Pick’n’mix or one-stop-shop?

The need for greater efficiency and the growing influence of procurement departments have been cited as reasons for marketers to reduce the number of agencies they work with.

But the need to understand digital specialisms – and apply them – might be softening up the stranglehold procurement officers have over the agency selection process.

In pre-internet days the process was simple. The advertising agency was the lead agency and custodian of the brand, and developer of the creative ideas. But the advent of digital has challenged that model by introducing more routes to market – and the above-the-line agencies had little or no experience in these new channels. The result has been a dramatic increase in the complexity of marketing and of marketers’ relationships with agencies.

So far during this process of digital evolution, nobody has come up with a universal solution to the question of which option makes for more effective campaigns/ a large integrated agency or a roster of smaller, specialist shops with the latest digital skills often lacking in many large creative agencies.

As the situation develops, one might be forgiven for expecting procurement departments to position themselves as strong advocates of the large single integrated agency solution, but that does not appear to be the case.

For some marketers, such as Virgin Media’s head of online marketing Sonia Sudhakar, procurement in digital involves the same processes as elsewhere in the organisation, with only the variables being different. For others, such as NSPCC creative director Ian MacArthur, procurement departments are starting to recognise the complexity and diversity of digital media and change their approach accordingly.

There’s a culture change going on in procurement,” he says. “They know their processes need to change and become quicker. It’s also become obvious that digital needs to be a collective effort; the experts within the business need to drive the purchasing decisions so procurement needs to be more supportive.

“And then a lot of the agencies you might want to work with have to be approached in a new way, around the value they can deliver. How do we partner with them? What networks can they connect us to? There’s a much softer feel to procurement now and it’s being driven by digital.”

Global director of digital at Nokia, Craig Hepburn, agrees that this change is happening but also acknowledges that ’workarounds’ are still sometimes required.

“Nokia knows it wants to be more agile, it wants to work with the best,” he says. “Working with small agencies can still be a problem. You need due diligence. But sometimes I ask our big agencies to work with smaller agencies so we’ve got a better team.”

Both Hepburn and the NSPCC’s MacArthur see small agencies as vital parts of their marketing in future. Indeed the Institute of Practitioners in Advertising believes that, if anything, rosters are getting bigger, driven by the growing number of digital specialisms. When it last researched the subject in 2005, the average number of agencies on a client roster was 5.5, but it now estimates it to be nearer six.

“There’s not a lot of evidence to support the thesis that economic and integration pressures are leading marketers to cut the number of agencies they work with,” says Hamish Pringle, director-general of the IPA. “Marketers with significant resources feel they should take a best-of-breed approach and be the ringmaster. It tends to be the smaller clients, without big resources, that look to a one-stop-shop.”

One can imagine why. Large companies can deliver integrated marketing with almost any arrangement of agencies, but for almost everyone else, the skill and resources needed makes the task arduous. This is the point at which going to an integrated agency looks attractive, but Pringle warns that this may not be the simple solution it appears.

“Because the media landscape has become more complicated, it’s harder to find a single agency that can cover all the bases,” he says. “There seems to be a niching of the market. The big creative agencies have been trying to assimilate the new skills, but I’m not sure any of them have the complete skill set.”

It’s about working with the right people for the right campaign. I want to work with the people who are the best at what they do

Craig Hepburn, Nokia

Still, some companies seem to be making integration work. Sudhakar, says that at the end of last year, Virgin Media moved all its creative work from three specialist agencies into one.

“The agency could offer us an integrated solution, but it could also offer strength in digital so it wasn’t a compromise” she says. “We’re seeing real benefits from the appointment.

But Sudhakar stresses that choosing an integrated agency is not an easy option. “It’s hard work finding an integrated agency, because you have to find one that ticks all the boxes you need. We interrogated our agency about mobile and social media, for example, and we’re now working with them on social media projects. They have such strength in digital that we didn’t need to go elsewhere. It was worth the effort.”

Scratch the surface, though, and for most companies, including Virgin Media, the picture is more nuanced. As Sudhakar points out, most big agencies have relationships with specialists they can call on if they have to. Argos recently appointed its above-the-line agencies to increase brand perception and encourage customer interaction among social media. According to head of brand development Siobhan Fitzpatrick, working with its established creative and media agencies in newer areas such as social media and mobile “is crucial to integrating new and traditional channels and thus speak with one consistent brand voice.” But there are other areas where Argos still works with specialists, including search, affiliates and eCRM.

Nokia’s Hepburn believes it is important to work with both big and small agencies for the different things they can deliver.

“What you need from a big agency is scale and expertise in the execution of a marketing plan,” he says. “But you need them to work with boutique agencies who understand the nuances of conversational marketing, who understand the difference between being in social media and having a conversation there.

“You build up a level of trust, I’ve built a relationship with my agencies, and they will suggest they should work with other agencies when they know they can’t do something. They know it’s up to them to bring in the best.”

Many marketers still don’t believe that agencies can deliver such an honest, open and work-focused approach but Hepburn’s answer is to adopt the role of ’ringmaster’.

“The work we did around Tron was done through a combination of above-the-line and boutique agencies, to give both scale and nuance,” he explains. “But that takes a lot of work.”

And Hepburn goes further, breaking down the distinction between big and small agencies: “My personal view is that it’s about working with the right people for the right campaign. I want to work with the people who are the best at what they do.”

It’s also crucial to look at whether the people within a big agency are working together, he says. “Even if they tick all the right boxes, are they integrated enough? That integration is starting to happen; for example Blast Radius, which specialises in customer experience and social marketing, is swapping knowledge with its parent agency Wunderman by seconding staff to them.”

“I think there’s a trend towards more agile, boutique agencies,” Hepburn says. “But if you’re Nokia, you always need scale, so you’ve got to get the big agency to work with the ideas generated by the boutiques.”

The NSPCC’s MacArthur goes even further: “The big digital agencies are starting to move into the above-the-line world, and to behave like their old adversaries,” he says. “But while they’re fighting for that territory, there’s a new wave of small agencies coming through, looking to digital technology to join up their efforts.

“And there’s another factor, which is that marketers are becoming better informed about digital, and starting to challenge their agencies. A middle-weight marketing manager may now have a blog, be active in social media and be managing information feeds; so what an agency says has to be very interesting for it not to seem like something they’ve heard before. It’s going to be a big challenge for agencies and so, while buying big is popular, it comes with a big caveat.”

With procurement departments increasingly understanding that digital is a whole new ball game that may require new roster and payment models, the decision on which agencies to cover digital and the kind of partnerships they form might well be handed back to the marketer.