How to avoid the “Agency Measurement Paradox” and win client confidence
The ongoing drumbeat to prove ROI has led many agencies to start using attribution models to measure digital, but the outputs from digital attribution often are misleading. Other agencies have developed proprietary mix models to help prove their success.
But when the agency produces good advertising and does their own measurement, they’re facing a Catch-22.
The ‘agency measurement paradox’
A wise agency executive, Dave Gantman, shared with me what he called “The Agency Measurement Paradox.” In his experience — and many of us have seen it, too — when agencies share performance metrics showing a campaign didn’t reach an ROI goal, the client believes the data is accurate. Sharing bad news helps the agency gain credibility.
Yet, when agencies share performance metrics showing the campaign is beating ROI goals, clients are more often dubious. Skeptical marketers view the metrics as self-serving to the agency, thereby discounting the metrics that show the agency’s good work.
The client may even doubt the agency’s veracity. It’s precisely for this reason, Gantman argued, that the most important partner to a good agency is independent measurement.
But I would be remiss were I not to mention the number one reason agencies shouldn’t measure their own results. Quite simply, clients don’t want their agency to do it.
Nearly all of the marketers, or 97 percent, in an Association of National Advertisers survey indicated that they prefer third-party measurement. As Mike Eichorst, a recently retired Citibank SVP of measurement, told me:
“Every part of our business is independently measured and held accountable to deliver agreed-to results. There is a clear need to have that same level of confidence in our agencies’ performance. We want to celebrate our wins together and quickly find ways to improve our performance. Independent measurement makes that possible.”
The issues of transparency are real for marketers. The questions marketers have about the motive of their agency — particularly when they have multiple agencies and one is offering to measure the others — are genuine. The proverbial “fox guarding the henhouse” paints the agency as having questionable motives.
But let’s take a situation where the motives are 100 percent in the interests of the marketer, without regard to the agency’s revenue or profits. Gantman, who spent most of his career in agency research and rose to the level of managing director, captures the solution to the paradox when he says, “A good advertising agency’s best resource is an independent measurement vendor.”
This quote is compelling to me because I have witnessed agency relationships grow stronger through a tight, but independent, partnership with measurement companies.
How to build client confidence
So, how can an agency avoid this fox-and-the-henhouse situation? Here are five suggestions for addressing the problem and building client confidence:
1. Transparency is key — Develop partnerships with measurement companies that are committed to understanding business goals and providing complete transparency. You want to know how they are measuring, what data they have, and perhaps what data may be missing.
2. Find independent validation — Anyone can say they’re good. Look for partners whose measurement solutions and processes have been validated by independent third parties. For example, participants in Forrester’s recent “Measurement & Optimization Wave” all have had their methods independently validated by marketers.
3. Look for speed — It’s a 24/7 world, and modern marketers need solutions that give them lots of flexibility to respond to an ever-changing marketplace. You will probably want to find a partner who can offer in-campaign optimization with direct links to your agency buying systems.
And make sure the insights, solutions and plans provided by your measurement firm are actionable. With speed, the agency has the opportunity to improve. Without speed, all the agency gets is a backward-looking report card, with no chance of improving the score.
4. Being agile helps — You’re going to want to have a fast and efficient process to turn on measurement for your clients. Look for a partner with whom connections to your media systems, such as digital logs and DMP (data management platform), can be set up once, then reused for future engagement.
Select a partner that will help make the process of onboarding clients seamless by providing the agency a rate card for the use of their service, a standard pitch deck, and answers to frequently asked questions.
5. Commit to implementation — Turning results into insights that drive next-level performance can represent a significant opportunity to grow agency revenue. In addition to driving a client’s business forward, things learned may be applicable to other clients in your portfolio.
A good measurement partner will also allow your agency to lead more “test and learn” to create more value for the marketer.
At the end of the day, my firm belief is that modern agencies are eager to find the tools they need to prove the value they deliver to their clients. They are also interested in discovering solutions that work and learning from ideas that don’t. It’s only with these insights that agencies will find competitive advantages for their clients and themselves.