Magazine article Marketing

OPINION: Marketing Society - Shared Risk and Reward Is the Key to Partnerships

Magazine article Marketing

OPINION: Marketing Society - Shared Risk and Reward Is the Key to Partnerships

Article excerpt

Two weeks ago on this page, Tim Cornell talked about the continuing quest for 'genuine commercial partnerships' between agencies and clients, something of a holy grail in our business. It's a subject that has been given many column inches during the past few years. It's also a subject around which there has been little or no innovation from either agencies or clients. Not surprisingly, I have a few thoughts on the subject.

First, agencies should begin by sharing a much greater degree of commercial risk. To do so, they have to become much less reliant on fixed income and much more structured around variable income dependent upon results.

Over time, of course, this will demand a different approach to the management of agency business models but such a move would be long overdue. The structure of many client businesses has changed dramatically over the past few years while agency structures have not.

Then, I'd rip up most of the existing payment-by-result deals (PBR) and start again. If you look closely at them, they're mostly based on vague criteria, easy-to-manipulate measures and a guaranteed minimum and maximum.

Added to which, the PBR element will account for only a very small percentage of total revenues - hardly enough to make an agency chief lose any sleep.

The usual objections to payment by results, such as how difficult it is to isolate the effects of the advertising, should be ignored, along with the people who spout them. True innovation and accountability in this area lies in choosing a single measure that everybody can be judged on. …

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