The agency space is constantly evolving into more diverse and complex agency operating models and more numerous remuneration approaches. As such, marketers have various models available to them when searching for a best-fit agency partner. The best model will be different for each marketer, and often marketers create a mix of multiple models in order to most effectively reach their goals. The three main dominant types include:
- The Retained Agency Model
- The Bench Model
- The Single Client Team Model
Remuneration ModelsIn terms of remuneration models, marketers are increasingly developing their own blended approaches. The ultimate goal for clients is to discover the most effective way to best engage their agencies to work more effectively so they can make budgets go further. The different approaches to reward and incentivize agencies can vary but are typically around inputs, outputs, and outcomes with the opportunity for marketers to develop a singular or blended approach with all 3.
- Inputs- Retainer relationships and fees, time or hourly rate, rate card items
- Outputs- Produced work, project work, and fees
- Outcomes- Performance, project completion, commissions
The Retained Agency ModelIn previous years, the agency retainer models dominated the industry primarily because agencies knew the traditional platforms of broadcast and print well. Although this model is still common, client attitude has changed. According to Forbes, marketers are increasingly seeing instances where moving forward without an agency of record is not only possible but beneficial. Specialization has become increasingly important in the agency realm, and across the board, more marketers are led to believe that no single agency could possibly handle all of a client’s different needs. However, the retainer model is proven to work well where there is a frequent need for strategic input and advice. It is ideal when a deeper understanding of the brand is needed, and often a longer-term agreement between the client and agency, which presents an opportunity to grow a trusting relationship. This way, agencies have the freedom and ability to dive into client strategy and goals which many marketers find great value in. The retained lead creative and media agencies typically exist in smaller amounts and are considered specialists. For example, PR, CRM, data and digital agencies are often retained. The retainer model creates more of a sense of accountability and also provides a higher level of consistency and predictability between work with a client. An agency that remains on the roster is typically considered to be the best in their field, and this model works well when there is a need for consistency and familiarity with the brand in order to overcome certain challenges. This model may be most ideal for you and your team if you’re searching for:
- Trusted Advisors
- Client/Agency Relationship Depth
- Consistency of Approach
- Consistency of Contacts
The Bench ModelCompletely opposite from the retained approach, some clients structure their agency model around a bench of preferred partners who have pitched for a spot on the bench and are involved and actively working with the brand in some form. This approach is becoming increasingly popular as there is an industry shift towards more project-based work. This approach is more demand-based, with the clear benefit being flexibility. It allows agencies to call on expertise in certain areas when needed. The downside is the risk of asking an agency to work on-demand and hoping they’re available. Another challenge lies in attempting to create an integrated agency team made up of several different specialized agencies working toward one mission. Creating any sort of long-lasting agency relationship through this model can be extremely challenging with the constant rotation of expertise needed on specific projects. No trust or allegiance is built up between a client and agency when the agency of choice is constantly changing. However, successful work on a particular project will lead to agencies potentially being prioritized for the next round of hiring. There is a greater level of uncertainty for the agency in this approach, but it provides a substantial amount of more flexibility for the client. Project-based work can serve as a positive and efficient way for agencies to generate a profit if properly executed. The main purpose of this model is to cater to projects with more diverse requirements while simultaneously providing more flexibility for the client, putting an emphasis on project-by-project hiring.
The Single Client Team ModelOne of the broader and more popular trends within the agency realm is the shift towards the cross-agency holding team. This operating model has become more relevant due to the following shifts and trends:
- A need for more integration between disciplines
- Simplicity in the arrangement: Clients have one point of contact, therefore making business as a whole an easier communication
- Cost savings
- Concerns around roster inefficiency
- Integration of Teams
- Consistent senior representation
- Alignment of incentives
- Alignment of expertise
An avid writer, Lisa has contributed many articles in top industry trades such as Forbes, Huffington Post, Advertising Age, Adweek and HubSpot Blogs’ Agency Post. Recently, Lisa entered the world of publishing with her book, @AARLisa: New Biz in 140 characters (or Less), written for the on-the-go new business exec that needs cut-to-the-chase insights to nail new business wins again and again. Lisa is also part of the industry speaking circuit, presenting at national conferences including 4A’s Transformation Conference, AAF Admerica National Conference, BOLO, HOW Design Live, Mirren, and AdAge Small Agency Conference.