Evaluating Agency Performance How-To Guide

1. Evaluating AgencyPerformance Executive Summary Evaluating agencies can help you gauge the performance and alignment of key partners. To create an effective agency performance evaluation, evaluations must occur on a regular basis, there should be a neutral evaluator, a consistent format should be used, 360-degree reviews should be considered, and a clear follow-up plan should be included. This guide will explain why you need to evaluate your agency, what criteria you should use and how to conduct an effective evaluation. Why is this Important? The Association of National Advertisers (ANA) reports that 82% of companies regularly review the performance of their marketing agencies. It is important to regularly evaluate agency performance for the following reasons: 1. Improve Resource Allocation - when evaluating agencies, a regular assessment can help you determine what is working well and why. The companies that conduct regular assessments are likely to identify successful and under-performing aspects of their agency relationships. This will allow a company to allocate efforts and resources more efficiently. 2. Ensure Alignment - an evaluation can ensure that your marketing agency’s work is aligned with your company’s overall marketing strategy. 3. Budget & Measure ROI - a regular agency evaluation can help you understand the total cost of agency services and will help you calculate Return on Investment (ROI). © 2013 Demand Metric Research Corporation. All Rights Reserved.

2. 4. Motivate Under-Performing Agencies - the companies that plan regular assessments are more likely to identify successful and under-performing parts of their agency relationships. This can lead to constructive conversations and improved performance. 5. Encourage Realistic Expectations - A regularly agency evaluation can help you ensure that your company and its agencies are clear on expectations and are committed to the relationship. Key Evaluation Criteria When evaluating agency performance, both qualitative and quantitative measures should be used. The most common formal agency evaluation criterion includes: 1. Creativity & Innovation - agencies should generate creative and innovative ideas to help your company’s marketing strategy for the long-term. 2. Execution - a marketing agency should have a clear understanding of expectations and should be regularly meeting these objectives. While your team should be involved with its marketing agency, it should not be required to spend an excessive amount of time to ensure that expectations are met. 3. Financial Stewardship - when working with a marketing agency, it is important that a positive ROI is realized. Agency partners should do everything possible, strategically and judiciously, to create work that will have an impact on your bottom line. 4. Quality of Deliverables– agencies that do not deliver extremely high-caliber work should be replaced or evaluated closely to get up to the standard you require. © 2013 Demand Metric Research Corporation. All Rights Reserved

3. Action Plan 1. Conduct Evaluations On A Regular Basis - companies should conduct formal agency performance evaluations on a regular basis such as quarterly or annually. If you are looking for more insight into agency selection, use our Agency Selection Tool to evaluate and compare different ad agencies by analyzing them across a set criterion. 2. Use a Neutral Evaluator - a trusted, neutral point person should be assigned to the evaluation. This is important because the person should be focused on objectives and metrics, as opposed to personal relationships. 3. Consider Doing Mid-Term Reviews– companies that opt for an annual review process should consider having a more informal mid-term review at the 3 or 6-month point to avoid any surprises at year-end. 4. Maintain a Consistent Format - a consistent format should be used across all agencies, although specific questions can be varied for different agency types. 5. Consider 360-Degree Evaluations– use our Performance Review Template to create a 360-degree evaluation that includes multiple perspectives such as the agency reviewing themselves, the internal project manager and an executive decision maker. This style of review opens up agency performance appraisals to greater depth and breadth of feedback and can provide more insight to ensure more accurate and effective assessments. 6. Create a Clear Action Plan– following the review process, work with your agencies to create action plans that include areas for improvement and a commitment from them to meet your expectations for future performance. Bottom Line Regular agency performance evaluations allow you to determine successful and underperforming aspects of an agency relationship and identify areas for improvement. If you are not currently evaluating your agencies on a regular basis, consider implementing this new process in your organization. © 2013 Demand Metric Research Corporation. All Rights Reserved