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Successful Budget Management

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Budgeting can be like going to the dentist — not high on your list of favorite activities. However, if you go often and do the recommended preventative maintenance, you are much less likely to end up in a painful and costly situation!

The key to successful budget management is “early and often.” Below, we’ve identified three steps to take in building the annual budget, setting project budgets, and managing budgets on an ongoing basis:

Annual Budgets

  1. Select methods that fit your company culture such as zero based budgeting, standard costing models, top-down target driven, inflation factors, prior year base, stop/start/continue, etc.
  2. Lay the groundwork up front so everyone in marketing consistently applies the budget methodology. Set the standards for level of detail required, standard costing and modeling, and ratios requirements (working versus non-working, media versus production, fee versus creative, etc.)
  3. Train the team and review the budgets during the process versus after the budget is submitted. Giving a list of review tips, frequent errors, and issues to avoid can be very helpful for your marketing team.

Project Budgets

  1. Consider a model approach with standard cost ranges for various components of production.
  2. Define the components and potential costs up front with agreement from all stakeholders.
  3. Explain variations to the standard costs and obtain senior management approval to operate outside the standard, as needed.

Ongoing Budget Management

  1. Recruit a champion to manage project budgets and implement process enhancements.
  2. Analyze, understand, and agree upon detailed budgets prior to the start of any project.
  3. Wrap-up and reconciliation are just as important as the planning phase and can help your team learn from issues and collect remaining funds for re-investment.

In summary, here are 5 additional things to keep in mind:

  1. Clarify expectations with the team up front before budgets are prepared and submitted.
  2. Have a formal review process for variances to standard costing models used in budgeting.
  3. Have a formal approval process for changes to project scope.
  4. Assign responsibility for ongoing budget management.
  5. Be the team that gets more money due to your track record for effectively and efficiently managing your budget!

Being involved early and often are the keys to success in budget management. Check out our upcoming post for tips and key watch-outs for implementing improved budget processes in your company.

Written in collaboration with Angela Saferite.

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Budget Planning: Fall Into More Money

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With today’s consumers digesting content at a rate like never before, organizations are struggling to keep up. Marketers are challenged to create more content, more often — yet have stagnant (or decreasing) budgets. So, how do you overcome the challenge of doing more with less? During this “budgeting season” we wanted to share a few ways you can approach “finding” more money in your budget. Check out three real-life examples:

Refine Your Content Production Strategy

This can help drive creative synergies, increase speed to market, and lead to significant cost efficiencies — especially for advertisers looking to globalize advertising development and production. So, where do you begin?

  • Tap an internal or external production expert to analyze current processes, creative outputs, staffing, technology tools, content needs, and spending across brands and geographies to identify opportunities, barriers, and challenges.
  • Develop an annual planning protocol — and stick to it
  • Determine the optimal production approach(es) based on your content needs for the next year
  • Analyze historical benchmarks and develop a methodology for tracking success

MRA was tapped to lead this process for a global advertiser. The results? 44% savings in production costs versus historical benchmarks for comparable scopes. Click here to request the full case study.

Establish Targeted Production Investment Levels

Whether you’re investing broadcast and digital video, creating target investment levels based on deliverable type and complexity can have a significant and positive impact for your organization.

Start by building standard cost ranges (based on historical benchmarks) for the various components of production. A few examples of these “components” include:

  • Video style (presenter, single storyline, testimonial, vignette, etc.)
  • Testing (boardomatic, 2D animatic, 3D cinematic, etc.)
  • Number of locations
  • Number of shoot days
  • Music (licensed, stock, custom, etc.)

 Once all components have been considered, develop categorizations based complexity and deliverable type to be used as “building blocks” for budgeting.

Next, create a budgeting tool which factors in additional elements which may increase/decrease the investment level. A few examples of these additional elements include:

  • Heavy CGI or special effects
  • Multiple casts
  • Shooting in a low-cost location
  • Repurposing existing assets

By right-sizing your budgets based on historical benchmarks, deliverable type, and complexity you have the opportunity to drive efficiencies all year long. In fact, one of our clients tapped us for help and captured $1.5M in efficiencies within the first year alone!

Create a Strategy for Scaling Social Media

These days, marketers are struggling with the need to produce more and more content for social channels — with flat budgets. Many organizations are finding themselves with unsustainable year-over-year expenditures in social media and are looking for new approaches to be able to scale their program. If you find yourself in this situation, here’s something to consider:

  • Leverage an internal or external expert to evaluate optimal content for driving the best interaction across channels
    • Look at social media posts over the last 12 months and analyze interaction rates
    • Identify trends in interaction rates by content types and posting cadence

MRA was recently tapped by a global advertiser who needed help in scaling their social media program. By partnering with our client’s marketing team and agency, MRA was able to analyze engagement trends and identify multiple opportunities to stretch budgets and drive efficiency. The results? Our client stretched their social content production budget by more than 35%. Click here to request the full case study.

In Summary

As you can see, falling into more money comes in all shapes and sizes. Understand the strategies currently accepted by your company and what strategies might improve your approach based on the culture and tolerance for change.

Check out our upcoming article as we’ll provide steps on enhancing your 2018 budgeting processes.

Written in collaboration with Angela Saferite.

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Budget Planning: ‘Tis the Season

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It’s Fall and most everyone is working on budgets. And over the last 37 years, we’ve NEVER heard a marketing professional say, “I have enough to execute all the plans and build my brands. No thank you, I don’t need any more budget money.” Seriously, through all the years, with all the brands, in all the circumstances — never have those words been spoken.

So, as an Operations Team member, Procurement Specialist, Accounting or Finance professional, Strategic Planner, or Budget Analyst, here’s what you need to do to be successful: FIND MORE MONEY!

The business environment of today is a picture of:

  • Doing more with less
  • Holding budgets flat in spite of inflation
  • Negotiating incremental deliverables out of existing contracts
  • Introducing new brands without incremental budget
  • Squeezing payment terms, hourly rates, and fees
  • Working with an approved budget only to later receive cuts to that amount
  • Reducing total spend but providing the same or better business outcomes
  • Reaching consumers in a complex, always-on communication stream
  • Complexities with technology and the digital space

So, the task of finding more money in this environment can seem daunting, but there are ways of analyzing existing budgets, building plans for the next year, utilizing tools, and managing processes that can make this a reality. It is reasonable to find money and identify savings that can make you look like a hero, and that money can be dropped to the bottom line or even re-invested in incremental marketing programs to drive improved revenue!

Success in budgeting and smart ongoing budget management looks like this:

  • You become the “go to” person for the executives
  • Marketing and brand teams respect you and seek advice
  • Teams come to you early when there’s a problem
  • Teams are honest with you when there’s money remaining in projects or available to solve problems or drop to the bottom line
  • You become known for solving problems and helping the marketing team and your company deliver financial goals
  • Senior management begins coming to you saying, “If we have incremental money to spend, what can we do to drive incremental sales and revenue?”

So over the next few weeks, let’s roll up those sleeves, sharpen the pencil, and get after this budget in a new way with results that drive new thinking and help you find money!

Join us next week as we explore some actual case studies and tools that deliver this type of success in budget season and throughout the year with ongoing budget management.

Written in collaboration with Angela Saferite.

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Production Transparency: Tips & Tricks

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“Change before you have to.” — Jack Welch

Here are 4 key tips to consider as you implement change to bring about greater transparency with your agency partners:

Tip 1: Create Policies, Procedures, & Guidelines

Many people may believe that production policies are developed to simply prevent issues. However, they offer a true benefit by outlining transparent production practices, creating efficiencies in the production process, and including safeguards to mitigate financial risk. Remember, it’s best when your production policies and guidelines:

  • Include the “do’s and don’ts” as well as clearly-defined business procedures
  • Address approval processes, responsibilities, and limits
  • Have training, training, training – BOTH internal advertiser employees and agency employees should be trained annually and/or during on-boarding
  • Are proactively utilized to review/audit for compliance
  • Are updated regularly to ensure the latest industry best practices (including the ANA Production Transparency findings) are addressed

Tip 2: Assign Responsibility

It might seem straightforward and intuitive, but many companies focus on tips 1, 3, and 4 but miss this critical element. Having production policies means nothing unless someone is responsible and actively assuring compliance. Also, it’s important to make sure the person(s) you designate has the right tools and resources to be successful; getting the right expertise or training is crucial and should be considered up-front.

Tip 3: Consider Up-Front Analysis

Analyzing costs and overages after-the-fact (or when the purchase order runs out of funds) is simply just the process of approving incremental spend. The most critical decisions which can have a significant impact on transparency (and costs) are made early-on. Having a seat at the table with standard processes, tools, and templates helps ensure transparent discussions between your brand teams and agencies — and can help you avoid any unnecessary spending. With a proactive approach to up-front analysis, you’ll also be better equipped to manage scope changes (while still staying on budget) — or, heck, you may end up with funds that you can reinvest back into your brand.

Tip 4: Review Invoices Prior to Payment

Prior is the key word here. After payment is made, issues are often discovered:

  • During an audit
  • When invoices come in and there are no more funds available on the purchase order
  • When invoices come in and the project is closed

This wastes precious time and money to resolve — and may lead to issues with the agency.  Moving this review and “audit” process up before payment is made is the key to success.

In Summary

There’s never been a better time to take an active role in managing and governing production transparency in your organization. Check out additional articles on the topic:

Need advice? Click here to submit questions directly to our team, and one of our experts will get back to you with an answer immediately.

Written in collaboration with Angela Saferite.

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Production Transparency: 4 Steps to Getting Started

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With the recent release of the ANA Production Transparency, now is the perfect time to review and refresh your practices.

Step One

Identify someone or a team who is responsible for managing production. This can be accomplished in three ways:

  1. Tap into in-house resources with deep production knowledge (these team members may reside in marketing operations, procurement or finance)
  2. Train and develop internal team members to manage the production process and expenses
  3. Hire production experts to supplement your internal team

Assigning this responsibility is a critical first step to success!

Step Two

Implement solid policies, procedures and guidelines governing production spend. These usually start with your company policies and procedures that need to be adhered to. However, this alone is not enough; more specific production guidelines require clarification and communication. Production guidelines are best when in writing, updated often, and both employees and agency personnel receive training. (The training is best delivered by the individuals responsible for the management of production costs.)

Step Three

Avoid surprises and issues with your agencies up front in the process by conducting a thorough pre-bid meeting, including leveraging an objective party to ensure 100% alignment among agency personnel and brand teams on all elements of the production, including (but not limited to):

  • Recommended bidders
  • Shoot location options
  • Types and number of assets to be included in production
  • Talent requirements, residuals, and buyout considerations
  • State incentives
  • Music
  • Special effects
  • Budget

Input and clarity around these topics early in the process facilitates transparency, effective management of budgets, and — yes, even results in savings.

Step Four

Have a smooth invoicing process which includes a detailed review of invoices before payment is made. This also is helpful in eliminating the painful process of recouping funds if there are discrepancies or disputes with the billing.

Experts that specialize in reviewing production invoices and back-up documentation, monitoring compliance, ensuring verification of all costs can provide a thorough analysis. (Up-to-date, best-practice guidelines are a key element to have in-place prior to implementing the invoice review process.)

Summary

Regardless if these 4 steps are supported by internal or external resources, there’s never been a better time to take a look in the mirror and identify areas for improvement. Find yourself wondering how you’re stacking up to other organizations, or need help identifying areas that you might be at risk? Call 513-354-3833 to schedule a free transparency assessment.

Join us next week as we provide tips and tricks for implementing change to production management practices in your operations.

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How Production Transparency Can Impact Your Budget

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Building from last week’s “Cliffs Notes” on production transparency, this week we take a look at case studies and examples of how this very topic can directly impact your budget.

Whether it’s internal or external, having a resource for production expertise can lead to real savings for advertisers.

Below are a few real-world examples of how a lack of transparency can lead to increased costs:

Templates:

Here in the United States, bids for TVC/video production shooting and post production are often on the Association of Independent Commercial Producers (AICP) and Association of Independent Creative Editors (AICE) forms. However, the scope of work for digital, photography and experiential projects are often in different formats with varying levels of detail and specifications. This makes it extremely difficult to compare across bids submitted. A best practice is for the advertiser to utilize a standardized template with all the required specs and appropriate level of detail (similar to what is in practice for TV and video). This allows for a smooth pre-bid meeting and the ability to make smart business decisions regarding costs.

Related Party Transactions with Bidding:

The ANA Production Transparency Study noted cases where related party transactions were not disclosed leading to various competitive bidding issues. In a recent project, a freelance producer who also owned a production company wanted that company to submit a bid for the project. In this instance, since an external production consultant was involved, the relationship was disclosed and bids from all production companies were received and evaluated by a 3rd party resource. Can you imagine what would’ve happened if the production consultant hadn’t required proper disclosures before bidding began?

Bid Review

During a recent bid review, a line listed “equipment” with an associated dollar figure. When asked for clarification, the specific items (grip, lighting, back drop, gels, etc.) with prices were provided and the total “equipment” amount came down several thousand dollars.

Overage Approvals

A brand director on a commercial shoot was asked by the agency to approve an overage on set due to some overtime requirements. The brand director “signed off” not really paying attention to the amount, authorizing the over time required in the amount of $60,000. When the production consultant analyzed the charges the next day and looked at the detail requirements for the two hours, the overage amount should have been $16,000. Having someone with production knowledge understanding the details and digging in really paid off in this situation!

Invoice Review

Why use your precious budget on things you shouldn’t be paying for? In today’s world of high turnover, short-staffed teams, and people who are stretched so thin, there’s a higher risk for error — which can impact your bottom line. Invoicing transparency issues aren’t necessarily intentional or malicious, but it’s critically important review all billing prior to payment to ensure you don’t fall victim to common issues, which include:

  • Number of individuals above guideline limits traveling to the shoot
  • Inappropriate class of airfare, upgrades, airline clubs, monthly fees, subscriptions, etc.
  • Miscellaneous non-billable expenses (items you can’t imagine!)
  • Non-transparent talent charges related to miscellaneous payments, member violations, fees, wardrobe, overtime, etc.
  • Charges to incorrect brands or projects (and yes, even incorrect clients)
  • Duplicate charges
  • Past due balances on invoices
  • Taxes charged on non-taxable items

NOTE: MRA has an entire team of people who review agency invoices and back-up documentation to ensure billing is 100% accurate. To learn more, click here to download an overview of our LineWatch® Invoice Monitoring process.

Purchase Order & Budget Management

When advertisers don’t have solid pre-bid and bid review processes in place, project estimates become inaccurate and one risk is having the purchase order open for a larger amount than needed. If the advertiser doesn’t have an individual or team closely managing open purchase orders and budgets (vs. actual expenses), significant amounts may be left on open purchase orders and when final billing is settled, there isn’t always enough time to utilize the available funds. Imagine if YOU were the client that found out too late an entire additional spot could have been produced for your campaign!

Join us next week as we provide steps for how to get started and make improvements to your production management practices.

Written in collaboration with Angela Saferite.

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Production Transparency: A Good Idea or Baseline Requirement?

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Board members, CMOs and CFOs are starting to ask what their companies are doing. Are you prepared to answer these questions?

We’ve pulled together the “Cliffs Notes” version of what has been happening in the industry and the ANA’s recently released study: “Production Transparency in the US Advertising Industry.”

Industry Timeline:

ANA Production Transparency Timeline

Advertising production and media, two of the biggest marketing spend areas continue to be at the forefront with issues and investigations. This presents an opportunity for advertisers to make significant changes. It’s time to roll up your sleeves and get started!

What Is Transparency?

  • Full disclosure of relevant info required for informed and intelligent decision-making
  • Lack of hidden agendas and conditions

ANA Production Transparency Task Force: Two Part Mission

  • To assess for lack of transparency in the US production industry
  • To assess production management processes and develop recommendations for improvement

Industry Dynamics

  • The spend is huge – no single source estimates available, video commercial production alone is $6 billion (source: AICP June 2016 member survey), other areas include audio, digital, print, out of home and experiential/event marketing
  • Digital has driven a fragmented ecosystem for content distribution
  • Advertisers are working with an unprecedented number of agency, media and production partners
  • Expanded client requirements for commercials and content
  • Pressure from advertisers on fees and production budgets
  • Agencies experiencing decreasing market share and revenue and adapting by increasing service offerings including in-house production, editorial, and music facilities
  • Need for more content with less money and fast turnaround driving advertisers to seek greater flexibility and efficiency in production spending including decoupling, pre-qualifying suppliers, and direct sourcing

All of these factors created the “perfect storm” for issues to rise to the surface.

Findings of the ANA Study

  • Creative agencies are increasingly directing post-production projects to affiliated companies within the same agency holding companies
  • Producers at times ask for a “check bid” from independent post production companies with inflated prices to drive the work to the in-house option
  • The producer did not work to negotiate pricing with the external bids but utilized the information to make sure the in-house estimate was lower
  • Clients aren’t always informed of the ownership status of the agency unit submitting the bids
  • Agencies markup vendor invoices a certain percentage which is not always disclosed to the advertiser
  • Agencies are managing the bidding process while also participating in bidding for the project
  • Agency management is incentivized to keep work in-house
  • Cost savings are not always realized if the in-house bid was estimated low and has significant overages
  • Agencies are at times acting as the principal with production suppliers entering contracts directly with the production supplier versus entering into the agreement as the agent of their client. Principal transactions can result in nondisclosure of the original purchase prices as well as an incentives/rebates paid by production suppliers and limit the advertiser’s right to audit.
  • Experiential and Event Production areas have fewer bidding and reporting requirements, less operational oversight, fewer compliance audits, and more reporting lapses due to the just-in-time nature
  • Production companies and agencies file for state commercial production incentives without the advertiser’s knowledge or approval; these savings can range from 15 – 30% of production spend

MRA has provided a summary categorizing the major issues and next steps, click here for a download of this chart.

ANA Member Survey Findings

  • Only 43% of advertisers require agencies to disclose if bidding a production job to an in-house or affiliated production company
  • Over 60% do not require or know if their agency contract requires production rebates and incentives be passed back to their company
  • 33% confirm knowing their agency acted as principal with production suppliers, 38% said the agency did not and 29% don’t know
  • Marketers lack familiarity with state commercial production incentives and don’t know if their company is benefiting
  • The knowledge of advertiser personnel making buying decisions varies dramatically and in many cases, is very limited

Similar to what was discovered with media transparency, the blame is not all on the agency side, advertisers need to be much more actively managing and controlling production spending.

Join us next week as we explore the study’s recommendations for advertisers and case studies illustrating how to bring these recommendations to life.

Written in collaboration with Angela Saferite.

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Production Bidding Transparency

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It’s MRA’s priority to ensure transparency and integrity in the production bidding process for our clients, and we wanted to share a quick post regarding the recent announcement of the U.S. Justice Department’s investigation.

Day-in and day-out, our Content Production Advisors advise our clients on best-practice processes and procedures to protect against fraudulent bidding practices like those mentioned in The Wall Street Journal article.

With that in mind, MRA has responded to this week’s announcement by developing additional resources to help you mitigate risk and safeguard your organization against unfair production and post-production bidding processes. We’d be happy to discuss them with you — please request additional information here or call Stacey St. John directly at 513-354-3833.

 

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Defining The Actual Role of Broadcast Advertising

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What is advertising? In its simplest form, advertising is a message from a seller to a poten­tial purchaser – which the seller hopes will produce extra sales and, ultimately, an en­hancement of revenues. And some other descriptors?

  • Advertising is an investment by the adver­tiser, wherein he puts capital into a venture he hopes will not only be self-liquidating but will also produce a handsome return on his investment.
  • Advertising is a golden opportunity to outwit, out­spend, and out-maneuver the competition.
  • Advertising is the very best method of pro­moting, building, rebuilding, or maintaining a Brand.
  • Advertising, in many companies, is the fast­est, most direct route to the Executive Suite.
  • But, above all else, advertising is SELLING.  The sooner we all get that very basic principle clearly in mind, the better off we’ll be.

Veteran salesmen will tell you it’s essential, at some early stage in the selling process, to get your prospect nodding, saying “yes” in response to your selling argu­ments. This, of course, is preparation for the essential “yes” that answers the bid for action, your “closer.”

Advertising, being an indirect form of sell­ing, needs to get “yesses,” too.

For the next few minutes, put yourself on your pro­spective customer’s couch and consider the daunting challenges your ad­vertising must take on. Within seconds, your ad must secure a “yes” answer to six vital questions. You must get six “yesses” in a row in order to win this game. Here they are – in sequence:

ADVERTISING YES #1

Yes – I’ll watch this commercial or read this ad.  If you don’t get this one answered right and right away pack it in.  You’ve lost the game at the get-go. Your commercial or ad must nail the viewer immediately. This is known as “attract­ing attention.”

Consider, for a moment, the enormous competition your ad encounters. You’re fighting the reader’s or viewer’s current mental condition, the accumulated events of the day, the iPad in one hand and the iPhone in the other, whether the dog is scratching itself, what the kids are doing, etc., etc. Your commercial opening or ad visual had better be good.

ADVERTISING YES #2

Yes – I’m interested enough to stick around for a few seconds. This stage in the sale, not surprisingly, is known as “arousing interest.” And you’d best be sure that the interest sought is the prospect’s interest, which you have cleverly ascertained from research. Beware of using an execution technique as an interest arouser – all prospects want low-calorie food that tastes good, you know.

ADVERTISING YES #3

Yes – I want what you’re promising. This is where the principal benefit comes in. Clearly, you market your product or service to provide a certain desirable end benefit for the prospect. Ergo, waste no time getting to the benefit quickly and unerringly (remember that your “temporary” reader or viewer can still bag out on you at any second).

Many sagacious advertisers make sure the principal benefit gets appropriate attention by making it the sub­ject of the ad’s main illustra­tion or using it as an early and dramatic visuali­zation in television. The best advertisers do both.

ADVERTISING YES #4

Yes – I believe what you’re saying or prom­ising. I understand how your Brand is different from your com­petitors, how you can offer some­thing they don’t or can’t…and I want what you’re offering me. If you don’t get this right, your persuasion score suffers.

Brand differentiation thrives on reason-why which is, of course, what we’re talking about here.

ADVERTISING YES #5

Yes – I want what you’re selling. Your proposition meets me squarely in the area of my interest and pro­vides the benefits I seek in Brands like yours. You’ve also convinced me why I need to buy your Brand over any other.

I like what you’re telling and showing me, and I’m ready to buy.

ADVERTISING YES #6

Yes – I WILL buy what you’re selling. I’ll matriculate from becoming a consumer of your advertising to be­coming a consumer of your product. You’ve showed me the package, you’ve rammed home the Brand name, and you’ve urged me off of my couch and made me make a note reminding myself to pick up look for your Brand while shopping next.

Cost Control: A Blend of Art & Science

Okay, now that you’ve studied the answers your advertising must elicit from viewers, we have some questions for you. Look at your most recent advertis­ing, particularly your Creative Strategy. How hard are you selling? Have you traded in a potentially effective cam­paign for “a little top of mind awareness”? How long has it been since you spent a day in the field with your agency, talking to retailers? How long has it been since you ran a truly innovative us­age and attitude study?  What are the analyses of your last copy research tests showing you?

MRA has more than 50 major advertisers as clients, and our consultants deal with questions of this kind every day.  Want to learn some more? Give us a ring!

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15 Hot Ad Agencies

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Keep An Eye On These Hot Ad Agencies

We live in one of the most interesting and challenging business environments the world has ever seen. New trends and technologies are emerging overnight, making it difficult for brands to keep pace with the rapid changes. Finding the right partner(s) to support the changing needs and preferences of customers is paramount. That’s where a list of the best ad agencies comes in handy.

In today’s marketing world, working with the right ad agency can make the difference between rapid growth and the slow decline of your business. Top ad agencies today offer a fresh approach and new ideas to companies to help them get a competitive edge.

If you’re searching for an ad agency, or you just want to keep a watchful eye on the market, you’ve come to the right spot. Day-in and day-out, MRA has the pleasure of working with hundreds of agencies around the world. And we consider it a privilege to collaborate with many of the brightest minds in marketing and advertising. Some of the agencies featured in our lists are ones we work with — and some we simply admire from afar.

We decided to publish our first Hot Agencies list in April — which featured were rock stars like Sparks & Honey, Droga5, TDA_Boulder, Huge, and gyro…just to name a few. And now, we’re continuing to showcase some of the best and brightest ad agencies to watch. Download our latest edition of MRA’s Hot Agencies list, and you’ll find 15 top shops in the following categories:

  • New Breed Agencies
  • Independent and Proud of it
  • Small(er) with a Fresh Approach
  • Digital Roots
  • Content

The ad agencies in this list are pushing boundaries, coming up with innovative approaches that blur the line between marketing, strategy, creativity, and technology. Ready to find out who these hot agencies are? Download your copy now!

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