Agency remuneration has always been a sour topic amongst agency management. With revenues dropping , the favourite buzz word these days in the board rooms is “High-Margin-Business” (HMB). 2009 was a water-shed year anyways. HMB sounds good, but do such clients really exists. The problem is global. In the midlle east , slightly more pronounced. There is always some one ready to offer that one-bit-extra for two-bit-less. And when each agencies offering is hardly any different, clients tend to go in for the cheapest.
First the commision era, which still continues. Then came charging for time. Followed by charging for “Value” that we create. Each model has intrinsic faults. Because at no stage do you really get paid for what you bring to the table. And the problem is more deep rooted. Media Agencies have never really offerred anything more than price. I say thats a great offering … its never going to go out of fashion. So why go hammer and tongs over ‘value additions”. We’ve strated doing what the traditional brand agency does. We call it comms planning. The tradtional brand planner at the agency now is restricted only to message strategy. so in effect, we’re trying to take over what already existed anyways.
Then we created the Activation Arm and called it ‘Invention Division’. Utter crap…. Event agencies have always thrived and will continue to do so. In any case we outsource everything to them and then try to charge clients ???
We’ve always been about price and i hope we continue to be that way. Agencies have always been about ideas and i hope we continue to be that way. PRICE and IDEAS. two powerful offerings. Lets charge for ideas and not time. Ideas that will make brands. Ideas that will touch customers and move the products out of the shelves.
If i were to wear the hat of a management consultant and go to clients with the same idea that i brought to them as an ad agency, i am sure that i will get three times the price for the same thing. So what did we do wrong as media agencies? Why would we still get paid less and less whicle consultants and other sensible folks around get paid more and more.
The answer simple… we moved far far away from our core deliverables. We havent really reinvented ourselves and our offering. We’ve done noew things… but new things as media agencies and nothing new that wasnt being done anyways by the traditional agencies.
Thats why we suddenly realised that unbundling wasnt a great idea. Its good that we’ve got our rightful position (away from the fax machine) but are suddenly scrounging for intergration. Integration with the same guys we broke away from a few decades ago. And as usual we’ve found some nice 10-dollar words like Interdependence or Asset Integration to back us up.
We shot ourselves in the foot and now its hurting real bad. Its imperative that we re-invent. The digital boom is an opportunity that could be this turning point. Lets do something about that. Lets re-invent, re-invigorate and strive for great ideas that will yield brand results. Lets charge right after we’ve made sure that the ideas are not run-of-the-mill.