Media fragmentation, creative fragmentation, pressure to improve ROI and the current economic environment are driving our clients to increase the value received for their agency fees. Yet, the lack of solid metrics makes determining agency value far from precise.

To answer this dilemma Roth Associates has developed a proprietary process to increase the ability to assess an agency’s contribution that we call The Value Equation.

A more revealing approach to evaluation (vs. traditional assessment) is to examine the value received for fees paid. We use The Value Equation to spotlight the relationship between compensation and performance through a formula that determines the distance between benchmarked agency fees and assessed agency contribution.

Value is determined by comparing agency performance vs. expectations (par), and agency fee vs. market place pricing (par). The spread between the two measures agency value or lack thereof.

Fee Performance Value
Above Benchmark / Par Performance = Poor Value
Below Benchmark / Above Performance = High Value

Our clients have found this approach especially useful when providing corrective guidance, comparing multiple resources and tracking agency performance over time as it allows a marketer to work on the numerator, fee, and the denominator, performance, to drive more value from the agency. The Value Equation can easily be linked to incentive compensation for additional agency motivation.

While we are not in the business of disrupting satisfactory agency relationships, statistically we know there are opportunities for improvement. With more than 20 years of experience providing fact-based insight Roth Associates clients benefit from disciplined processes designed to identify and implement best practices.

If you would like to know more about Roth Associates’ experience with providing counsel and delivering measurable and usable results for advertisers please contact us for a confidential conversation.