CUB asks agencies to share risk and rewards nichola patterson
Carlton & United Beverages(CUB) is reassessing its existing agency relationships, offering them the chance to become true partners in its business.
CUB’s director of consumer and customer solutions Steve Arthurson said the brewer would look beyond rostered agencies if necessary. “Some of our agencies have embraced the idea of moving from a traditional transactional relationship to a strategic partnership. Others are not so sure.”
In the past, agencies’ biggest gripe about reward/risk-based remuneration has centred around aspects of a client’s business they have absolutely no control over—such as delivery drivers going on strike.
As one of CUB’s rostered agencies, George Patterson Partners managing director, Anthony Heraghty, said those fears are unfounded and that the risk/reward model is a much more transparent way of doing business. “The only risk is in those areas that you’re directly responsible for the outcome. This stuff scares the shit out of agencies but it’s exactly the type of relationship they’ve been asking for.”
In practice, CUB is hoping to get all its rostered agencies to collaborate across all its brands at a strategic thinking and planning level. At this stage, each agency will be paid a fee for its contribution. “A few of them went white at the thought of working with their competitors,”Arthurson said.
Each brand will then be worked on by one agency, although Arthurson has not yet decided whether this will be via a ‘mini-pitch’ process or through permanent allocation. It is at this point the performance-based component will be introduced, based on the effectiveness of the communications mix and the creative execution.
“It’s a more formal business relationship,” Arthurson said. “Previously, we used to reward agencies with a fee and the only way we could pass on any of our ‘pain’ was by sacking them.”
He plans to use econometric modelling tools to facilitate joint accountability and allow the relationship to have some middle ground, saying that this move is about building a more solid relationship with CUB’s agencies and is adamant the agency-client relationship will not be destroyed by an instance of poor sales.
“If one of the marketing plans falls over, let’s review what we, as a team, did wrong,” he said.
Arthurson added that the agency review is in line with massive internal restructuring at CUB that has included changing everything from the managing director to the way the firm devises and markets new products.
The brewer also wants to become more flexible and responsive to marketplace trends, with Pure Blonde low-carb beer and Half Mile Creek wine having emerged from this thinking.
The new innovation and product development arm, i-Nova, has roughly 45 product ideas under discussion at the moment.
