4A's aims to simplify agency search process, modernize compensation model in 2023

The American Association of Advertising Agencies is setting out in the new year to simplify the often lengthy and complicated ad agency search process, one of several areas of focus for the trade organization detailed in its expansive “2023: Look Ahead” report released on Tuesday.

The 4A’s and the Association of National Advertisers are working together on the initiative and already identified pain points of the review process outlined in a report last October, including a lack of communication throughout the search that left agencies in particular feeling like they weren't fully prepared for the requests asked of them or the key execs on the marketing side making decisions in the process.

As for next steps in 2023, 4A’s President and CEO Marla Kaplowitz said the ANA and 4A’s will hold roundtables with marketers and agencies to identify ways to make the search process more efficient and productive, and they will be sending a survey to them soon to assess exactly what each party spends on the process.

“We haven’t ever done a comprehensive report on the real costs of pitching on the marketer and agency side,” Kaplowitz said, “so that will be interesting.”

The 4A’s Mollie Rosen, executive vice president of member engagement and development, and Matt Kasindorf, senior VP of business intelligence and insights, are leading the efforts to simplify the search process.

Meanwhile, Kaplowitz said the 4A’s appointed Nicole Rizzo, also senior vice president of business intelligence and insight, to oversee efforts in 2023 to modernize the agency-marketer compensation model. Rizzo joined the 4A’s last August from Interpublic Group of Cos. agency R/GA, where she was senior VP of finance.

Kaplowitz said the 4A’s is working toward getting updated options for agencies to be compensated for their work based on the costs associated with doing a project, versus how it’s done now where an agency is paid based solely on the number of people working on a project and the hours they put in. She said it's an outdated compensation model that no other industry relies on but it'll be tricky to get procurement people on the marketer side to update these models because they want to be able to compare annual finances apples to apples.

“Helping them get over the discomfort of that” will be what the 4A's is focused on in 2023, Kaplowitz said.

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The 4A’s will also be introducing a new practice in 2023 for overseeing mergers, acquisitions, and succession planning. Kaplowitz said the 4A's has seen heightened demand for this type of guidance from executives at smaller, maturing agencies who are preparing for the next steps in their growth plans.

“There are a number of independent agency owners who are Baby Boomers, at the age near retirement, who have a decision to make,” Kaplowitz said. “Are they succession planning? Do they want to sell their agencies? We also have agencies wanting to grow and expand to add on new capabilities. More recently, they want to add performance marketing and are asking ‘do you know small performance marketing agencies we could acquire and partner with?’ We have people on the team who have M&A experience who help them through this.”

She said the 4A’s started this work under the radar about a year and a half ago. The official 4A’s Merger, Acquisition, and Succession Planning Services Group will be run by executives including Rosen; Chief Operating Officer Adam Cotumaccio, a former exec for GroupM and Deloitte Consulting; and Ashwini Karandikar, executive VP of media tech, and data and a former exec for McKinsey and Dentsu.

On the global economic uncertainty, Kaplowitz said she hopes the ad industry remains resilient. The 4A’s pointed to the overall advertising growth of 8% in 2022 as a sign of optimism.

But she said the organization will be even more focused on ensuring the industry continues to invest in DEI and other areas of innovation that it's identified as ripe for growth such as Web3 and artificial intelligence because these are places companies have historically pulled back on during past economic downturns as part of cost-cutting moves.

“Unfortunately companies make short-term decisions during times of economic uncertainty,” Kaplowitz said. “Ultimately, it will be the employees that drive the accountability. If people within an organization notice [DEI] cuts being made, that will have an impact."