Agencies Think Clients Often Measure Them Against The Wrong KPIs
Image credit: Celpax via Unsplash
Agencies increasingly like to be honest with their advertisers when it comes to performance reviews, according to research by the World Federation of Advertisers and its strategic partner Decideware.
However, there are growing concerns about too many key performance indicators (KPIs) and “bad KPIs”.
According to the 2022 Client-Agency Performance Evaluations study, 68% of agencies are now most likely to tell their clients what needs to change over time, up from 45% two years ago.
Agencies are also seeing a slight improvement in quality (56% vs. 54% in 2020), at least in most cases.
Although not a significant increase, staying consistent can be considered a win and the vast majority of agencies now receive some level of performance feedback.
The results are based on surveys of more than 90 respondents from 82 multinational organizations (49 clients and 33 agencies), and the advertisers surveyed are responsible for more than $69 billion in global ad spend.
However, the current set of KPIs is causing dissatisfaction with clients and agencies.
While the most important KPI for clients, client satisfaction, is what the agency wants, advertisers add that the lack of “measurable or objective” KPIs is their biggest concern.
Agencies say bad things are often measured.
Therefore, agencies do not always find it appropriate to be paid based on their performance. Similar to the previous survey in 2020, less than half of agencies believe your compensation should be linked to the results of your assessment.
Depending on the type of agency, clients prefer medium-sized agencies, full-service agencies, and creative agencies for the most regular review.
In at least three out of four cases, communications agencies are paid based on assessment results, as KPIs tend to be more objective and measurable.
Digital partners (35%) and manufacturers (44%) said they would probably not have the opportunity to receive structured feedback.
Overall, nearly one in three agencies surveyed say they don't have the ability to test their clients, and another quarter are forced to do so in an unstructured way.
Growing agency satisfaction with improving the customer process is evidenced by the drop in the number of agencies to 13% (from 38% in 2020) who agree that “regardless of feedback, the customer is king and will not change".
Another positive result is that more than half of the clients surveyed now appreciate interagency collaboration.
53% of advertisers surveyed said they are currently testing collaboration, reflecting the need for campaign integration and the fact that modern campaign management requires many and varied skills. Such efforts signal to agencies that “playing well together” is a serious expectation.
A respondent advertiser explained, "Our ecosystem is built on collaboration between agencies, and each agency brings their own unique experience. It all starts with well-defined swim lanes, and the quality of collaboration is monitored."
Laura Forsetti, Director of Global Marketing at WFA : “Advertisers must redouble their efforts to become their preferred customers by actively developing relationships with agencies.
“To do that, you have to start 'at home' and look at your own results before blaming your partners. This report highlights that the biggest challenge facing agencies is "conflicting needs/expectations in isolated client organizations".
“Clients need to get their house in order, and performance reviews give agencies the opportunity to help them do that.”
Other important findings:
One of the biggest challenges advertisers face is the lack of strict KPIs. The lack of KPIs is the main problem for clients when evaluating performance. Most clients say they include "nuances" in their review process. While some types of agencies lend themselves to objective and measurable KPIs, others may not. When multiple agencies work together on a campaign, it can be difficult to define success.
More agencies are sharing their bonuses with agency staff: The number of agencies reporting sharing these bonuses with agency staff increased from 27% in 2020 to 46% in 2022. Work is one of the most effective in stimulating behaviors and forming partnerships.
The lack of alignment within the client organization affects the relationship between the client and the agency: in addition to the varying importance between groups such as purchasing, agency management and marketing, large Organizations may have multiple client groups working with multiple agency teams. What works for Brand A may differ from Brand B due to market conditions, personalities, etc. All of this may result in different or conflicting expectations or feedback.
Agencies do not always view performance-based compensation as appropriate: agencies with the clearest KPIs (media and digital) are more likely to have some level of incentive compensation, but agencies also accept other forms incentives, long-term commitments to the work you announce has paved the way. . Helping with new business opportunities in the client's organization or providing feedback or suggestions were the second most popular options.
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