Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / Why CMOs Are Capping Agency Scope Creep
Transcript
- Lucas: Luna, I want to start with a number that's been rattling around my head. The Association of National Advertisers — the ANA — put out a report last year that said Fortune 500 companies are now spending an average of 18 percent of their total marketing budget on agency fees. Luna: That's huge. And I bet a big chunk of that isn't even planned. Lucas: Exactly. The same study found that roughly 40 percent of those fees go to out-of-scope work. Scope creep, in other words. And CMOs are finally starting to cap it. Luna: So what does 'capping' look like in practice? Is it just stricter contracts, or are there structural changes? Lucas: Both. P&G is probably the most aggressive example. Their procurement team quietly implemented a policy last year that caps annual retainer growth at 3 percent. And they now require quarterly scope resets — meaning every three months the agency has to re-justify what they're billing for. Luna: That's a massive shift. Agencies have historically relied on that organic growth — the 'oh, we need an extra creative sprint' or 'can you just handle this one more channel'. Lucas: Right. And P&G's move has already rippled through other CPG companies. Unilever and Nestlé are reportedly looking at similar models. And it makes sense — when you're spending billions on marketing, even a few percentage points of waste is real money. Luna: Before we go deeper — a quick honest thing. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these episodes possible. No ads, no sponsors. Just listeners who find value and throw in a few bucks. So if these conversations have sparked something you've actually used in your work, that's why it exists. Lucas: Yeah, and we really appreciate that. It keeps everything independent. So back to scope creep — I think the other driver is that CMOs are under more pressure to show ROI on every dollar. And when an agency bill comes in 20 percent over the original statement of work, that's a hard conversation to have with the CFO. Luna: Totally. I worked with a mid-market DTC brand last year — about fifty million in revenue — and they were bleeding money on scope creep. Their creative agency was charging for 'strategic guidance' that was basically just the account lead's opinion in a deck. Lucas: Classic. So what did they do? Luna: They implemented a scope-change protocol. Any request that adds more than five percent to the original SOW has to be approved by the VP of marketing and the procurement lead. In year one, they saved two point three million dollars. Lucas: That's a real number. And it's not just about saving money — it's about forcing clarity. When you know you can't just add a line item, you actually think about what matters. Luna: Exactly. And it also changes the agency dynamic. Instead of the agency being incentivized to find every possible addition, they're incentivized to nail the original brief. Lucas: There's a tooling aspect too. Several startups now offer ai powered SOW trackers that flag scope drift in real time. One I've seen parses every email and Slack message between client and agency, and if it detects a request that's outside the contracted scope, it alerts both sides. Luna: That's both brilliant and a little terrifying. But I can see why CMOs are adopting it. When you have dozens of agency relationships, manual tracking is impossible. Lucas: And it's not just about policing. The best CMOs are using these tools to actually improve the relationship. If you see that a certain type of scope creep keeps happening — say, 'can you just make the social assets a different size' — you bake that into the next contract. Luna: Right. It becomes a data point for better scoping. So the question is: if agencies lose the margin from scope creep, where do they make it up? Lucas: That's the billion-dollar question. Some are moving to outcome-based models — getting paid on performance, not hours. Others are raising their base rates. But I think the agencies that will thrive are the ones that can clearly articulate the value they deliver, rather than hiding it in add-ons. Luna: And the CMOs who cap scope creep effectively are the ones who will free up budget for the stuff that actually moves the needle — like the zero-click content and customer communities we've talked about in past episodes. Lucas: Exactly. It's about discipline. The CMO who can say to the CFO, 'I've reduced agency waste by 15 percent, and I'm reinvesting that into high roi programs' — that's a CMO who earns trust and budget. Luna: So for our listeners who are on the client side, what's the first step if they want to start capping scope creep? Lucas: Audit your last six months of agency invoices. Flag every line item that wasn't in the original SOW. Calculate the percentage. Then have a conversation with your agency about a scope-change protocol. You don't have to be P&G. Just start with transparency. Luna: And for the agency folks listening — I'd say get ahead of it. Offer your clients a fixed-scope option with a clear change-order process. It builds trust and sets you apart. Lucas: Good advice. I'll leave listeners with this: if you're a CMO and you haven't looked at your agency cost structure in the last quarter, you're probably leaving money on the table. And in 2026, that's a risk you can't afford. Luna: Amen to that. Thanks for the conversation, Lucas. Lucas: Thanks, Luna. Talk to everyone next time.