As I set out to answer that question, I uncovered a topic that is probably one of the most hotly debated topics in the industry. People are passionate – on the agency side, on the finance side, on the procurement side, and on the marketer side. Everyone has an opinion.
So, instead of doing a straightforward report on how to structure performance-based compensation, I took a step back to dive into whether performance-based compensation is actually achieving the desired results – which is better performance from agencies.
I found that:
Performance-based compensation, as it is most commonly structured and applied, is being used as a stand-in solution for a much larger issue – the fact that CMOs are having a very hard time measuring and explaining the impact of their agencies' work on ultimate business outcomes.
Adding financial incentives to agency contracts gives organizations a way to measure the impact of agency work and assign that impact a monetary value.
These organizations are not getting better work from agencies because of this. And by using performance-based compensation as a motivator, they are missing an opportunity to truly motivate their agencies.
This research reminded us that "innovation agency" is a label that Forrester assigned to agencies with specific aptitudes. Most agencies don't have neatly packaged innovation offerings. But those we reviewed do offer strategy, change management, customer experience, and design and development services — capabilities that are core to enabling digital business innovation. Since CMOs may not find a standard blueprint for an innovation agency, this wave provides guidance as you review potential innovation agency partners.
In addition to the report, please make sure to download the interactive scorecard tool to build your custom wave and gain a more in depth look at each agency.
I’d like to extend a huge thank you to all of the agencies that participated. The teams that I worked with are all so talented and put in a lot of time and effort, which I appreciate.
Being asked to pitch for a new piece of business strikes both excitement and fear in the hearts of many agency folk. When I started research for my latest report, The Fit Test For Strong Agency Relationships, there was no shortage of people who wanted to weigh in on how to make the process better for both CMOs and agencies.
After many interesting and spirited conversations, I settled on the four things CMOs should screen for when selecting an agency to help drive their business forward in an increasingly competitive and real-time environment.
Check out my report (subscription required) for a how to guide to screen for:
Vision: Does they agency’s vision for the future of consumer behavior, technology and marketing align with yours?
Experience: Can the agency provide a fresh perspective to your acute business challenges?
Passion: What is the agency doing to create a culture where its employees are passionate about coming to work?
Process: Will the agency be able to enact change across your organization?
If you are interested in discussing your next agency search or how to get the most from your current agency relationships, please schedule an inquiry with me.
I recently joined Forrester’s CMO team as a principal analyst covering agencies — the world where I spent most of my time over the past 15 years. I have been fortunate enough to have worked at thriving agencies as they have undergone major change: Avenue A as it built out its media capabilities and tools; OMD at its start — merging four strong media divisions to form one media buying firm; and for the past five years, 360i as it grew from a search powerhouse into an award-winning full service digital agency.
As marketers shift their focus to become more customer-obsessed, agencies are evolving to provide the strategy and services needed to usher brands into the age of the customer. My research will focus on how CMOs can navigate and nurture their agency relationships and how agencies can evolve their businesses in the post-digital agency landscape.