Andy on Twitter

  • Connect

Fed-up Agencies Quit Punching the Clock

Yeah! This is something I’ve been trumpeting for years. It’s time agencies threw out timesheets and focused on the value they bring to their clients. You don’t measure value in minutes or buckets of clips, but rather in terms of ideas.

Crispin Porter & Bogusky’s bold deal with Haggar, struck last year, in which the agency took an equity stake as part of its compensation, stood out as a rare exception from the sad status quo of agencies selling ideas as if they were pork bellies to be traded by the ton. “We’re in the intellectual-property business,” Crispin’s Jeff Hicks said at the time. “We don’t sell time.”

Ok, I get the value of time sheets in terms of measuring productivity and time spent on a clients business. But why over-emphasize it? Why not focus your talent on what really matters – Ideas!

PR agencies are going to once again have to follow the lead of ad agencies (I fear) on this one – especially as communications continues to be transformed around content and participatory communications:

Agencies’ moves into content creation — such as Bartle Bogle Hegarty, New York’s co-production last year of an MTV special that’s set to become a TV show — is another factor for rethinking traditional labor-based compensation models. Agencies might share syndication revenue or retain rights to creative content. When Crispin created a video game for Burger King, it was paid a fee in addition to what it is paid to create advertising, one executive said, although the agency does not receive a percentage of sales.

Update: My wife and Jesse inspired me to add to this post.

I bounced this off my wife last night and she made a very good point. What about all the tactical work that goes on inside a communications agency? Like it or not, lots of work that agencies do relates to block-and-tackle communications and not just the big idea. How do we charge for that? In this respect, counting the hours might make more sense.

So perhaps what we need is an overlay – where agencies can build and participate in the upside of idea generation (and by default the downside). Reflecting on this, perhaps what we need is more blended models rather than the one-size-fits-all model of today. I believe today’s model kills “ideation” as an activity by confining it to the scope of billable hours. It also has the effect of nuking what I call “idea entrepreneurship” – the creation of ideas that transform business models and models.


Central to the tenet of “idea entrepreneurship” is that agencies co-invest with clients – they put up the hours and nouse, the client contributes products, services etc. The only agency I know of that is doing this today is Arnell Group. Measurement gets easy in when “idea entrepreneurship” is at play. Great ideas = Great dollars.


4 Responses

  1. By JesseCiccone on January 25th, 2007 at 8:47 am

    Andy,

    I’m all for a move away from clock-punching (the agency where I work has taken an important step in that direction in that we do not have hourly billable rates for any of our staff and we don’t track hours).

    Your idea of selling ideas is intriguing. But how do the practical realities play out? Do you get paid based on the success of the idea, how long it took to develop, the work associated with executing it, some combination of these factors or something else all together?

    And what comes first, idea creation or payment? This point is a particularly sensitive one for those of us that have done a lot of (unpaid) work for a new business pitch only to have the prospect take the ideas and execute them on their own without hiring the firm!

    The models suggested in the article are qutie interesting, but seem to me to more easily lend themselves to advertising than PR. As you know, there are *still* no generally accepted rules for measuring PR’s value in the current model. The ‘selling intellectual property’ approach adds another layer of complexity.

    I would like to see our industry move in this direction (one side benefit of it would be making the work a lot more interesting!), but feel like there are some issues to figure out first.

    Or am I just being overly resistant to change?? :-)

  2. By JesseCiccone on January 25th, 2007 at 11:40 am

    Inspiring? My wife will not believe that!

    OK, so…

    I couldn’t agree more. Separating ideation from tactical execution is a must if it’s going to work (otherwise, how do you charge for that brilliant, business-changing idea that came to you during a 5 minute shower?) How do you suggest valuing the ideas? For example, I was recently in a planning meeting with a client. We were talking about some “strategic” stuff like company messaging, market position, competitive landscape, etc., but it was still a pretty typical planning meeting in that even those topics quickly were boiled down to “OK, what’s the next step/whose action item is it?” All of the sudden, I had an epiphany (I’ve been doing this for a decade, it was bound to happen once, right??) and came up with an idea that has since changed the entire approach to the company’s communications and, to an extent, overall strategy. While there was some inherent value to blurting the idea out (oohs and ahhs, some goodwill with the CEO, an overall reinforcement that the client is smart to work with us, etc.), it had no financial impact on our business. And, moving forward, all it has done is replaced some of the tactics we would have executed with different ones associated with the new idea.

    So, the *assignment* wasn’t to come up with a big idea. It just happened. Now, I see that in the idea entrepreneurship model, the value (and compensation) associated with this idea should be handled differently (in fact, that thought occurred to me at the time!), but how?

    BTW – I hope you’ll forgive the self-congratulatory tone of the example above, but it illustrates my conundrum!

    The aspect at play here is not just getting agencies to buy into the idea and figure out the right structure, but to get companies to accept it, too.

  3. By Jon Beattie on January 28th, 2007 at 9:31 pm

    We have already entered into this type of arrangement with some clients and are actively seeking more. The concept of sharing risk/reward was one of the founding principles behind our firm as we strongly believe this is the future of the industry.

    Sure doing these deals is going to be complicated, but the upside is clear. Potentially more revenue than might have been gained via time and materials and interestingly your relationship with the client is much more a true partnership. For example, we have to all agree on the strategy and creative, whereas quite often in a traditional client/agency model you have to end up “dumbing down” the original concept due to the constraints of the client.

    We mainly deal in the digital space where measurement of a success of a campaign is generally speaking eaiser than offline. I don’t think it is impossible to measure traditional media campaigns though, it is just traditional agencies tend to shy away from hard numbers, except if things went really well. If sales increase massively post-campaign, it was their stunning creative, if they flat lined, then they’ll wheel out research that show that brand awareness has increased, and say that sales will follow in the future.

  4. By JesseCiccone on January 29th, 2007 at 2:59 pm

    Jon,

    You bring up a fair point regarding agencies’ resistance to measurement.

    Of course, there are always initiatives that are purely for brand awareness (with the implicit hope you describe that sales will follow) that I would presume require some sort of different measurement/compensation model, no?

Speak Up — Add Your Thoughts

Connections

  • Connect
How did you connect?   [?]
OLYMPUS DIGITAL CAMERA
almaty-kazakhstan-region-landscapes-1
The Daily Lark-11
The Daily Lark-5
OLYMPUS DIGITAL CAMERA
Indulgences-Coffee