Marketers to agencies: ‘we want to pay you based on business KPIs rather than time spent on work’

Senior marketers from the world’s biggest advertisers want to change the way they pay agencies in order to encourage more commercial creativity.

How the remuneration model should be overhauled is a topic of hot debate across ad land, although both brands and creatives are (mainly) in agreement that value and risk need to be better rewarded. To help spark the transition, the Marketing Agencies Association (MAA) has surveyed senior clients from global consumer brands such as Shell, Royal Mail, UKTV, PepsiCo and BSkyB and over 80 agencies to the key attributes of the ‘Agency of the Future’.

“Collaboration is a hot topic and a vital component of any client/agency relationship,” said Mette Davis, director of digital and regional innovation at MAA. “We wanted to get to the crux of key industry issues, before developing a practical approach that solves business challenges and transforms both client and agency business practices.”

The effort, which also used an online collaboration platform created by WikiSolutions, spawned eight rules for success; creativity for business, consumers, transparency, commercial expertise, agility, remuneration, agencies’ culture and talent and reputation and uniqueness.

Creativity for business: From Tesco to Adidas, most advertisers are recalibrating structurally and operationally to get closer to consumers. For agencies, this means they need to develop working processes and business models that understand the business and not just the brand of their clients or else they will become obsolete in a marketplace where every buyer wants their agency to solve business challenges rather than create an ad.

Consumers: The jury is still out on whether crowdsourcing holds the key to true customer-centric marketing but marketing has to do a better a job at brining consumers into the working process. It’s why the MAA’s guidleines stress that the agency of the future be mindful of the direct role consumers now have on brands and understanding how to harness that.

Commercial expertise: Successful marketers need to be able to prove the commercial value of their trade in the boardroom now more than they ever have done. Tougher competition and procurement’s growing influence on marketing budgets has meant that what was once seen as just a cost is now viewed as growth driver. The creative industry has admitted it hasn’t adapted to this shift in dynamics as quick as it could have, which has paved the way for management consultants like Accenture, media agencies and consultants to muscle in on budgets that were once solely reserved for creating an ad and a media buy. In a world where marketing is expected to make money and not just sell a product, agencies have to show their commercial expertise if they want to get ahead.

Agility: Marketers and agencies wax lyrical about being ‘agile’ and yet examples of this in action are few and far between. It requires a change of mindset not just processes, according to the MAA that will create an agile service capable of complementing the long-term strategic direction of marketers. Mondelez, Pernod Ricard and Unilever are part of a small pool of companies that have spoken up about the need to build more collaborative relationships with agencies in order to make this a reality and the MAA will be hoping more take on the approach.

Remuneration: Traditional models of hourly rates, retainers and project-based work aren’t cutting it when it comes to fostering commercial creativity. “The current remuneration models (hourly rates, retainers and project-based work) will ultimately drive quality, innovation and collaboration out of the industry,” according to the MAA. Remuneration is a key part of any advertise/agency relationship and there needs to be more flexible ways of working, particularly as advertisers increasingly consolidate their advertising and media accounts into big agency networks. At an event hosted by the Institute of Practitioners in Advertising last year, Pernod Ricard’s then chief marketing officer Martin Riley spoke about how he wanted to explore remuneration based on access to specific talent within an agency group.

Agencies’ culture and talent: With the likes of Google and Facebook making a beeline for top creative talent and the emergence of start-ups and alternative advertising agencies, differentiation for agencies is getting harder. Those agencies wanting to get ahead are changing team structures, exploring how to better collaborate with clients as well as understanding how to get closer to the best, emerging talent.

Reputation and uniqueness: Agencies are notoriously poor at marketing themselves to both prospective clients and talent. And yet they work in an industry where reputation and uniqueness are becoming more vital to success.

Services like RAR, Oystercatchers and The Clear Partnership have formed to help marketers and agencies navigate through these shifting times. Key issues to the future agency model will be discussed at RAR’s Brief Encounters event this month (24 November) where speakers from Honda, New Look, RBS, GlaxoSmithKline and Havas will give key insights to help agencies win new business. To register, click here.

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