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Creative Agency Engagement Models

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by Kaaviya Radhakrishnan , Research Analyst, Marketing Agencies
5 December 2021

Creative Agency Engagement Models

This article provides insights on various creative agency engagement models like Lead Agency Model, Holding Company Model, Multiple Specialist Agency Model, Bespoke Agency model and their advantages and disadvantages, adopting the best suited model in order to get the best service from the agency.

Introduction

Marketers engage with advertising agencies in various methods based on the advertising needs and also to gain the best in service from the agencies. Various engagement models such as Lead Agency Model, Holding Company Model, Multiple Specialist Agency Model, Bespoke model are predominantly adopted in the industry

Lead Agency Model

Lead agency model is adopted to leverage the best-in-class services of different agencies at a single point of time. Lead agency will be a single point of contact for the clients and will help the client engage with any other agency in the roster. There are variations in how this model is adopted, based on communication channel.

Best Suited Scenario

  • This type of engagement is best-suited for brand building activities.

  • Here, the buyer builds a strategic relationship with the agency and the synergy has a direct impact on the brand value.

Contract

  • The ideal contract length for this kind of model is 1–2 years.

Allocation of Services

  • The services will be bundled and assigned to a lead agency.

  • The lead agency will decouple the production service and outsource it to low-cost countries or some other agency in its holding network.

  • The services that are decoupled are generally traditional (TV) and digital.

Advantages

  • Tighter client-agency coordination, fewer points of contact to manage
  • Potentially greater consolidation

Disadvantages

  • Lead agency can dominate to the point where other agency voices are drowned out.

Holding Company Model

The holding company model is adopted when the marketers are looking for a simple sourcing model, which can reduce duplication of work. Only marketers, who have large advertising budgets >USD 1 billion, generally, adopt the custom holding company model. The marketers engage with the holding company to leverage on the full range of creative services, provided by holding company, globally. The holding company acts as a virtual network, and the marketer will have the benefit of choosing the agencies of their choice for different services, based on their needs. A variation of the holding company is the custom holding company model, where holding company has a dedicated team that works as an agency to cater to the client.

Best Suited Scenario:

  • This type of engagement is suitable for clients, who are looking to find volume efficiencies, reduce duplication of work, and to have a consolidated sourcing structure.

  • The custom model can work well for clients with scale, but attracting the best creative talent within this model can pose as a challenge

Contract:

  • The ideal contract length for this kind of model is 2–3 years.

Allocation of Services:

  • The services will be strategically bundled according to the nature of work and assigned to agencies under the holding company

Advantages:

  • Single agency contract and point of accountability, but allows for multiple specialists

  • Some degree of resource flexibility

  • Potential greater integration

Disadvantages:

  • Some limitations for “best in class” options

  • Efficient on paper, not always in practice

  • Less flexibility with agency conflict management

Multiple Specialist Agency Model:

The marketers engage with few to many global and local agencies to meet their creative needs. Here, each agency takes ownership of a particular creative discipline of the marketer. The client selects the best-in-class agencies for each of its requirement.

Best Suited Scenario:

  • This model is adopted by highly matured marketers, who would like to leverage the specialty of each agency. Focus is on quality rather than cost

Contract:

  • The ideal contract length for this kind of model is 1–2 years.

Allocation of Services:

  • The services will be allocated to the agencies, who are specialist in the respective category.

  • Similarly, traditional creative, digital creative, shopper marketing and promotional items creative can be sourced from specialists

Advantages:

  • Considerable resource flexibility

  • Helps ensure “best in class” agencies

Disadvantages:

  • Increased client management time

  • Potential cost inefficiencies

  • Potential barrier to consolidation

Bespoke Agency Model:

The Bespoke Agency model is adopted when the marketers are looking for a simple sourcing model and would like to include a more niche & data oriented approach by having technical expertise on the team. The bespoke Agency Model is where 2 or more agencies within a holding company have a dedicated team that works as an agency to cater to the client. It will be housed separately and will involve having members from the client within the team. It can be used within disciplines like Media and Data, Digital and creative etc.

Best Suited Scenario:

  • This type of engagement is suitable for clients, who are looking to find volume efficiencies, reduce duplication of work, and to have a consolidated sourcing structure.

  • The custom model can work well for clients with scale, but attracting the best creative talent within this model can pose as a challenge.

Contract:

  • The ideal contract length for this kind of model is 2–3 years.

Allocation of Services:

  • The services will be strategically bundled according to the nature of work and assigned to agencies under the holding company

  • When it comes to a review, agencies create bespoke agencies which usually helps them to win the pitch

Advantages:

  • Single agency contract and point of accountability, but allows for multiple specialists.

  • Some degree of resource flexibility

  • Can have specialists from Technology

Disadvantages:

  • Some limitations for “best in class” options

  • There is high chances of conflict between the client and the Agency Team

Conclusion:

Marketers engage with two or few lead agencies at the same time, based on their needs and channels of communication. The adoption of lead agency model is at a medium level, and its adoption is set to increase, as digital footprint is increasing. The lead agencies can be from different network agencies. Most marketers, who look for best-in-class services, engage with a lead agency, which is a part of the holding company.

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