The thing about the Campbell’s Soup example from my last blog post, which excites me so much is the notion that ideas really are what ad agencies should be valued for.
We’ve been saying it for years, but it seems we really don’t believe it. We retreat to traditional ways of disseminating, measuring and charging for our ideas.
If the T-CAAN conference this past week convinced me of one thing, it’s that ad agencies have been too darn stubborn, and despite all the evidence pointing to the need for new models for media, fees and agency services, we still cling to them like lifelines because everything else in the landscape is changing so fast. They have been the anchors of our industry and it seems clear we feel we have invested too much in them to give them up without a fight.
They look set to become the dodo bird eggs of advertising though.
The most successful agencies are moving towards some form of engagement strategies with their customers, in a growing understanding that the amount of time a consumer spends – or engages – with a brand, is a more valuable and relevant measuring stick than how many people we expose it to (impressions, views, readership).
So how do we assess value to it? How do we charge for engaging consumers and creating these conversations around our brands? Our guest speaker Tim Williams prodded us on this question. (And if you haven’t heard of Tim, or his book Take a Stand For Your Brand, or his Agency 2.5 presentation, do yourself a favour and click here.)
It’s easy to assess using old models. A television commercial takes X amount of hours to concept, script, produce, and then the media is bought accordingly. The end result is a fee based nominally on costs to the agency, rather than value to the client.
But how do we bill for buzz? By the hour? A smart idea from an ad agency can generate invaluable engagement (like Campbell’s Soup). It may arrive in 5 minutes. Is it then only worth 5 minutes of our hourly rate?
Tim shared with us some case studies of agencies that are moving towards models of performance-based renumeration. When their clients win, they win. Not unlike the ROI strategy Copeland tried, without traction, to take to the market in 2008.
Rather puts our money where our mouths have been, doesn’t it? Without the security of the hourly-rate estimate. Personally, I like it.
If you’re in advertising, or even if you’re not, and the question interests you, let us know what you think.