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Modern Marketing Agencies Value Based Pricing

Money’s alright to mention: agencies must balance creativity with commerciality

By Jason Cobbold | CEO

December 7, 2020 | 5 min read

​Following the publication last week of the IPA’s pricing guide, which highlighted how commercial relationships between agencies and clients need to evolve beyond purely time-based pricing, BMB’s Jason Cobbold says agencies need to stop seeing money as a handbrake on creative ideas

ad agency money pricing model

Agencies need to get more comfortable with the commercial

Bob Dylan once said that “money doesn’t talk, it swears”. Many in creative businesses of all kinds will nod vigorously in agreement with this. And that’s because it’s true.

Money moves ideas around in all sorts of unwelcome ways. It makes things go too fast and sometimes too slow. It means things get changed, changed more and then changed again.

But nowhere (in my experience) is this tension more evident than in creative agencies. It strikes me that creativity and money (let’s call it commerciality) mix particularly poorly in agency culture. Why are they such rubbish bedfellows?

I suspect the answer is not straightforward. Yes, it may speak to a long-standing belief that any kind of conversation about money – whether one of cost, price or impact – somehow contaminates creative vision. How can we think about this stuff when we’re masterminding the next anthropomorphised robot or deep in the back catalogue of Toto hits? Fair enough, you might say.

But it’s much more than this. The separation of creativity and commerciality in the agency is born too of a particular financial model – the so-called agency retainer. The value exchange is quite simple. Client pays agency a relatively generous monthly fee. Agency gets to do lots of exploration. Client gets some great ideas for his/her brand. In other words, the retainer is a financial model that buys a freedom to work and re-work. The focus is on the output, not the practicalities of achieving the output.

Now, this separation in our business feels increasingly like an anachronism. Are we really more effective because our creative conversations are sealed off from our commercial ones? Can we really thrive this way if more and more clients are shifting away from a retainer to a repeat business model?

A friend of mine once vividly described our business as “where the silly people meet the sensible people”. This has stuck in my mind over the years as an odd but good metaphor for our business. It’s the co-existence of these worlds that makes our industry what it is.

All this is really to say that we need to get more comfortable with the commercial.

First, let’s stop seeing money as a handbrake on our ideas. We do great things – things that can land in culture and still fuel conversations in the pub (well, eventually) – but we do them with a business purpose. That’s a brilliant and interesting tension that should never go away. And that means celebrating clients’ growth and our industry’s growth as much as the familiar yardsticks of creativity.

Second, let’s stop being bashful about money. Our ideas have power and value, and we must never let this belief dissipate. Our clients will continue to look for best value, and so must we. That means being robust and commercial with our pricing, and then being willing to defend our position. This is as much an undertaking for our collective psyche as anything else.

Spreadsheets and shooting boards may never end up in the same sentence at agencies, but we need to understand their inter-dependency. From Pixar to Pinterest, the great creative businesses of the world have done this brilliantly. The more we can look outwards to this world, the more we can thrive.

Henry Ford famously said that “a business that makes nothing but money is a poor business”.

He was not wrong, but our future depends on us creating a more positive link between what we make and the commercial world around us.

Modern Marketing Agencies Value Based Pricing

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