Tuesday, October 2, 2007

Hold on a sec. How much is that by the minute?

I’m a little behind on my reading, so I just caught up with a great piece in the September 24 Ad Age – “Agencies Must Wake Up To A Different Business Model”.

There’s a lot in there – like compensation, revenue streams, outsourcing and social responsibility -- and I’d suggest anybody in the agency business read it. But one thing I especially agreed with was writer Avi Dan’s take on compensation. “Instead of compensating agencies fairly based on their contribution to wealth creation for their clients,” he writes, “clients [have] adopted labor as the metric for evaluating the contribution intellectual property has on wealth creation.”

As much as I have long been an advocate of paying agencies based on the value of their work rather than the time it takes to do it, I’ve never really taken the next step and expressed it quite as well as Dan has. That is, the value of our contribution to wealth creation for clients. Read that last part again: “wealth creation for clients.” What we really do is generate and apply intellectual property to build value, not just spend X-number of hours. It would be pretty terrific if more clients were on board with the concept. (But shame on us for letting it get to this point, I suppose.)

Dan goes on: “ Most intellectual-property wealth creators, whether they are Steven Spielberg . . . or Georgio Armani, don’t fill out time sheets and don’t get compensated based on how many hours they toil, but on the basis of the value that their artistry creates.”


See the whole article at Ad Age online.

1 comment:

Life Out of Bounds said...

It is a good point, but also a double edged sword. How many agencies do you know that would be willing to risk their paycheck on whether or not a campaign generates sales? Of course, if that were the case, I imagine there would be fewer poorly executed ads out there - or maybe even fewer agencies.

It really opens a great discussion creativity becoming a commodity.