In the previous two posts of this series, I had introduced the concept of 5 Ps (5 Ps for a Business Plan – Part 1) and the 5 steps for implementing this in practice (5 Ps for a Business Plan – Part 2). A business plan prepared around the 5 Ps of Product, Patron, People, Profile and Profit will enable a qualitatively improved budgeting process instead of it being just a number crunching exercise. In this case study, I will explore how the concept of 5 Ps can be implemented in an advertising agency.
Parameters and Measures
For an ad agency, Product is its creative work. The parameters to benchmark for its work can be – (a) creative awards won in domestic and international festivals, (b) client feedback, (c) internal rating system etc. The measures for these will be (a) no. and type of metals (gold, silver or bronze) won at each festival, (b) client satisfaction rating in, say, a 10 point scale and (c) internal scores and/or internal awards.
Long Term Targets
Once the parameters and the measures are defined, the next task will be to set the benchmark values. For example, you can set targets to be achieved in 3 years time, in this manner – (a) 3 to 5 golds in Cannes, (b) client rating of 8 on 10 on all major campaigns, (c) internal scores of 7 or above for all released work.
Shorter Term Milestones
The third step will be to break down the final target into shorter 6-monthly or annual ones – these will be the milestones to cross on your way to the final benchmark targets. For example, you may set yourself a milestone that at the end of year 1 you will get at least one metal at Cannes. In year 2, the milestone perhaps will be to get to 3 metals of which at least one must be gold; and finally in the third year you will be striving for 3 to 5 golds.
Once you have set your targets and milestones and decided how you will measure progress, the real issue will now need to be addressed – how do we get there? This is where the real benefits of budgeting will be realised. You will need to carry out a thorough review of existing processes and of the people involved and perhaps do brainstorming internally (sometimes with external help) of what changes you need to do, in order to improve these, which in turn will put you on your way to your desired target in time. This 4th step of process review is the most crucial of the 5 steps for implementation.
To improve quality of creative work, you may decide to (a) hire new creative talent and (b) revamp the creative briefing process, (c) carry out creative training workshops, (d) set up an internal review committee to evaluate all campaign work, prior to presenting to client, and agree that any work below 6 points (out of 10) will not be presented, and so on. These are the typical decisions coming out of the process review exercise.
The 5th and the final step will require the lead measures to be agreed upon and targets set for implementing the agreed processes. As explained before, lead measures are frequent and quick checks on progress, while the ultimate benchmark or milestone targets can be measured only after elapse of some time and thus not convenient for day to day monitoring.
The lead measures for creative work improvement process can be (a) whether the hiring of new talent is on schedule, (b) how many briefings are following the new briefing process, (c) the no. of people attending creative training workshops, (d) how many items of work are obtaining internal scores below the agree cut off of 6 on 10.
Other P elements
Similarly, we can now take up the second P element of Patron. The benchmarking parameters for a client could be (a) client satisfaction level, (b) percentage share of client’s business or growth of business from the client, (c) client retention period, (d) new business wins etc. The corresponding measures will be (a) a rating given by the client through a feedback form after appraising the performance of the agency, (b) percentage of business handled by us in relation the entire business from the client and/or growth in business volume over previous year, (c) the duration of retention in terms of years and (d) no. and value of new wins.
You can then go on with the next steps of setting target, setting milestones, review and improve processes and set up lead measures and carry on likewise for all the other 3 P elements.
Real role of a business plan
An important point to note is that the value of a business plan rarely comes from the goals set therein – the goals keep changing every quarter. The real value of budgeting comes from the analysis of the situation and the thinking that goes behind the plans to overcome the bottlenecks and the knowledge thus gained, all of which help in better decision making on a day to day basis.Email This Post 0