I mean no offence. And neither does the next creative hot-shop that knocks on a client’s door with a proposal: “We have an idea we thought you’d like”.
It doesn’t matter if a client has a new agency on its roster, or whether a formidable client-agency relationship has withstood the test of time over decades. If you have an interesting idea, you also have an interested client.
The industry stands divided on this subject. And sides are being taken on the basis of where one stands to gain. But this also raises an age-old and perhaps the most pertinent question in our business: As agencies, what are we in the business of?
The answers, of course, are as varied as the number of agencies. But what’s obvious from this recent trend is that there has been a paradigm shift in clients’ loyalty axis. Clients aren’t loyal to their agencies any more. They’re loyal to ideas.
The emergence of project-based agency remuneration is now hailed as the 'new normal'. But like every other change our industry needs to deal with, this too comes with consequences.
The agency of record, a proud claim agencies made in their credentials, is seemingly becoming history. In a way, the client stands to gain, because agencies can’t take them for granted. It challenges them to be at the top of their game, brief after brief. Even if you are the AOR, the client believes it deserves the best ideas. The trouble is, ideas can come from anywhere.
Perhaps, in a way, agencies gain too. It keeps complacency from setting in, and gets them to deliver their best every single time. After all, this industry can be quite unforgiving. For clients, you’re always as good as their last campaign.
Some members of the fraternity would be strongly disapproving of this trend. Brands are built over time, not over a campaign, they’d say. So an agency should have the freedom to have its ideas tested over a period of time, so that it can take the risks it needs to take to see what works best for the brand. But I ask, is anyone listening?
FTE versus 'supertemp'
No matter how everything changes around us, the one thing that remains constant is that talent is the lifeblood of our industry.
Traditionally, agency remuneration was based on hours talent put in to achieve a given scope of work. So the retainer model enabled agencies to staff up adequately and efficiently against some revenue commitments from clients.
However, as we brace to adapt to revenue based on projects, it now gets harder to plan for resources. Agencies have yet to find a solution for staffing against this moving target. With the advertising business already struggling with margins, it’s a struggle to retain good talent against emerging startup ecosystems that find easy money to pay so much more. Is leaving revenue targets to guesswork further depleting our already-thinning talent resources?
If Project Contracts are finally replacing retainer contracts, we might see the emergence of the supertemps, perhaps the only chance for the industry to stay profitable.
But then how can we secure these supertemps to commit to the agency wholeheartedly? How can we avoid conflicts of interest, as they become shared resources used by many agencies?
Non-compete: Client exclusivity versus agency exclusivity
Client confidentiality is the Holy Grail of the communication business. All the more, when agencies have access to so much classified information and data. Trust between the client and agency gets established over time. But in an always-on world, who has ‘time’? NDAs are signed at the drop of a hat. In some cases, agencies are restricted to non-compete category commitments, often without having any long-term revenue commitment.
So here’s where things get really unfair. For the agency, they are sworn into monogamous contracts. But the client is free to work with the agency’s competitors. Are ‘projects’ becoming a surrogate for client infidelity? Why aren’t agencies getting clients to swear into exclusivity contracts? If the agency sacrifices the rest of the category for a brand, then shouldn’t the brand sacrifice the rest of the agencies to pay back in equal measure?
Integrated versus specialist
Traditional agencies have been left with no choice: adapt or die. So they brought in specialists, integrated their skillsets with their core competencies around strategy and creative, trained their suits to lead the integrated function and transformed into full-service integrated agencies. But no one can deny that the many startups that emerged as ‘specialists’ forced this change upon them. Their importance can’t be denied, and so we have the emergence of agency rosters.
But how should the business be split? How does one account for integrated functions that the specialist can perform, or the specialist functions your integrated agency delivers on, leading to wasteful duplication of resources? Should you have integrated agencies on project contracts, or the specialists? Or both? But who takes the lead? Who becomes the brand custodian? Marketers don’t have answers. But they owe them to their agencies.
I ask many questions, because there are no answers. Like on everything else, the industry stands divided. So it would be best to end this piece with a few more questions, pointed of course, to the business at large. Are you willing to challenge this 'new normal'? Are you going to take a long-term view of how this phenomenon is going to leave you hollow? And when are you going to come together to stop this from happening?
Anish Daryani is CEO of Phibious Indonesia. The views expressed here are his own.