Representative Case Studies

Case Study 1

Agency Compensation Benchmarking & Assessment – 3 Geographic Regions – Global Consumer Retail Store Company for its Global Media & Advertising

Client Assignment/Need:

  • Reduce global advertising agency compensation costs during the third year of a multi-year cost reduction initiative at the client
  • Achieve agency cost containment by moving from local to regional structure and likewise review client/agency work practices for potential economies
  • Establish a single global agency multiplier which the agency would manage across markets – 6 representative countries (3 regions) were assessed (representing 75% of client’s global agency fee compensation)

MAC Solution/Result/benefit:

  • Through rigorous benchmarking and assessment, Morgan Anderson provided client with a global multiplier that approximated benchmark, met needs and was acceptable to agency
  • $2.1 million (12%) in reinvestment cash flow achieved from economies. Additional $1.2 million (8%) in economies achieved through benchmarking and work practices assessment
  • Client exceeded its high goal for the initiative

Case Study 3

Agency Fee Compensation Assessment & Benchmarking … Agency Search  – Pioneering U.S. Company in Professional Services Area –  Search for Brand Positioning, General Advertising, Traditional Media & Digital/Interactive Agency

 

Client Assignment/Need:

  • Make agency compensation proposals comparable for the finalists in a brand agency review process
  • Devise methodology for comparing incumbent agency and new agency candidate Scope of Work and adjustments to incumbent agency made applicable to new Scope of Work
  • Make recommendation for adding a pay-for-performance aspect to new agency’s contract and compensation – Broker/negotiate winning finalist agency contract and compensation for client

MAC Solution/Result/Benefit:

  • After devising a detailed Scope of Work for upcoming year and having all agencies submit using an established Morgan Anderson methodology, all finalist agency proposals were made comparable  – finalist agencies were from different geographic areas and of different sizes, and this had to be taken into consideration by Morgan Anderson in making its assessment for client
  • Incumbent agency’s economics for account when made comparable to all others were determined to be higher cost (less value-for-money) than 3 of 4 new finalist agencies
  • The winning finalist agency’s proposal for annual fee was one of the higher ones but when the quality/level of staffing was considered and it was determined the winning agency’s annual Scope of Work was more robust than incumbent and most other candidates, it was determined in the final analysis by client to be the  “best value-for-money” agency  – an unique risk/reward metric devised for application beginning Year 2
  • Using a structured Scope of Work all finalists had fee compensation proposals within + or – 10% of each other before negotiation
  • Morgan Anderson provided the methodologies, benchmarking and assessment processes for evaluating proposals and brokering fee

 


Case Study 6

Agency Remuneration & Agency Work Practices Assessment – Fortune 100 Global Automotive Corporation for Advertising & Media

Client Assignment/Need:

  • Support a company-wide initiative to reduce costs, including costs of marketing and advertising
  • Determine the right level of agency staffing (vs. benchmarks) and the resulting agency compensation level based on the actual Scope of Work for Year 1 and projected Scope of Work for Year 2

MAC Solution/Result/Benefit:

  • Created a deliverables-based Scope of Work from existing client data and agency diagnostics. A specific deliverables methodology was developed and applied deliverable-by-deliverable. This was then linked to agency staffing resources expended and agency costs incurred; however, costs not benchmarked at this stage
  • Despite a minor increase in Scope of Work and resource (staffing) plan in Year 2, agency fee compensation for advertising reflected $5.7 million in savings or reinvestment cash flow. 20% of this was due to cost efficiencies achieved by adjusting staffing level/mix, and 80% was due to agency transparency that enabled client to achieve a downward adjustment in agency fee for Year 2
  • Inefficient client/agency work practices and process management opportunities identified; specific work practice enhancements not implemented at this stage
  • Next steps for Year 3 identified to achieve additional operational savings or free cash flow through process enhancement and work practices collaboration between client and agency

 


Case Study 8

Annual Agency Contract, Compensation & Benchmarking Assessment – Major U.S. Automotive

 

Client Assignment/Need:

  • Assess agency staffing and compensation for recently consolidated global advertising account in 12 key markets, including North America, Europe and Asia/Pacific, against automotive industry benchmarks
  • Evaluate client and agency work practices in the United States to determine whether there were additional efficiencies that could be implemented via improved process management without diminution to the client/agency relationship and advertising effectiveness
  • Assist client in approaching agency compensation at benchmark levels in the client’s key markets
  • Provide client with agency performance (incentive) program and template for implementation globally

MAC Solution/Result/Benefit:

  • Morgan Anderson recommended compensation and staffing levels resulted in an annual savings or free cash flow of $10.2 million in the United States alone, with no reduction in the amount or quality of work done by the agency
  • Morgan Anderson recommended an agency incentive compensation program which was successfully instituted by the client, eliminating the previous “guaranteed” annual bonus payments of $2.1 to $3.1 million to the agency
  • Process management “best practices” were identified to eliminate numerous inefficiencies in the client/agency relationship. These changes resulted in an estimated $2.3 million in additional savings
  • Morgan Anderson qualitative assessment of client/agency processes was linked to Morgan Anderson quantitative benchmarking, providing client’s senior management with a compelling basis for work practice changes

Case Study 10

Agency Compensation Assessment, Benchmarking & Agency Work Practices – Design Agency “Value” Certification Program to Improve Management of Agency Assets – Fortune 200 Consumer CPG Company for All Advertising & Marketing Services

Client Assignment/Need:

  • Assess 60+ marketing services agencies serving business units including direct marketing, promotions, PR, events and interactive
  • Better manage agency compensation paid to these agencies
  • Reduce agency compensation without diminishing agency relationships 
and agency deliverables
  • Achieve a single compensation methodology for application across all agencies

MAC Solution/Result/Benefit:

  • Morgan Anderson provided client with competitive cost benchmarking to consolidate its large number of marketing services agencies to a more manageable number
  • Morgan Anderson determined that $10.1 million could be eliminated from annual agency compensation paid by client—with no reduction in the quality or quantity of the work produced
  • Client/agency structure and process inefficiencies identified, providing additional cost containment opportunities; it was estimated that an additional $7.2 million in savings or re-investment cash flow could be realized through recommended work practice changes
  • Procurement and marketing at the client worked in collaborative alignment during process

 


Case Study 11

Fee Benchmarking & Best Practices Assessment Using 3 Years of Data – Major Global Pharma/Healthcare Company for Advertising, Marketing Services & Media Agencies

 

Client Assignment/Need:

  • Procurement and marketing needed to determine whether they were managing agency relationships, agency contract and compensation negotiations in a way that supported the client’s internal directive of achieving “best-of-breed”
  • Provide procurement with annual marketing communications agency intelligence and benchmarking for general advertising, direct marketing, sales promotion, media, interactive, and public relations agencies in five major global markets
  • Benchmark client’s global multiplier, actual work year (hours) and hourly rates

MAC Solution/Result/Benefit:

  • Morgan Anderson developed diagnostics for creating custom benchmarking data. Agencies working for competitive and comparable companies were included in the survey
  • In the second year of this ongoing assignment, procurement met its annual savings goal with the results of this assignment, and needed to do no further benchmarking that year
  • Morgan Anderson’s benchmarking methodology now used by client to conduct other annual agency compensation assessments

 


Case Study 12

Agency Contract, Compensation Assessment & Benchmarking for New Procurement Initiative – Fortune 100 Global Financial Services Company for Advertising & Direct Marketing in 40 Markets

Client Assignment/Need:

  • Apply marketing/advertising with new rigorous procurement objectives
  • Assess and benchmark competitive agency compensation costs for 40 countries and three agency networks
  • Implement a single agency compensation methodology for all global agencies for advertising and direct marketing
  • Implement a one-time agency compensation cost reduction while preserving quality of work

MAC Solution/Result/Benefit:

  • Cost reduction of $17 million on annual agency compensation of $52 million (33%) achieved without reduction in quality or impact of agency work product
  • Single global compensation methodology was developed and applied to all network agencies
  • All markets and agencies made comparable on a US$ basis
  • Realignment of network agencies achieved the following year
  • Single global agency contract was designed and applied to all network agencies
  • Procurement and marketing successfully collaborated. As a result, a finance/purchasing team was moved into marketing

 


Case Study 15

Agency Consolidation from a Large Number of Agencies to a Lesser Number –  Includes Agency “Certification” Asset Management Program & Agency Contracts – Major Telecommunications Corporation for 5 Marketing Services Agency Types in U.S.

Client Assignment/Need:

  • Obtain economies and better work product by rationalizing 60 marketing services agencies to no more than 10 direct marketing, promotion, PR, event/sponsorship, and interactive
  • Recommend and implement a single compensation methodology appropriate for all agencies
  • Complete assignment without interrupting client’s ongoing marketing communications efforts

MAC Solution/Result/Benefit:

  • Morgan Anderson reduced number of agencies from 60 to 8 with increase in quality of agency work product
  • Developed a single compensation methodology appropriate for all agencies; “true” hourly-rate methodology as counterpoint
  • Achieved agency fee economies of $2.1 million (16%) without compromise in quality of work.  Received accolades from procurement, marketing and advertising for untangling a heretofore “unmanageable mess”

 


Case Study 18

Agency Remuneration Assessment & Benchmarking for Two Global Agencies – Fortune 100 Global Technology Company for Advertising & Media Agencies in 21 Countries

Client Assignment/Need:

  • Design an “improved” agency compensation methodology for global brand agencies, meaning fair across markets and a single fee-based methodology based on client’s scope and deliverables
  • Assess agency compensation in 21 countries for 2 global network agencies
  • Recommend a fair one-time agency compensation cost reduction

MAC Solution/Result/Benefit:

  • Using its methodologies and tools, Morgan Anderson identified fee economies of $4.6 million for Year 2 (14%)
  • A single-fee based multiplier for global compensation was developed and applied to all global markets, including 13 markets previously on non-fee arrangements. Morgan Anderson also developed a single global agency contract
  • Local markets agreed to have local-market advertising compensation and contracts managed by HQ

 


Case Study 20

Media ROI Assessment for Major  Telecommunications Company …  U.S. Media Agency Search

 

Client Assignment/Need:

  • Implement a media buying AOR assessment (TV/Radio and Print) with a media spend of $20 million
  • Develop a media agency fee compensation methodology and new agency contract
  • “Rate” and “weight” finalists on quantitative criteria (delivery versus strict buying 
guidelines), stewardship practices and qualitative (“value add”) criteria.

MAC Solution/Result/Benefit:

  • Winning candidate for Spot TV indexed at 100, highest (most expensive) candidate indexed at 143 and Low SQAD indexed at 116, indicating that media buys could be more aggressively negotiated
  • Winning candidate Spot Radio indexed at 100 and highest candidate indexed at 141, indicating that buys could be more aggressively negotiated in the markets considered
  • On a media spend of $20 million, $1.8 million in buying efficiency (9%) was obtained without diminution of media effectiveness
  • Annual monitoring and implementation of “best practice” media procedures by Morgan Anderson led to additional savings of $1.1 million (+6%)

 


Case Study 23

Agency Relationship Enhancement Study  for Fortune 100 Technology Company for Advertising & Media Agencies in U.S.

Client Assignment/Need:

  • Identify the “root cause” of a negative relationship between client and client’s long-time agency, before client decided whether to put the account into review
  • Identify organizational structure problems at client and/or agency that negatively impacted client-agency work practice and relationship
  • Streamline and enhance the internal ad development processes utilized by client with the agency

MAC Solution/Result/Benefit:

  • Extensive diagnostic interviews identified the “root cause” of negativity between the new lead client and the agency: a lack of communication
  • Morgan Anderson recommended an alternate process for communication, which, when implemented, reversed decision to put the account into review
  • Identified barriers in client/agency work practices, including communications, advertising development process and annual agency evaluation process
  • Recommended “best practice” advertising planning and work processes to improve the efficiency and effectiveness of client/agency relationship.
  • Recommended rotations in staffing that when implemented over a one- year period, resulted in a stronger client team — a change well-received by agency

 


Case Study 25

Mass Printers Benchmarking & Compensation Assessment for Fortune 200 Retail Chain  to Contain its Printing Production Costs

 

Client Assignment/Need:

  • Support company’s goals for printing/production cost reductions while maintaining world-class quality and service requirements for it’s FSI (free standing insert) program
  • Recommend new supplier candidates in a review situation to achieve a more competitive mix of printing suppliers and solutions, yet maintain relationships with existing suppliers
  • Train internal procurement personnel in “best-in-class” sourcing, negotiation and contracting methods as applied to state-of-the-art printing needs

MAC Solution/Result/Benefit:

  • Morgan Anderson provided a formal methodology for supplier selection, RFP development and negotiation strategy. Client’s procurement department educated on best systems and processes
  • Led by Morgan Anderson, printer expertise, procurement and marketing aligned to achieve objectives. Introduction of new suppliers to the mix by Morgan Anderson provided new benchmark data and competitive advantage in supplier negotiations
  • Achieved cost reduction of $14.5 million (7%) under new contract using fact-based competitive analysis. Existing suppliers continued, and a new one added.  Client exceeded all objectives

Case Study 26

Agency Audit, Fee & Creative Assessment for Fortune 100 Global Healthcare Company for Advertising & Media

 

Client Assignment/Need:

  • Review and assess: 1) all client and agency advertising processes vs. “best practices”, and 2) all agency OOP costs (media, production, other) on behalf of the client vs. industry cost benchmarks for an advertising agency supporting all marketing and advertising work for North American business unit of major global company
  • Assess and recommend 1) work practices, 2) creative/production process and costs, 3) agency compensation costs, 4) financial management process, and 5) media planning/buying processes and buying costs
  • Develop “best practices” agency contract that would bring rigor and transparency into this long-standing client/agency relationship

MAC Solution/Result/Benefit:

  • This Assessment determined:
    • Client/agency work practices were informal, depended on personal relationships to succeed and 
did not follow Corporate guidelines for working with an outside vendor
    • Although creative/production costs were at benchmark, printing costs were not
    • Agency compensation was high and derived heavily from income received from purchase of media, not from creative work done for client
    • Financial processes in place at the agency were unacceptable
    • Media planning and buying process was not “best practice” and media buying costs were high over 
industry benchmark
  • Price/value was determined positive for its creative development and photography/pre-press, but not for media expenditures
  • Media planning and buying responsibilities were subsequently placed with a more effective and efficient media resource. 
Implementation steps taken included:
    • Stronger policing of corporate guidelines and procedures for outside vendors, as well as restructuring of client procurement tools
    • Implemented resource-based compensation methodology
    • Implemented “best practice” client/agency contract
  • With implementation, agency was placed on a “preferred vendor” list, allowing it to potentially recoup the loss of agency compensation from the removal of media buying as one of its responsibilities
  • A minimum reduction of 15% in agency fee compensation was negotiated longer term and better media planning/buying achieved short term

Case Study 28

“Best Practices’ Agency Work Practices Assessment – Major Entertainment/Media Company for Advertising, Digital, Media & Production Spend Investment

 

Client Assignment/Need:

  • Review advertising agency creative and production process for media TV and print to ensure client processes were followed
  • Review advertising agency processes against “best-in-class” companies
  • Compare agency’s out-of-pocket costs on behalf of our client for creative, photography, pre-press and printing against industry standards and “best- in-class” procurement

MAC Solution/Result/Benefit:

  • Assessment determined that client’s processes not well documented or fully understood by the agency, or effectively policed by procurement, resulting in an inefficient and chaotic internal process at agency. Neither company’s processes were “best-in-class”, which created opportunities for miscommunications, errors, and fraud
  • Opportunities for significant formalization of media procurement practices were identified, particularly in the area of supplier selection. No supplier selection criteria was provided by the client or used by the agency. Agency supplier selection was haphazard and unprofessional
  • Agency print prices higher than benchmark providing client with another opportunity for additional cost reductions
  • Agency found to be doing a good job against benchmark pricing for photography, creative, and production
  • Once recommended client/agency work process changes were made, agency was placed on a “preferred vendor” list and allowed to bid for creative work from additional business areas of client

Case Study 30

Media Agency Fee & Best Practices Assessment –
Fortune 100 OTC Pharmaceuticals Company for Interactive/Digital Spend Investment

 

Client Assignment/Need:

  • Assess compensation requested by client’s digital/interactive agency. Proposed fee would increase by 25%
  • Reduce requested compensation without harming agency’s work product, the client/agency relationship, or agency finances
  • Identify where client and agency perceptions were at odds thereby causing inefficiencies. If gaps identified, recommend improvements to get relationship moving towards best-practice levels

MAC Solution/Result/Benefit:

  • Using a combination of benchmarking and work-practices assessment, Morgan Anderson identified that increase in staffing and a change to its overhead rate resulted in the 25% fee increase proposal
  • Morgan Anderson analysis determined agency had too many execution specialists working on client’s business at the expense of strategic insight. Consequence of restructuring agency practices and staffing plan was elimination of certain staffers and replacement by other (more qualified) staff
    • Compensation slightly reduced compared to prior year, and no need to do a 25% fee increase due to staff restructuring and work practices improvement identified. Agency had no problem concurring, as its finances were not negatively impacted
    • Interactive strategies became better grounded in consumer needs. Situation monitored to keep agency staffing and deliverables on track

Case Study 39

Agency Benchmarking & Assessment – Global Asia Technology Company for Advertising & Marketing Services in 9 Asia/Pacific, North American & European Countries

Client Assignment/Need:

  • Devise a single agency compensation methodology for global marketing HQ that can be benchmarked periodically and used to determine each of 9 Asia/Pacific markets annual agency fee compensation. Single global network agency used. Americas and EMEA had previously been assessed
  • Develop a “primer” for client’s in-market use that gives each market direction for determining local agency scope of work, agency staffing plan, agency economics, and an appropriate agency performance fee
  • Conform each local market to client’s global agency contract standard and recommend a Web-enabled agency performance evaluation process

MAC Solution/Result/Benefit:

  • Morgan Anderson provided client with template tools for each market to use in negotiating local fee arrangements that allow for HQ/regional input
  • Morgan Anderson provided the methodology and assessment process for negotiating agency compensation for each market. Rolled each local market into a single global agency compensation multiplier methodology that had comparability so value-by-market could be ascertained. This enabled “centers of excellence” to be determined and “value-for-money” for each local agency
  • Client’s 10% cost reduction objective exceeded within two years