cost & Communications
Making Smart Media Choices
Breakfast Briefing
Tues 3rd March 2009
National Press Club, Barton, ACT

Chris Sewell will speak on marketing communications and the environment. Other speakers include:
• Rob Edwards, CEO, ADMA
• Richard Stanton, CEO, A3P Aust Plantation Products
• Mark Warren, Commercial Manager, Australia Post

Attendance is FREE and places are limited. For more information, contact Sonia Brooks, Australia Post