If you haven’t seen it yet, take a look at this report on P&G and Coca-Cola ending billable hours with their agencies.
The agency time sheet is going by the wayside. And performance-based measures are gaining in popularity.
I have to bet that advertising agency CEO’s are huddling right now trying to figure out what kind of performance they want to be held accountable for.
Because that’s really the question isn’t it? It’s no longer about if you want to be paid based on performance. It’s about how you want to be paid based on performance.
Or, to put it another way, what does your agency perform the best at and so you can try and make the most income?
According to Sarah Armstrong, director of worldwide media and communications operations at Coca-Cola, “The amount of labor or time should not define the value of the work.”
I have to disagree with Sarah. The amount of time does define the value of the work. If, of course, the amount of time that you’re measuring is the amount of time that the viewer spends with the commercial rather than the amount of time the agency spent working on it.
The more time a viewer spends with a commercial, the more value that commercial has for the advertiser. Do you think Sara Armstrong would be willing to pay her agencies based on viewer time sheets rather than agency time sheets?
Think about it. The more time an advertiser can get a viewer to spend with their brand, the less time that same viewer has to spend with the competitor's brand.
In this way, share of time leads to share of mind. And share of mind, as we all know, leads to share of market.
Guess what? Share of market is something that all advertisers agree is a fair measure of performance.
Which means that if I were an advertising agency CEO, I’d be marching into my clients’ offices and asking to be paid based on viewer times sheets. In fact, I'd agree to be held completely accountable for how long the viewer is engaged in the commercial.
The longer the agency's creative involves the viewer, the more the agency makes.
In return, ask for one thing and one thing only. Creative freedom. Once the advertiser buys the script or idea, they have to agree to back off. Let you do what you do.
How many agency heads do you think would take that deal?
I know three that would. If you know one as well, have them give me a shout and I’ll tell them how they can make it happen.
Or, they can always go here and see for themselves.