Tuesday, October 19, 2010

Ad Agencies Say They Can’t Demonstrate Value

I know, the above sounds like something I would say, but actually it came from the 4A’s position paper on agency compensation.

The actual quote from the paper is as follows: “Our industry’s problem is our inability to demonstrate value on a regular basis or to remind the client about this value on a regular basis.”

Can’t define value delivered, huh? Makes it tough to figure out what to charge, doesn’t it?

So what should agencies do? Well, if they can’t define value, then let the viewer define the value delivered to them. And then, pay the agency based on the amount of value delivered.

How can viewers define value?

Viewers are very protective of their time. If they start to watch a commercial and it’s not offering value to them, they leave (if it’s not a force view). Viewer time spent with commercials is measurable on the digital platform.

Greg Stern, CEO and founding partner of Butler Shine Stern & Partners, who helped put the 4A’s document together said, “Ultimately, the goal is to allow agencies to be paid on the basis of the results they achieve for clients. Right now, we’re selling time.”

He’s right. Agencies are selling time. And the problem is that they're selling the wrong time. They’re selling their time, as in how much time they spend working on the creative. What they should be selling is the viewer’s time. As in how much time did viewers spend watching the creative.

The 4A’s report was supposed to come out late last week.

I haven’t seen it yet. But how much do you want to bet that basing agency performance on viewer time spent isn't one of their recommendations?

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