CASE STUDY: Maximising media value through contract renegotiation
Against a background of increasing cost pressure, a major UK retailer enlisted our services to assist them with renegotiating their media agency contract. The critical task was to unlock additional value from their investment, with a specific brief to leverage and repatriate savings from the marketing plan, effectively delivering the same for less.
The terms of the client’s media contract meant that incremental value from media buying performance had begun to dissipate, with over-deliveries from the existing contract now threatening future returns. Additionally, an increasing proportion of offline and online investment was not covered by trading commitments.
The agency’s Performance Based Remuneration Model was complex, thus incentivised the wrong planning and buying behaviours, creating unauthorised over-deliveries in poor quality environments.
We created baselines for all media spend related to fees, rates, and adtech. This enabled us to forecast a tangible and realistic savings target. We also ran a workshop with key stakeholders to align and prioritise requirements.
From this, a bespoke RFP was created with clear objectives for both the commercial and buying models. The process delivered the following outcomes:
- A simplified set of media pricing commitments capturing 100% of on/offline spend were implemented, driving significant improvement in overall value
- Quality hurdles and buying KPIs were set, ensuring that communication levels would be maintained
- The agency agreed to absorb over-deliveries outstanding from the previous contract
- Buying controls relating to over and under delivery were implemented, and regular media value reconciliations were introduced to improve spend management
- A formal measurement methodology was created to ensure all parties have a clear understanding of the new targets, metrics and the terms
- Additional value was identified by the introduction of a more transparent programmatic operating model, agreed service deliverables and the formation of outcome-based digital targets set against client business KPIs
The project successfully over-achieved against the retailer’s cost challenge, creating >10% improved media value, thereby improving the performance terms of the contract and negating the requirement for an open pitch.
Our introduction of a bespoke mechanic ‘hard-wired’ budget savings into media plans, ensuring real PO savings could be leveraged and repatriated to the business.
We applied tighter buying controls to ensure the agency became accountable for minimising under/over-deliveries, and implemented a new system for reporting spend and tracking value delivery.
We introduced a new governance process empowering marketing to authorise over-deliveries beyond a minimum level, ensuring that budgets are always optimised and the right inventory is selected.
MediaSense now provide ongoing performance tracking reviews to monitor commitments at a faster pace, surfacing actionable insights that help the agency to fine tune delivery.
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