The 4A’s Agency Management Services team, led by EVP Tom Finneran, provides members with consultation, information and insights related to agency practices, mergers and acquisitions. It also offers insights regarding management development and transition, commercial production, data security and client relationship management, as well as agency culture and industry trends. 

Many 4A's members have benefited from the deep knowledge and experience that this team has to offer. One such member is Sam Meers, who runs Meers Advertising in Kansas City, Mo. When the full-service agency — a 4A's member for 21 years — was vetting potential suitors and crafting a succession plan, they turned to Tom and his group.

“The 4A’s is an amazing resource for those types of issues. I don’t have any idea where I would have gone if it were not for the 4A’s to get that kind of information.” Sure, Sam agrees, there are consultants and lawyers he could have hired, but they couldn’t possibly know our industry, or his agency, as well as the 4A’s, he says. “That’s a huge value.”

The 4A’s Agency Management Services team also works with agencies to develop guidance, suggest best practices and provide benchmarks on a variety of topics designed to facilitate effective, efficient and profitable agency operations.  

Agency Compensation

The tension between marketers and agencies relating to the amounts that agencies should be paid for services rendered and results achieved continues to intensify. To help agencies respond to client inquiries on cost-based agency compensation systems, the predominant form of remuneration in the industry, the Association’s finance committees developed guidance called 4A's Agency Overhead Rules of the Road FAQs and 4A's Agency Profit Rules of the Road FAQs. These guides provide agency management with best-practice principles, negotiating suggestions and information to counterbalance inaccurate information and over-reaching efforts by compensation consultants and ill-informed procurement groups whose primary agenda is to reduce agency compensation. 

Both marketers and agencies are frustrated by conventional systems of compensation. The industry is interested in identifying new structures that align agency pay with the value of the work and results achieved. While there has been significant discussion related to Value-Based Compensation (VBC) and experimentation with agency performance incentive compensation, we have not yet cracked the code on how to execute meaningful, appropriate, ongoing Payment by Results (PBR) agency-compensation arrangements. In order to help the industry understand the prevalence, economics, structure, issues and opportunities associated with agency incentive compensation, the 4A’s authored the 4A's Survey on Agency Performance Incentive Compensation Payment by Results (PBR). The survey report provides guidance on evolving formal two-way relationship management arrangements with clients and outlines best practice as well as cultural considerations that enhance the probability of calibrating successful, meaningful agency incentive-compensation arrangements.    

In 2015, the 4A’s will provide guidance on the merits of market-based agency labor rates as well as guidance on the shortcomings and unnecessary complexity associated with deconstructing labor charges into cost and profit components. The Association will conduct an enhanced comprehensive labor billing-rate benchmark survey. All agency domestic business units and offices will be encouraged to participate in the 2015 4A’s Labor Billing Rate survey.

New Business

The 4A’s new business community ratcheted up discussion on the ANA/4A's Agency Selection Briefing Guidance, a supplement to the highly regarded ANA/4A's Guidelines for Agency Search, which provided best practices for clients and agencies to consider in the agency search and selection process. Community discussions at leading advertiser and agency events promoted awareness of the best practices and advocated adoption of the principles contained in the guidance.

The New Business committee expanded the dialogue with client communities related to the opportunity to leverage expertise and scale by revisiting outdated restrictive client conflict policies. The Association’s communications highlighted examples of appropriately structured policies, identified safeguards that protect confidential information and described why it is in the marketer’s best interest to craft prudent conflicts parameters.

Agency search consultants play an important and influential role in agency search, agency compensation and agency-client relationship management. The Association’s 2014 outreach and collaboration with the agency search consultant community included 4A’s hosted events along with key consultants’ participation at 4A’s conferences and committee meetings.

The growth of project assignments and the dynamics associated with project reviews were documented in the 4A’s Project Reviews Survey. The survey findings identified initial possibilities for working with advertisers to recalibrate project reviews processes to better match an agency’s new business investment with the revenue opportunity for projects. The report also identified preliminary suggestions for agencies when a review is for a project. Looking ahead to 2015, the Association’s new business committees will form a task group to develop guidance on project reviews.

Agency Operations

The speed and complexity of real-time marketing across rapidly expanding media marketplaces and technology platforms is resulting in increased pressure on marketer and agency operations. In 2014, the 4A’s developed information and guidance to help guide agency management:

  • 4A’s is initiating a series of task force groups comprised of financial, legal, commercial and subject-matter experts to develop a series of guidance best practices relating to agency-client Master Service Agreement (MSA) provisions:
    • The initial MSA series guidance publication, 4A's Client Audit Guidance, recommends that agencies and advertisers collaborate to design effective, efficient controls and verification procedures related to significant marketing expenditures. The guidance provides stewardship principles, strategies and best practices for working with clients on audit verification and benchmarking activities.
       
    • The 4A’s Risk Allocation, Indemnification and Limitations on Agency Liability guidance discusses allocation of responsibilities as the foundation for assignment of risk, frames equitable parameters for indemnification, recommends appropriate limitations on agency liability and provides concrete examples of predominant practices.
       
    • In 2015, the Association will initiate development of guidance on structuring data security MSA provisions. This initiative will build on the data security discussions that the Association began in 2014. Those discussions led to the publication of 4A’s Data Security Awareness Guidance, which provides an introduction to the topic of data security and briefly summarizes why data security is important, why agencies need to invest in data security and a few recommendations for getting started with implementing data security policies and procedures.
       
  • 4A’s iconic employee compensation survey, which includes information on 31,300 salaries, was expanded in 2014 to include supplemental analysis, comparative information on salaries in other professional service industries and recommendations related to industry starting salary pay grades. It also featured social media job titles for the first time.
     
  • 4A’s committees, communities, benchmark activities and operating practices information included:
    • Project management workshops and a survey on software tools used in the different components of project management
       
    • Production cost information for short-form and long-form online videos
       
    • About Employee Benefits Series of surveys provides information on employee bonus compensation as well as information on planned salary increases
       
    • Agency Services and Structure Survey Series – two surveys were conducted in this series: 
      • An overview of services offered by agencies
      • A survey of small and mid-sized agencies on how they are structured to offer services in a number of areas including creative & production, digital production, media, project management, social media, analytics, video content and mobile.

All of this thought leadership and recommended best practices comes to life each year at the 4A's Transformation conference. The first day of that event kicks off with senior agency leaders gathering for a full-day, members-only session called the Management Practitioners Forum.

During this session, agency leaders and industry experts such as search consultants share real-world scenarios, insights and experiences designed to equip attendees with tools and ideas to take back to their agencies to help them be more successful.