Time for a new agency model?
July 23rd, 2008 | Alex Craven Published in Agency views, General | 16 Comments
Hi all and welcome to the Bloom Media blog!
I’ve invited all the team here to post and would welcome our peers and clients to also share their thoughts on all things digital and beyond.
I thought i’d get stuck right in.. hope this sparks some interest.
I’ve been working in digital for 10 years now and have watched this industry grow and mature with pleasure. At first communicating the opportunity digital presented to senior decision makers was always an uphill struggle but over time this has eased and every year we are lucky enough to take an ever larger share of our clients marketing spend. So you’d all think I’d be happy right? So did I, but actually I’ve found myself getting ever more frustrated.
Whilst things have moved on from ‘why do I need a website?’ still all too often we (digital agencies) are treated as a bolt-on side strategy, measured solely on our own capacity to generate ROI. This is plainly the wrong way to go about it..
I think if a client wishes to truly seize the opportunity of digital then they must be prepared for change.. change to their marketing strategy, change to their media evaluation and measurement, change to their back office systems, changes to their sales strategy but most difficult for them to accept is often the requirement for change to their organisational structure. The customer journey from initial brand exposure, to contact to conversion has been changed forever by digital and at every stage in the process, in this brave new world the customer controls the brand, the best the corporation can hope for is influence!
I think the problem we face is a consequence of the fact that our industry is still young and consequently there is a gulf in understanding this between the maturing leaders of digital agencies (such as myself) who are now experienced enough to understand business, and the leaders of our clients’ organisations who cut their teeth in business in a totally different age. The big opportunities for agencies like us are therefore restricted to companies that have managed to bridge this gap themselves and embrace the change (and there are some) or where we can find a way of overcoming these hurdles.. the only obvious solution being appointment to a decision making role within the clients management team (not that easy to get agreement to).
We find ourselves increasingly looking for new ways in which to approach clients to try to drive this change within their organisation and often that means looking beyond the fee based model to payment on results/commission based structures linked to a win-win. Essentially this is a cock-on-the-block gesture from us to the client to show them we really believe in what we are pitching, and this is what it takes to convince them we are worth listening to. If they engage with this approach then we have a platform for a true partnership and can insist on measures such as board/senior exec representation.
Reading what I have written, it makes me envy the situation the old skool advertising and marketing agencies are in, but I guess once upon a time it was the same for the ‘ad men’. I can’t help but think this would be easier for us if we were coming in as part of the overall marketing plan rather than the afterthought or parallel strategy. It’s time to stop thinking in terms of media silo’s and start thinking in terms of customer journeys across many media (search being just one of these), integrated strategy, integrated measurement. Clients are starting to stop thinking in these silo based terms and are looking for this joined-up thinking.. call it full service or whatever you like but either through partnerships or groups of companies or single ‘full service’ agencies I really think it’s the future.
I’m not sure I have fully evolved this thought yet but its convinced me to re-attend this year’s ‘New Agency Models 08’ master class run by Centaur(marketing week etc).
So if you are reading this and you are a client, or an agency I’d love to hear your thoughts.. does this scare you? Excite you? Can you envisage a relationship which isn’t just based on day rate but mutual reward?
Alex Craven
MD - Bloom Media
July 25th, 2008 at 3:01 pm (#)
Welcome to the blogosphere Alex! Really looking forward to reading more on these parts
Interesting post - as you mention, the whole digital industry is still in it’s infancy and even more so the specialisms like SEO and PPC. As a result of this we see pitches all the time where what they WANT off us isn’t what will bring them the best return so we have to re-educate them as well as sell services to them.
The one-man consultant working on a revenue-share agreement has worked for a while but thinking about that problem at an enterprise level is tricky! As you say though - maybe this is the future…
August 1st, 2008 at 12:56 pm (#)
thanks tom,
I tell you what why dont we try it on a few clients and see what happens..?
I was thinking about posting something similar to SEOmoz but wasnt sure if that would be the right forum.. what do you think?
August 4th, 2008 at 9:09 am (#)
[...] While the payment-on-results model has been around for some time it’s interesting to think how this applies to large enterprise clients and how when you’re talking about enough money (which some of these contracts are) the next logical step is for board/senior exec representation for someone from the web agency. If you’re interested you should read the full post here: time for a new agency model [...]
August 4th, 2008 at 9:14 am (#)
I think they’d love this kind of thing over on SEOmoz - you should definitely write that. Since the industry is so young there’s very little written about the best model’s for selling SEO or the best practice for managing SEO contracts. Initiating this kind of conversation is the kind of thing which helps the whole industry mature.
August 4th, 2008 at 10:35 am (#)
Great article, Alex. I like the thought process this is leading towards - I have to admit to never having thought of the opportunities that would be presented by the board-level influence you mention.
Good stuff - looking forward to hearing more of your thoughts.
Oh, and we should go for that beer sometime…
August 4th, 2008 at 4:18 pm (#)
Very ambitious ideas. Absolutely the way agencies AND clients need to be thinking in order to succeed, but… good luck. Perhaps you can get a few really progressive companies to sign on to that, but as a model for engaging every client…? Seems really difficult to do.
Seems like companies that really “get” the integrated approach will bring it in-house, rather than appointing a vendor to the high-level decision making team. The argument, of course, is against the “vendor” mentality, but to some degree that’s how agencies will be perceived.
I do know one-man and small shops that will work on a profit-share basis; but if you’re a large agency and you’re doing a pure pay-for-performance play and then the client doesn’t execute 100% on the strategy you lay out (or you just fail) that’s a lot of employee salaries you just put on the line.
On the other hand, we need pioneers to push the envelope and accomplish those things that cynics think could never get done.
August 4th, 2008 at 4:53 pm (#)
Hi Melanie,
you are right but it isnt without precedent.. there are a number of lage agencies that already work like this. There is a conference on this issue in September which i attended last year hosted by some of the larger agencies (New Agency Models 08’ master class run by Centaur).
I think its about finding the right client, managing the issues surrounding measurement of the agreed KPI’s and ensuring transparency. I dont think we are brave enough to make this the only way we will work with clients (yet) but I would like to give it a go.
I’ll let you know how we get on
Cheers
Alex
August 5th, 2008 at 9:41 pm (#)
Hey Alex,
I have also been pondering this issue. I think essentially internet marketing needs to position itself as part of the marketing mix. Start off by getting some ‘token’ support so they say they are covering this area.
Once we are in the marketing mix we can then begin to demonstrate with results the real power we can deliver. The trouble is Internet Marketing firms seem to miss the boat on selling the sizzle they provide!
August 6th, 2008 at 12:35 pm (#)
Alex,
My agency has been charging clients based on our performance for several years. Usually that’s some percentage of profit directly attributable to our PPC campaign management. The model is hugely successful - clients love it, and it keeps us motivated to work hard and push client profits higher and higher. This is in stark contrast to the motivation of agencies that charge as a percentage of ad spend - they’re usually motivated to increase client cost, and to improve/optimize a PPC campaign just enough that the agency can devote fewer hours to improving it.
Thanks,
David
August 6th, 2008 at 5:24 pm (#)
Hi Alex,
Great post! I especially like this line:
“It’s time to stop thinking in terms of media silo’s and start thinking in terms of customer journeys across many media (search being just one of these), integrated strategy, integrated measurement.”
I think the growth of this industry within the next few years will be phenomenal, but for a few other reasons as well. More start-ups will start, small businesses arise, but also the growth of the mobile net. The traditional advertising methods (a la black & white newspaper ads) just won’t be as effective for small businesses, and more will dive into the world of PPC and SEO.
Regards,
Christian
Wpromote
August 7th, 2008 at 11:55 am (#)
hi all,
thought i’d thank you all for your comments.. i’m glad its sparked some interest and so many others are thinking along these lines.
A quick update from us is that it looks like we might be about to secure our first payment upon results client. It is a major UK brand (though for obvious reasons I cant disclose who) and we have agreed a mixed fee / incentive based model and haev verbally agreed the terms this morning.
It isnt quite the full integrated service with our this contract being based around SEO and reputation management but the client has really grapsed the concept and the system seems fair and equitable to both parties.
I’ll keep you posted on how this goes..
Cheers
Alex
August 8th, 2008 at 12:56 am (#)
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