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.