Analyticsbusinessfood for thought

Drop the Agency and find the jam to your peanut butter sandwich

By July 6, 2017 May 28th, 2019 No Comments

Creative & Media agencies are fast becoming an anachronism living on borrowed time. Unless major change starts to happen, classical agencies will be left as a footnote in the annals of time, along with printed press, music labels and video store rentals.

The days of huge project fees are no longer swallowed down with a spoonful of sugar, they have become a bitter pill for most businesses to justify swallowing, and many are looking for alternatives.

A caveat before I continue: let me stress that not all agencies are bad, far from it, agencies are the lifeblood of the creative and media industry. However, specifically what we’re talking about is how agencies, in the traditional sense, operate, and inter alia, how this perpetuates the perceived stereotypical reputation that of agencies reluctant to move with the times.

“How do businesses go about finding the jam to their peanut butter sandwich?”

The problem being, most businesses don’t know where to start, nevermind look. So how do businesses go about finding the jam to their peanut butter sandwich? Many assume the only alternative is to find a less expensive agency that won’t necessarily be as good, find a consultant at an expensive day rate or hire new staff. The truth is, there are some middle options available.

In the meantime, if agencies are getting you down, you can always hop on over to our stress-busting whack an agent game. This is obviously tongue and cheek and for comedic value. Of course no account managers were harmed in the making of this game, sadly.

Hire a consultant

The Consultant Route

Consultants can be an excellent interim fix, they come in and assess the issues and set out a plan to remedy them – and also execute said plan in some cases. This can be a perfect short-term solution for many businesses.

The downside with this route is that consultants either charge by the hour or day, and usually at a premium. This can get expensive very quickly, businesses usually justify this with the fact they can terminate the consultant at any time. Due to the volatile nature of consultants, this not a long-term solution.

Hire new staff

The option of hiring a staff member is perhaps a more sensible option, as they as committed to the business, are usually in the same office during the same working hours and are solely dedicated to the role. The tricky part is finding the right employee, if the interviewer is not from a technical, creative or marketing background, the interviewer may find it difficult to assess the candidate’s actual abilities and experience. At which point the interviewer has to rely on the recommendations of the recruiter. Which is fine if you have a good relationship and trust with the recruiter in question.

Finding the right person who’s genuinely engaged in your brand can be a challenge. Many companies resort to hiring internally, for instance picking a young fresh face and putting them at the helm of social media – young age doesn’t correlate a deep understanding of digital, just because they know how to use it. My youngest daughter is a whizz on a tablet, but I wouldn’t put her in charge of social media (maybe Head of UX though).

Hire a cheaper agency

The reason why some agencies charge seemingly profligate fees is usually down to one of three things:

a) They’re genuinely brilliant and have some of the best talent going on their books, and while their fees may be eyewatering, their track record is a marker for their ability to navigate projects to an incredibly high standard.

b) There’s also the possibility they charge silly fees because they have to outsource the majority of their work, which is riskier if they don’t have solid and long term relationships with their freelancers.

c) They are under skilled and under experienced and simply charge these fees due to average market prices

Whilst the idea that more expensive agencies are usually better is probably more right that wrong, the reverse is certainly not true. As the old English proverb goes “buy cheap, pay twice” – this is usually the case for cheap services overpromising and underdelivering.

Why agencies with project-based billing don’t work

1. You’re not a priority

Agencies usually work on multiple projects at any one time, and often don’t have the resources to devote a team to each project. Once the pitch and SOW (scope of work) are over, your project gets added to an ever increasing pile of work, destined to miss deadlines and go over budget. Not necessarily because they don’t care, because they don’t have the time or passion for your project.

2. They overcharge

Just take a look at what’s been happening with media agencies for the last few years, Dentsu was discovered to have charged for $2.3m dollars worth of ads it didn’t place. This is symptomatic with media agencies worldwide. Agencies based solely on project-based billing means revenue can drastically change on a month to month basis. To compensate for the feast and famine periods, many agencies simply overcharge. Another issue is charging via an hour or day rate, there are only so many working hours in a day. Hence agencies need to multiple staff hourly rates to hit their quotas.

3. There’s no transparency

Many agencies themselves aren’t aware of what’s going on with their advertising partners or affiliates. Take Procter & Gamble for example, they were reviewing their partners and discovered some of them were receiving kickbacks which weren’t fully disclosed. As a consequence, they have now set out new rules for all partners.

Marc Pritchard speaks at the IAB Annual Leadership Meeting. Credit: IAB

The solution is simple, switch to a subscription without the middlemen.

There are companies out there now turning away from project-based billing and onto subscription-based billing. Some of which have dropped the middlemen and account managers (Runaway), letting the creatives and marketing professionals speak directly with the client. I wrote an article about the importance of the subscription economy earlier this year and the mutual benefits it brings not only to the agency but also for the client:

“Another byproduct of this new business model has had a direct effect on the clients themselves. Now, the clients have a transparent view of what services they receive – not in a retainer manner, but clearly and specifically what plans get them what services, plus they have the ability to upscale and downscale as necessary. It’s a powerful simplification that works incredibly well for us and continues to evolve our business whenever we add new products or services.”

There are some great businesses out there that are now championing this model, Bizango based in Seattle for local businesses, YouthNoise with a plethora of service options, Blogmutt with its blog subscriptions and many more offer subscription based marketing services. Runaway Collective (a company I co-founded) which runs the Digital Pro programme offers direct interaction with the campaign planner and executor.

Even though under the current time-based billing model, advertising agency income ‘per unit of work’ has fallen 40% during a steady 20-year decline, there will always be a need for one-off projects and agencies will play their part in fulfilling that role.

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