With most agencies and brands operating at reduced capacity, and the effects of COVID-19 dominating the business news, there ain't much of interest happening in our glorious ad world these days. The trades are quickly running out of idiotic 'What marketing will look like after the pandemic' horseshit. And self-promoting CEOs have composed just about every tired 'Coronavirus will change everything" op-ed they could stuff down a publisher's throat.
Consequently, Publicis got a lot of undeserved ink last week for a gimmick their CEO Arthur Sadoun is peddling called The Pact. The Pact "guarantees" mid-size businesses—those with 10 million to 1 billion in sales, and spending at least $25,000 a month in online advertising—that it will return all fees if certain KPI (key performance indicator) criteria aren't met. Anytime you hear the term 'KPI', run for cover.
For a little background on this, let me tell you about my experience with these types of performance guarantees. I was a copywriter who, through a series of comic mishaps, wound up as CEO of a few agencies. The truth is, the only part of advertising I really enjoyed was the creative part. Everything else was agony. The most agon-istic of the agony occurred when I had to negotiate compensation deals with clients. I hated it. But there was one exception.
The exception occurred when some genius client would show up and demand that our compensation be 'results-oriented.' When that happened, I knew I had a fish.
You see, isolating the effect of advertising from all the other components of marketing success—product quality, price, distribution, promotional activity, competitors' actions—is virtually impossible unless you're in the direct-response business. So I would happily agree to any KPIs a client could dream up, as long as two principles were acknowledged:
- We could not be held responsible for things we couldn't control (product quality, price, distribution, promotional activity, competitors' actions)
- All analyses of results had to be objective, not subjective.
These tilted all the KPIs in my direction. Once these terms were agreed to, the 'results-oriented' compensation agreement became not much more than a tarted-up media-delivery guarantee. And delivering a media goal turns out to be a lot easier than delivering real money.
We don't know what Publicis is guaranteeing. According to MediaPost "each deal will be tailored specifically to the company with agreed-upon KPIs." I know one thing for sure: Publicis will be torturing the shit out of the KPIs.
If they're willing to guarantee things they can't control, they're idiots. If they're given any kind of control, they'll just implement the old direct-response formula: one price promotion after another. That's how you clean a fish.
Bob Hoffman is the author of four best-selling books about advertising, a popular international speaker on advertising and marketing, and the creator of 'The Ad Contrarian' newsletter, where this first appeared, and blog. Earlier in his career he was CEO of two independent agencies and the US operation of an international agency. His latest book, 'Advertising For Skeptics', is now available.