communication is essential to business making and it involves more than the ability to name your product, write a tag line or a press release. It's an intricate, rational and scalable effort and, let's face it, not anyone can do it.

11/04/2009

Performance based agency remuneration

"WTF?" you ask yourself.
Well, it's something ad agencies have been dreading for a long time and which is slowly but indomitably creeping its way up into our lives. And the ultimate proof of this "nemesis" is the jaw-dropping question I got from a client in a pitch. He asked me straight out "if you fuck up majorly, how much would you be willing to pay for it?"... fun, huh?
I initially thought, is he seriously asking me how much? Maybe he means will we feel bad? Are we willing to gather and take some criticism in a workshop? But no, the question he was asking me referred specifically to amounts of money we would be willing to pay back based on a clear evaluation of the damage our actions might create.
Agencies are not used to this. Actually we are seldom used to being evaluated on results alone - sales results that is. We like to make evaluation a combo of brand index, agency relationship, sales, reputation etc etc. Eventually, results, financial, hard-core are not really a major part of the evaluation process. And, get this, agencies only do evaluations to get bonuses. NOT to get penalized.
But with the crisis and with measurable Internet, the game is changing. Once you can evaluate your objectives clearly and numerically, you can also evaluate the cost per new customer and the money you are losing your client. So, by all accounts the client should be entitled to ask you to pay up.
And obviously there is the other view: you did do work. You do have to pay the people who did the work. You have to maintain revenue. Even if you screwed up, some work was put in the process, so its really confusing. Should you have done this work for free? If you make a sweater and nobody likes it, should you not pay the people who made the wool and the needles and who chose the pattern?

What would you have said, if someone has asked you "if you screw up my project, how much are you willing to pay me back?"

1 comment:

Rares said...

Well I understand the client's point of view, yet, the agency is not the only one to be held accountable. No matter how good a campaign will perform, it will not replace the clients accountability towards: the market demand for the products, the way they're made available for purchase, their selling price and so on...