Case Studies

Improving Agency Media Performance

Situation:

A national quick service restaurant chain wanted an independent and objective review of their local market media plans and buys, which were being handled by several regional advertising agencies. The company had established media guidelines. But they wanted to know if their guidelines were up-to-date. The company also wanted an assessment of each agency’s performance in the areas of media planning, buying, and post buying.

Our Approach:

We began this project by reviewing all available research to ascertain whether the media advertising guidelines were addressing the correct target audience. This review took into account the geographic similarities and disparities of restaurant locations. We also looked at sales seasonality to see if it was being addressed in the media plans.

We then evaluated each advertising agency’s media plans, media buys, and post buys. We paid close attention to whether the media plans and buys were being adjusted for local market conditions and sales seasonality. We also examined whether any of the agencies were using a “one size fits all” approach.
An additional part of this comprehensive project was to assess the agencies’ media buying and post buy performance. In other words, were the agencies delivering the media on target and cost efficiently. Conducting a comprehensive audit for all media advertising buys in all markets was not financially feasible. So in order to keep our fee reasonable, we recommended and conducted a full audit on a representative sample of each agency’s media buys.

Findings:

The company had very good research for determining the correct target audience for each of their primary menu items. Our review of the media guidelines was that the guidelines provided up-to-date and very effective direction for maximizing their media advertising. We also found that the regional agencies’ adherence to the media planning guidelines was generally consistent.

However, we found that the regional agencies’ adherence to the media buying guidelines varied significantly. We found that some of the agencies were using a “cookie-cutter” approach with their media buys. In those instances, the media buys generally looked identical from market to market and from promotion to promotion.
We also found that agency post buy performance varied significantly. Our audit determined that not all agencies were recovering the make-goods owed from under-performing media buys.

Results:

As soon as we shared our findings with the company and with the agencies, the agencies immediately began making improvements to their media buys. The agency media buyers began making adjustments or local market conditions and sales seasonality. They also started buying more targeted programming based on reaching the specific primary target audience for each menu item promoted, as verified by customer usage research.

In response to our audit of the media buys, the ad agencies became more focused on recovery of make-goods. Within six months, the dollar value of the make-goods recovered exceeded the amount of our fee on the project by a multiple of seven. More importantly, the improvements made to the media buying, and the improved stewardship of the post buys led to better media performance by all regional ad agencies, which in turn, helped fuel an increase in sales.

Agency Search and Compensation

Situation:

A fast growing health care service provider was expanding its locations and needed to increase their marketing and advertising due to competition. The company had never used a full-service advertising agency in the past. But several agencies had been in contact with them about handling their business. The company contacted us to help them through the process of selecting an agency.

Our Approach:

Since several agencies had already submitted credentials and ideas, we immediately reviewed the submissions and did some background work on our own to determine if the “short list” was already acceptable. Our philosophy is that if some of the work has already been done, then there’s no reason to start the search over just to increase our own fee.

We also examined the company’s business and their marketing needs. We wanted to make sure that both their short-term and long-term marketing needs would be met.

Our Findings:

We found that a couple of the agencies that had already submitted pitches for the business were well-suited to become the company’s first agency. But one agency already stood out as having the pedigree for both the short-term and long-term needs. So we immediately began working on an agency agreement contract with that agency.

Initially, the advertising agency simply wanted the client to sign the agency’s standard agreement. But we found that the standard agreement was not entirely in the best interests of the client. It was very one-sided and did not promote a “partnership arrangement” between the client and the agency.

Results:

We co-authored an advertising agency agreement that resulted in both the client and the agency being satisfied. That was over ten years ago and when we last checked, the client and the agency were still in “partnership” with each other.

Corporate Trade (Barter) Has Its Risks – And Its Rewards

Situation:

A large national restaurant group had been approached by several corporate trade (barter) companies. The company had a desire to try corporate trade, but was unsure how it would work. They had heard stories about trade deals being “too good to be true” and needed expertise to help them decide whether to proceed.

Our Approach:

Corporate Trade, or Barter, is definitely something that should be approached with extreme caution. There have been many instances of barter arrangements being “too good to be true.” Some instances have led to a difficult situation becoming more difficult. But there are some companies that engage in corporate trade that will be conscientious throughout the entire term of the agreement.

Our first step was to assess the corporate trade companies that had already approached our client. We checked the companies’ backgrounds and their reputation within the media buying advertising industry.

Findings:

We found that each of the corporate trade companies that had already approached our client had some flaws in how they had done previous arrangements with other advertisers. Plus, we closely examined the terms of the proposed barter arrangements and found that the terms were too risky for us to recommend pursuing further.

But our client still wanted and needed to do something. So we contacted another corporate trade company that we knew had a good reputation and “brokered” the deal between them and our client. The terms of the agreement and the stewardship safeguards were favorable to both parties.

Results:

The corporate trade arrangement was completed successfully with only a few minor issues. The company was able to realize over $1 million in cash savings and all media advertising schedules delivered in excess of 100%.

Agency Performance Review – A Strategic Partner Assessment

Situation:

A growing sandwich chain wanted to conduct a review of their advertising agency, but did not want it to be perceived as a threat to the business. They were looking for a consultant that would conduct a thorough review of the agency’s work and their profitability on the account.

Our Approach:

We assessed the situation and decided to divide the project into three distinct but related parts. The first part was a media planning and buying assessment, whereby we evaluated the media planning and buying guidelines, conducted a spot audit of several markets’ media buys and post buys, and also did a spot check of several radio markets.

The second part of the project was to conduct a “360 degree” assessment of both the client-agency relationship and the agency-client relationship. Our philosophy in conducting an agency review is that it is not only important to gain feedback from the client on how the agency is performing its duties, but it’s also important to gain feedback from the agency on how the client is doing with regard to providing direction to the agency.

This particular client agency partnership has multiple points of contact and communication, both at the corporate service center and at the field level. So we developed several feedback forms for the various levels of contact. Client feedback forms were provided to corporate personnel, field personnel, and franchisees. Agency feedback forms were provided to personnel in each of the departments that were involved with the clients business, including management, account service, creative services, media services, and accounting.

The third part of the project was to conduct an advertising agency contract, compensation, and profitability assessment. This was done in order to identify opportunities for improving the financial aspect of the client-agency partnership. Our philosophy is that an advertising agency partner should be profitable on the business, but not to the point where excessive profits take away dollars from the marketing and media advertising budgets.

Our Findings:

The first part of the project revealed that generally, the agency was doing an acceptable job of planning and buying media advertising. However, we identified several opportunities where more “bang from the buck” could be achieved.

The second part of the project provided valuable “360 degree feedback about the partnership between the client and the Advertising agency. We identified several areas where the client needed to improve its direction to the agency and we also identified the key areas where the agency needed to improve its service levels to both the client and its franchise system.

The third part of the project identified some accounting issues with billing and reconciliations that would improve the financials on the account. We also were able to outline an improved compensation arrangement that would save the client money, yet still allow for the agency to make a reasonable profit on the account, both short term and long term.

Results:

Both parties agreed that the Strategic Partner Assessment was beneficial. The client was able to review the advertising agency’s performance without making the agency feel threatened. The client was also able to gain more impact from their media dollars and review opportunities for saving money on agency compensation.
The agency was able to see their strengths, weaknesses, and opportunities to improve their part of the partnership, while still maintaining profitability on the account.

Evaluating Coupon Advertising

Situation:

A large national retail chain with several brands was concerned about the execution of their coupon advertising activity, specifically with their free-standing inserts (FSIs). They had experienced a few problems with one of the national newspaper insert companies and contiacted us to conduct an audit.

Our Approach:

Our philosophy is that all media activity should be audited periodically to insure that the media companies are in compliance with acceptable business practices. In broadcast media, most advertising agencies will check invoices to verify that schedules have run. Some agencies do this better than others. But in print advertising, especially with newspapers, schedules are rarely checked thoroughly.

We conducted a comprehensive multi-year review of each of the brands’ FSl activity. We reviewed billing procedures, the accuracy of newspaper circulations, a production quality check of the printed coupons, and a competitive separation check.

Our Findings:

The production quality was generally acceptable except in a few isolated instances where the color reproduction was not ideal. More importantly, we found several billing errors, as well as some significant discrepancies in newspaper circulation counts. We also identified several concerns regarding actual coupon placements and competitive separations.

Results:

The existing contract between the client and the newspaper insert company was revised to incorporate new and/or improved parameters regarding billing procedures, coupon placement guidelines, and competitive separation guidelines. More importantly, newspaper lists and circulations were corrected. These corrections saved the client a significant amount of money and the results of the audit also allowed the client to negotiate a lower cost per thousand (CPM) for future FSIs.

Annual Media Planning (and Working with Multiple Agencies)

Situation:

A regional chain of restaurants had several agencies with each of them handling different responsibilities. Each agency had presented their own thoughts regarding media plans for multiple markets. The client needed an independent review of their markets and media budgets in order to develop objective annual media plans.

Our Approach:

We began by reviewing all markets locations along with the demographics and current consumer media usage trends within each market. We also reviewed historical and seasonal sales trends in each market. We conducted this initial work before we reviewed media costs and budgeted media spending.

We conducted the project in this manner in order to make sure we had identified the individual characteristics of each market, both in terms of the target audience profile (based on demographics and media usage), and the potential ROl of media spending. At Spectrum One, we recognize that different markets may behave differently and the impact of media spending in each market depends on many variables.

Our Findings:

Based on current demographics and media usage trends, we recommended a slight change in their core target audience profile across all markets, with recommended secondary target audiences customized by market.

We then developed different annual media plans for each market based on a review of all available data and research. We also took the additional step of developing a second set of annual media plans for some of the markets where we saw the potential for increased ROl by planning incremental media.

Results:

The client approved our recommendation on the target audience profiles, as well as our initial set of media plans. Due to economic reasons, the client did not proceed with any of the incremental media plan recommendations at that time. But the client agreed that once economic conditions improve, they plan to proceed with our second set of media plans.

Competitive Media Spending Analysis

Situation:

A regional Fast Casual restaurant chain wanted an independent and objective review of their competitive media spending. The company had made some significant shifts in their media mix, while holding total spending unchanged. So they wanted to know how their media mix stacked up against both their primary and secondary competitors and their competitors’ media mixes.

Our Approach:

We began this project by reviewing all available competitive media spending research to ascertain whether we could capture accurate and reliable media spending. Since there are multiple sources from which we could gather this market specific data, we reviewed several sources and ran comparisons against our client’s actual spending. We also felt that there were additional competitors that should be looked at beyond the ones our client specified.

An additional part of this competitive media spending analysis was to assess the competitive advertising-to-sales ratios, and included comparisons of share of market sales and share of locations.

Findings:

The company had reliable media spending research already available. However, we sourced additional competitive media spending that filled in some holes in the existing research. This gave us the ability to provide a more comprehensive composite analysis.

Our review of the competitive media spending included a media mix comparison. We found that not only was our client being outspent in total by several major competitors, but that they were also being outspent significantly in the primary media vehicles needed to increase sales and transactions. We also found that our client was being outspent by competitors who had a lower share of market and lower share of locations in their most important markets.

An analysis of marketing/advertising spending ratios confirmed these findings and illustrated the gap between our clients spending ratio and their competitors’ spending ratios. We also illustrated the changes in these gaps, as well as the changes in competitive media mixes from year-to-year.

Results:

Upon sharing our findings and our recommendations with the company, our client immediately instructed their media buying service to revise the media mix for the balance of the year in order to be more competitive in their primary media vehicles. Our client also communicated new media guidelines for moving forward.

Based on our analysis and recommendations, our client considered increasing their media spending ratio to be more competitive in their major markets. However, economic conditions at that time, prohibited them from immediate action.

The results of this project provided the company with a truer picture of the competitive landscape and helped them gain a greater understanding of not only how much their competitors were spending, but also “where” their competitors were spending their media dollars.