PERSPECTIVE®
MorganAnderson POV: Fixing Broken Agency Models and Establishing New Risk/Reward Approaches. "Two takes on fixing 'broken' agency model" by Ira Teinowitz, April 14, 2008 AdAge.
In a report to the IAA World Congress in Washington, DC, CEO Maurice Levy of Publicis correctly points out that the traditional agency media-centric model is no longer valid and a new "eco-system" is needed. How to do it, of course, is the question. Dentsu Chairman Tateo Mataki, a welcome voice from one of the largest global agencies, references profit sharing with an agency for developing new revenue streams for the client and provides a case history. As this MorganAnderson observer (Arthur Anderson) sees it, agency creative content and execution are what most clients look to their agency to provide… and the agency's challenge - account management, research and strategy have largely gone by the boards, as clients provide much of that themselves. Agencies will need to be structured, evaluated and compensated differently and new models and Web-enabled tools are being developed by consultants and other industry observers to do this. Another observation: certainly agencies should participate in success substantively contributed by them ("reward"), but they must also participate in the client's marketing failures the agency is involved in ("risk")? The key will be new risk/reward models and metrics, for example, resurrecting the old practice of sharing agency performance fees earned with THE TEAM working on the client’s account.
MorganAnderson POV: "Procurement in 'suspicious marriage' to agencies" by Megan McIlroy, April 14, 2008 AdAge.
As reporter Megan McIlroy correctly points out, the frequent disconnect between agency and client procurement continues to be a problem standing in the way of optimizing return on marketing investment. Both client and agency need to have a balance of art and science (it's not one vs. the other), with agencies - particularly the large ones - fully embracing "transparency" and procurement taking responsibility for spearheading "creativity relationship management". As this Morgan Anderson observer sees it, beware though 1) a marketer should have a legitimate need for running a review that a current agency relationship cannot or will not handle and 2) it is "best practice" for a client to pay an honorarium fee to the finalists for participating in the review. Also note the agency's economics that even though the agency does not directly recoup its costs of pitching, that amount becomes part of the agency's Unbilled Direct Client Costs which are included in its overhead and spread across all clients on a fair and equitable basis
MorganAnderson POV: "Quit whining about the pitch: It's a valuable part of the process" by Phil Johnson, April 7, 2008 AdAge.
In this op-ed by the president of a small creative agency, he hits the mark spot on: the agency pitch process is part of agency R&D. As this Morgan Anderson observer sees it, pitching is indeed part of an agency's R&D and marketing/advertising process. When did you last see an ongoing campaign by an agency actually advertising its services to its target audience? Do agencies believe in advertising and spend their own money on it? Agency pitch costs, if kept within reason, become part of the agency's Unbilled Direct Client Payments which are part of its overhead and a passed through to its current clients as a cost of doing business.
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