When agile marketing breaks the agency model

| Article

Key takeaways

  • Agile marketing teams can deliver real business value for an organization.
  • But agile transformations can be challenging and place outsized strain on a marketing group’s agency relationships.
  • The most successful agile marketing teams are doubling down on sound agency management practices, including approaches to scopes of work, fee arrangements, improved operating model, talent and culture, and metrics.

Marketing leaders are increasingly turning to agile methodologies to help improve the speed and performance of their teams along with the many partners they use for creative, production, and measurement expertise. In our experience, though, the shift to agile is often far from seamless for these constellations of teams. Our recent survey of marketing executives found that only 3 percent characterized their transition to agile marketing with their partners as “smooth,” while more than 80 percent reported the journey to be filled with obstacles.1

Managing multiple external partners can already be complicated in a traditional marketing department, and it’s an understandably significant shift to borrow operating methodologies from the IT world (see sidebar, “How agile operating models work in marketing”). Compounding that challenge is the fact that marketing requires engaging with so many more types of third parties, which include measurement, platform, and publishing partners. Google, Twitter, Facebook, and LinkedIn were mentioned by 40 percent of the executives as being among the additional partners they coordinate with today.

It’s no wonder, then, that when switching to agile methods, marketers often struggle with how best to involve their external partners and other third parties in their transformation. The result can leave some professionals feeling that agile marketing broke their agency model.

Still, many leading marketing organizations have successfully made the leap to agile. Through our work on more than 150 agile marketing transformations, as well as surveys and interviews conducted with industry leaders and creative, media, and content agencies, we have found that building a highly-effective agile marketing team is possible. In this article we outline the challenges and what it takes to successfully unite marketers, agencies, and third parties in agile marketing squads.

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The challenges

An agile squad, by its nature, upends marketing’s traditional approach to managing and working with third parties, particularly when squad members are expected to participate at 100 percent capacity and collaborate as dedicated team members. In our experience, both marketers and third parties working inside the squad can encounter challenges in the following five areas.

1. Scope of work

In agile marketing, deliverables change every two weeks, as decided by the squad during sprint planning. A squad’s priorities can shift quickly, even daily. In our experience, this uncertainty around deliverables makes it difficult for partners to predict the resources they will need to dedicate in advance.

2. Agency compensation and fee arrangements

Agile marketing makes compensation more complicated. For the typical account, it could be quite costly for an agency to dedicate 100 percent of an employee’s time to a given client squad, and it may need to charge higher fees for a labor- or time-based compensation arrangement. Conversely, it no longer makes sense for a marketer to pay for deliverables, as they may change with every agile sprint (every two weeks, weekly, or even within a day). As we heard from one marketing executive, “Agency partners may not have the staff to dedicate resources to fully functioning agile management approaches, and clients might have sticker shock when they see the cost of leveraging continuously dedicated resources.”

3. Operating model

Agile marketing challenges an agency’s traditional operating model. An agency is typically not structured so that any given employee can serve one client exclusively, and even for the largest clients, not everyone on the account is fully dedicated. Yet agile marketing demands that squad members be 100 percent dedicated and in the room. We often see that when third-party partners are not present for a session, they can feel out of the loop and slow the process.

4. Talent and culture

Identifying the talent with sufficient expertise, flexibility in skill sets, and appropriate tenure for a squad can be challenging for agencies. We have seen situations in which an agency representative was too senior to dive in and execute at speed or too junior to execute without extensive internal review. Agencies can also struggle with having the right talent available to the squad at the appropriate time. The talent across both teams must collaborate closely, requiring the creation of a cohesive team culture that includes all members.

5. Metrics for success

Measuring the success of a campaign can be hard, even under the best of circumstances. Agile marketing exacerbates this challenge, because marketers and their third-party partners often work with different data sets and platforms, and results must be available in real-time for the squad members. We see both parties often hesitant to share data and give a comprehensive view of performance.

Moving to agile marketing can often feel like a tipping point in the agency–marketer relationship. Many marketers conclude there is no option but to either put an account up to pitch or bring all the work in-house. In our experience, such extreme measures can be costly and ineffective. These challenges are not insurmountable. Numerous marketers are managing them successfully and emerging with stronger third-party partnerships.

Modern marketing What it is, what it isn’t, and how to do it

Modern marketing: What it is, what it isn’t, and how to do it

How to move forward

At their best, agency–marketer relationships are true partnerships. An agency provides marketers with creativity, specialized talent, and access to the trends of tomorrow. Best-practice marketers have frequent constructive conversations with their agencies and third-party partners about their organizational goals. Both parties can find creative ways to overcome challenges related to the scope of work, compensation, operating model, talent and culture, and metrics for success.

1. Scope of work: Revamp traditional agreements—and be flexible

Marketers should be transparent with partners about what the transition to agile marketing will mean for the relationship. We recommend sharing a vision for the agile model and how it will work for the full account. Collaborating on the design of agency involvement and setting expectations early can help.

Increasingly, marketers and their partners are shifting from an exact budgeting process to one with more flexibility that allows for a portion of planned “business as usual” along with an amount reserved for a less-defined agile scope of work. Under a more traditional model, marketers defined scope by deliverables, such as number of social posts per month or number of ads created. Even agencies working on labor-based fees typically estimated resources required based on planned deliverables. In both cases, when deliverables change often, it can become tricky for agencies to plan for the change in direction. Now, we see more companies buying creativity and cross-industry experience from agencies and prioritizing flexibility. According to one agency leader, “Clients are increasingly building scopes around the right people” and less focused on deliverables. This requires marketers to shift their thinking and orient the scope of work around skills rather than outputs.

A large US-based department store’s move to agile marketing illustrates the benefits of redefining scope by time. At first, the retailer’s marketing team worried about increasing agency fees and was hesitant to estimate more time than they needed. But later, the team found that dedicating extra time from agency team members allowed for more proactive planning, spend analysis, backlog management, and ideation. This ultimately led to a more efficient and effective marketing organization.

In an agile world, project plans and media blocking charts are too restrictive. Successful agencies and third parties build flexibility into scopes and staffing models. They may start from a minimum to service an account but have surge capacity available to flex across accounts. They also recognize that when the scope is more flexible, the opportunity to deliver innovative ideas is greater. In some cases, this requires agencies to have two models in place for a single account, one that operates in a more “traditional” waterfall setup and another that operates with a more flexible, agile approach.

2. Agency compensation and fee arrangements: Align incentives

A great partnership is not optimized for cost but for results. Best-practice marketers ensure their agency partners see the impact of their work and align incentives just as they do for internal squad members. One marketing group for a US-based software and data provider onboarded its digital agency at the beginning of an agile transformation. Over the course of four sprints, they aligned incentives by showing how positive test results for the work being done by the squad increased budgeting for the channels the agency managed, ultimately leading to a larger scope for the agency. Other marketers agree on a fee based on minimum resources—ideally, skills—and then reward partners when they hit key performance indicators (more subscribers, shoppers).

We find that marketers get more flexibility when they don’t squeeze too hard on fees. Those that pay for excess capacity ensure agency squad members have time to participate in strategic discussions, plan proactively, and gather the outside perspective that is a key benefit of working with an agency. In our experience, marketers are not buying empty capacity; they are buying agency members time to think.

Agencies, meanwhile, need to move away from charging by deliverables and embrace innovative compensation structures, such as pay-for-performance. One successful digital-marketing agency ties its employees’ bonus compensation directly to client goals. Agile marketing is an ideal opportunity for an agency to try out performance-based compensation because of the joint focus among partners who work toward measurable goals of the squad. In addition to opportunity, there is a sense of urgency among marketers; one survey respondent noted that to become truly agile partners, “a fundamental shift needs to occur with agencies and their billing structure.”

3. Operating model: Identify the right agency lead

Successful agile marketing squads have found a way to balance who needs to be in the squad from the agency in order to ensure speedy delivery without inflating the size of the squad or using only partially dedicated team members.

One way we have seen this done is for the agency to identify one key person, typically a client-service lead, who can be 100 percent dedicated to the squad and navigate the inner workings of the agency. It is important to ensure he or she is fully integrated within the squad, collocated when possible, and has sufficient resources within the agency. While all agency talent may not be in every squad, they have full access to the squads—including their backlog and ideation sessions. A global security company offers a compelling example. Its creative agency had one creative lead in the squad, but to ensure that the full agency had a clear understanding of the company’s marketing goals, the marketing team added “creative lookbacks,” during which the agile squad presented all its creative output for the past month and reflected on how each element performed.

For agencies to succeed, they must staff the squad with the right individuals and ensure these individuals have the trust of the agency, the clout to deliver, and the support of the entire agency to deliver on fast timelines. One global agency identifies a core team to serve the minimum needs of the squad. The agency then defines a second ring of professionals who can provide ad hoc support to specific sprints; for example, an animator supports the design director on the core team. A third-party marketing partner, who employs a similar approach to staffing and supporting agile squads, conducts monthly and quarterly reviews to make staffing adjustments as needed (see sidebar, “Agile marketing squads and the move to remote”).

4. Talent and culture: Find your rock stars and set the tone

An agile squad armed with the right talent, skills, and seniority is well positioned to deliver the goals of the marketing organization. Thoughtful marketers hire outside talent to complement the expertise they have in-house and must have a representative on the squad who has sufficient expertise to ask the right questions and hold a partner accountable.

Agile marketing helps both marketers and their partners identify and nurture future talent. In an agile squad, junior members have greater exposure and can bring in fresh ideas. They have more opportunities to think creatively, interact with senior leaders, and elevate their work in the organization. In a recent agile transformation at a large telco, the CEO would drop in on sprint reviews, providing an opportunity for junior agency members to showcase their work. One executive reported, “It was important to have the day-to-day account person from the agency believe in and get involved [in those efforts]. They are the champions back at the agency for the new processes.”

For all squad members to deliver, the agency needs to be well versed in the company’s organizational culture. The culture of the squad itself also has to be nurtured from the beginning. Marketers must welcome agency member as equals and model a working environment in which everyone on the squad trusts one another. Expectations should be consistent for all members. The marketer that exemplifies the goals of the squad is more likely to succeed. As one marketing executive shared, “Make sure your internal handoffs work well before you hand over to your agency. If you’re not fast or agile, it’s hard to expect the agency to be.”

5. Metrics for success: Be transparent with data

When incentives are aligned as discussed above, potentially with pay-for-performance instead of pay-for-deliverables arrangements or payment tied to squad performance, access to data is essential. Transparency around data ensures that all squad members understand what is driving their results and how it affects their compensation.

For many marketers and their third-party partners, sharing data does not come easily. It is technologically complex and requires trust. We often see open data sharing restricted to long-standing agency–client relationships. We encourage marketers to understand their own data and think strategically about tech-stack and platform access. At the same time, it is hard to expect agencies to tie their work to success without data access. Combining data sources inside the squad and creating real-time dashboards benefits everyone and the relationship. Our survey results show a strong statistical correlation between marketers who rate their partnership strength highly and those who report a high degree of data transparency.2

Some agencies are equally hesitant to share data and can be slow in producing it. In our experience, protecting data can be a red flag to marketers. It signals either that the partner does not have the information or does not welcome the scrutiny. We encourage agencies to think differently, as measurement can be a distinguishing opportunity to add value for the client. It can also mean the difference between maintaining a relationship or losing one.

For marketing groups, outside agencies and partners help ensure their creative output stays fresh and relevant. But managing these relationships can be difficult. As more companies turn to agile marketing, getting third-party partnerships right is crucial. By staying committed to sound agency management practices marketing groups can overcome challenges, deepen their relationships, work more efficiently, and accelerate growth. Marketing organizations that do not have strong partnerships risk forfeiting the benefits of agile ways of working altogether. For agencies and third-party partners, agile marketing offers a unique opportunity to strengthen the partnership, become more ingrained in the client’s day-to-day work, and future-proof the agency.

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