Why it's so important to understand your agencies' capabilities!!!

One area in which we are seeing a rising level of interest is Capability Management, where large advertisers are seeking to capture the intellectual property of what specifically their agencies can do for them (i.e. the services they provide and areas they specialize in).

In the past this information has generally resided in each marketers' head, but with the involvement of procurement and the desire to optimize the portfolio of agencies, organizations are now looking to formally capture and utilize this data.

Why do it?

In many cases the goal for the advertiser is to ensure that they are working with only their best agencies. This often allows them to reduce the number of agencies that engage with, which of course helps optimize costs, and also allows them to reward the agencies who are performing best, and who may well have additional capabilities.

As with other areas of organizations where Customer Management and Supplier Management have provided valuable insights, this new discipline of Agency Management has every chance of replicating those success stories by using similar processes and tools.

They also finding it a useful screening mechanism for new agencies who are looking to engage with them. He can be very difficult for clients to handle the constant stream of new business requests, and now looking for ways in which to streamline the collection of data and the decision-making process as to whether a new agency could be potentially used by that company.

What has happened in Direct supply?

So in many ways this mirrors what has happened in the direct supply base over the last 10 years, where specifically manufacturers have found that working with fewer (but better!) suppliers, not only delivers better product (through enhanced quality control), but also reduces their cost of doing business.

However, unlike direct supply where suppliers can readily provide information about their parts or services that they offer, there are not as many formal processes in the marketing environment as yet.

This means that the leaders in this particular area are forging a new path and in many cases learning as they go. We will be keeping a close eye on developments in this area and provide some follow-up posts on this topic in the near future.