Owning the ad

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Permalink Reply by Jenn Lowther on July 25, 2007 at 5:05pm

Its a great model if you are confidant in your work and you are selective in the campaigns you take on. I'm not sure about this model changing the industry though. I highly doubt too many established agencies will take this on as their pricing model.

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Permalink Reply by Sunil Shibad on July 26, 2007 at 2:06am

Hi Jenn,

<<I highly doubt too many established agencies will take this on as their pricing model.>>

Is this because there are too many variables in the marketing mix or that the big agencies do pedestrian work?

Sunil

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Permalink Reply by Cori Donohoe on July 26, 2007 at 4:51am

At the risk of being pedantic, this idea isn't exactly a new one:

http://www.rm116.com/2006/04/cpb_gets_into_h.html

I've also heard of a few others here and there trying this one out. (Anyone remember the Gamekillers TV show for Axe?) Seems like agencies are having a harder and harder time ensuring their compensation as companies come under pressure to cut costs. Branching out into other compensation models is a creative way to handle it. However, I wonder how much an agency gets a chance to help guide other factors like quality, price point, internal employee motivation and such? It's a fairly risky proposition.

Afterwards, if you are successful, don't you manage half your time running your stake in various businesses? Then what happens to the ad agency? Variety is a truly wonderful thing for creative minds, and I can see the whole game, film or book development projects (which various agencies have also dabbled in through client partnerships) being great fun - the perfect way to take a break from the ad world. However, when do you start having too much diversity and lose all sense of focus?

Well I hope the intellectual property thing takes off. I'd love to get to write a game now and then.

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Permalink Reply by Cori Donohoe on July 27, 2007 at 4:29am

OK, since I replied to this last, I came across this article which explores this idea of evolving models from a more personal perspective. Thought it was interesting. Figured I'd share:

http://www.core77.com/reactor/07.07_flux.asp

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Permalink Reply by Smitty on August 23, 2007 at 3:57pm

Dumb.
Every Tom, Dick and Harry who wants a freakin business card done will come running. Suppose they do it for 20 companies that are TANKING anyways?? There are a million people out there that think they have a great idea and start up a company WITHOUT business plans.

I wouldn't do it.

Maryann
http://bigbullcreative.com

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Permalink Reply by Steve McNamara on August 23, 2007 at 9:22pm

Hi Sunil:

Cori is correct - at least here in the US - this is not a new biz model.

The one place this model can work, and has worked, is in direct marketing, where you can measure return.

But it doesn't take a Mensa membership to figure out, someone is going to loose. If the campaign rocks, the client will scream that he's paying too much to the agency. If the campaign folds, the agency will feel ripped.

This biz model will not work except for a few niche dm / drtv shops.

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Permalink Reply by AJ Mirabedini on August 24, 2007 at 12:26pm

Ironically we have been asked to consider this model several times.

We have categorically refused. Our canned response is that we would consider it if we could maintain control of not only the advertising but the product, the people and the processes. While we are ultimately confident of our ideas and solutions we are only one part of a three-part process. It takes product, people and marketing for a brand to succeed and profits generated.

Let us do what we are best at and reward us for our work.

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Permalink Reply by Katie on March 6, 2008 at 3:38pm

I agree with AJ - too many unknowns/uncontrollables. And would many companies really share all their profit numbers with their agency? It would have to be a partnership scenario only.

We have a hard enough time just getting clients to share budget numbers up front.

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Permalink Reply by Paul McA on March 6, 2008 at 9:05pm

ditto - to many variables and its a fairly high risk approach, but it may be a good way to get clients to wake up to the impotence/importance of TV etc...

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Permalink Reply by Diana Oyaga on May 22, 2008 at 3:31pm

I think this idea could work but only by establishing some standards before such as if the marketing objectives are achieved in 100% the client must pay $__, if they are achieved un 70% $__ etc.... but anyway I think what this Anomaly agency is doing is really interesting because since they are taking such a huge risk, then they are working much more harder towards their creativity which could lead to great results.

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Permalink Reply by Dave Bricker on May 25, 2008 at 8:21am

I think it makes a good promotion, but it puts the agency in the position of having to monitor its clients' finances - which is just impractical. It puts the agency business under the thumb of client integrity. Ouch!

Moreover, it presupposes that profits and losses are simply a direct result of advertising. A client may lose money in spite of having excellent, successful advertising for any number of reasons. Why should the agency take a hit for that? Alternatively, the company may succeed in spite of a weak ad campaign. Should the agency take a share of the profits.

I don't mind the idea of agency principals buying stock in a client company, or even being paid in stock. If the agency leaders have already made their fortunes elsewhere, it may be a fun game to play. However, it boils down to a strategy for a group of investors who can afford to direct their creative energies towards adding value to their holdings.

It is not a new model for agency/client relationships.

Makes excellent hype for the agency though and fills pages for Business Week.

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