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The Benefits of Negotiation

A global food and beverage manufacturer wanted to increase its media spending by optimizing nonworking marketing expenditures. BCG helped the company achieve this goal in just six months through a negotiation with its agency partner.

The company had a long-standing relationship with its agency partner but had never carried out a negotiation. It wanted to find a way to optimize its nonworking marketing spending to free up funds for working media expenditures.

The company partnered with BCG to develop, populate, and implement a chart of accounts that detailed exactly how much the company spent on various types of working and nonworking media and marketing activities. The chart of accounts informed the company’s decisions to conduct a creative agency RFI and carry out a fact-based negotiation with key agency partners.

In addition, the team developed a standardized Ways of Working playbook that outlined best practices for its marketing teams. It also developed and implemented standard tools and processes for go-forward tracking.

As a result, the company aligned its CMO council on an approach to optimize nonworking spend. The agency negotiation reset the company’s rates to that of the market, generating a savings of approximately 15%.

The new Ways of Working playbook also created new opportunities equal in value to twice the agency negotiation savings. Finally, the standard tools and processes will enable internal stakeholders and agency partners to measure spend and effectiveness moving forward.

The project generated $300 million in available funds over the six-month project.

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