Navigating an unchartered path with trusted agency partners

Market Context

As we enter the last quarter of what most will rank as the worst year’s trading in living memory – with GDP declines estimated to be up to 6% in some MENA countries – many brands are assessing marketing plans for 2021. Most of the world’s economies are in deep recession yet two thirds of multinationals in our region expect revenue growth in 2021, meaning brands are exploring uncharted territory.

Consumer behaviour has changed significantly, some of it permanently, with a pronounced shift from bricks-and-mortar to online retail. Additionally, there’s an unprecedented cluster of pressures on both revenue and profits, including consumers trading down to cheaper brands, increased VAT, reductions in the expatriate population, and lower tourism in a number of GCC markets. This combination of factors is likely to translate to smaller marketing budgets managed with more caution moving forward.  Some of our clients expect marketing activities in 2021 to be less frantic and more about setting and sticking to the right priorities.

Implications For Brands And Agencies

Challenging as trading conditions are in the MENA region, the post-pandemic market shock provides brands with the opportunity both to review their marketing and retail strategies and also to reset their agency relationships. It’s an ideal opportunity because they’re operating in a period when they’ve never needed transparency and clarity more. Strategy 101 tells us that the first step in knowing where to go and how to get there is to identify clearly where we are right now, and so what tools, partners, and investments are required.

For brands, the knock-on effect will naturally be a re-evaluation and perhaps a right-sizing of agency services, marketing assets, and budget allocation. This applies to the entire marketing and retail supplier ecosystem, including creative and media agencies as well as merchandisers. Some brands may increase spend as they try to seize market share, while others will be looking to cut investment. Whatever the plan, this shouldn’t be taken lightly. That’s why it’s worth first assessing the efficiency of existing marketing investment before taking steps that can bring about so much disruption.

The Role And Value Of Auditing

Many leading brands carry out marketing contract compliance audits on their largest-spend agency partners each year. This helps them have a clear view of what they’ve paid for each component of their agency investment – from FTEs to DSP buys, from trading desk fees to creative production. Crucially, it enables them to assess whether this spend was managed in accordance with the terms of their agency contract. Transparency of any marketing spend is not a given, and brands should always press their partners to secure best value on their behalf. Although scopes of work don’t often change as rapidly or significantly as they did in 2020, change they do, as do team members both client and agency side. This can lead to misunderstandings over the course of the agreement term.

Where Audit Should Focus

In the increasingly complex and fragmented MENA region, brands need to assess their own strategic marketing challenges. Then they should assess some of the following agency partner issues:

  • Did any redundancies or reorganisation of agency resources across the region impact the capability of the agency to deliver on goals in each focus market? Were any efficiencies secured that should have been returned?
  • Where an agency doesn’t have local representation in a market, is there transparency of costs and mark-ups with their affiliates and third party partners?
  • Do all suppliers in the marketing supply chain adhere to brand guidelines and work policies? Even at the best of times, corners can be cut; under extreme pressure, this is more likely but less desirable. What checks and balances do partner agencies have in place?
  • With changes to consumer shopping behaviour and media consumption, do agency partners have skills, expertise, and capabilities necessary to develop brand assets in each market that resonate with the target audience cost-effectively? Are the production costs for developing content clearly spelled out?
  • Has there been a marked shift from sales at bricks-and-mortar retail to online and therefore a need to right-size deployment of merchandisers, as well as volume and type of point of sale materials?
  • With digital ad spend growing from 5-50% over the last 6 years and the increased use of videos, do brands have a clear line of sight into their entire digital media supply chain, its intermediaries, and associated costs?
  • The use of Influencers has grown exponentially this year and global spend is expected to double from an estimated $8bn to $16bn by 2022. Does the brand have the right commercial models that deliver ROI and secure optimal visibility for its products or services?

In summary

As brands navigate an uncertain future, they need to ensure that they create and deploy marketing assets that resonate, able to reach customers via touchpoints and media channels that fit into their lifestyles and at the same time achieve maximum bang-for-buck. Brands can’t do this alone and they need agency partners that have the right skills, understand the challenges, and go on the journey with them. To go on such a transformational journey demands clarity, and the best place to start is with an audit.


Featured in The Brandberries.