Sunday, July 07, 2013

Should Marketers Stop Paying For Under Performance?

Marketers and advertising agencies have more performance metrics at their disposal than ever before.

And yet, most agencies today are still paid based on effort versus outcome.

How come?

There are a myriad of excuses that agencies put forward.   And apparently, marketers are buying what their agencies are selling.

By the way, if customers did likewise, agencies wouldn’t mind being paid based on their selling performance.

But therein lies the rub, doesn’t it?

Customers aren’t buying the products that an agency is paid to sell.

To be fair, an agency shouldn’t be held completely accountable for sales.  That was once the case, when there were such things as agencies of record.  But today, rather than an agency of record, every marketer has a record number of agencies.

So, what should an agency be held accountable for and hence paid for?

Time spent.

If an agency creates a :30 commercial, their immediate objective is to get a perspective customer to spend more time with that commercial rather than less.

Most would agree that the more time spent, the greater the chance of a particular viewer being persuaded by the commercial.  If the agency thinks they can persuade the viewer in :15, then why wasn’t a :15 commercial created?  If they create a :30 commercial, they must feel that thirty seconds are needed.

In other words, from the agency’s perspective, time spent serves as a proxy for sales.

Whether an actual sale occurs or not depends on things outside of an agency's immediate control.  But, time spent is in their immediate control.

So, why aren’t agencies volunteering to be paid based on viewer time spent?

If I were a marketer, I would want to know.

But I’m not.  If you are a marketer, do me a favor.  Ask your agency.

And then, let me know.

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