The Models are Broken.
Edition 20 - Brand, agency, consultative. No one single model works for everyone or everything.
1. The agency model is broken. And the brand model is broken.
Purpose
The models are broken. Both of them. All of them. The ANA/4A’s collaboration report on recommended ways of moving forward has a few ideas. AI is gently pushing the conversation from effort-based to deliverables-based compensation. Reminds me of client rate card days for digital banners. The quicker and more efficient you crank them out, the greater the margin.
The advertising landscape is undergoing a seismic shift, and the ANA/4A's collaboration report offers a glimpse into the future. This future glimpse involves taking every working arrangement ever used (from the past), standardizing them, grouping by commonalities, and giving them common names, terms, definitions, what-have-you, moving forward.
It is a great exercise in defining the snapshot of who and where we are - today; prior to the tectonic plates movin’ and groovin’ to the AI DJ. So when all Hell breaks loose at least we have a shot at all speaking the same language.
In summary - big things are afoot, the old ways won't cut it anymore, but the ANA and 4A's are bringing conversation starters on how to capitalize in the oncoming new reality and new economy.
The report’s end goal? Breaking down barriers, fostering better relationships between agencies and clients, and driving tangible performance gains for everyone involved. In this era of constant disruption, the report is a call to arms, or better yet, a wake-up call to work together in new ways (or recycled ones too) - whatever works best for the brand/client relationship. So there’s a lot of TBD to get cracking on.
Where we are today
According to a recent survey by the 4As in Q1 2024, Fixed Fee emerged as the most utilized compensation model among participants surveyed in both project and retainer based relationships.
Moving forward, marketers and agencies are encouraged to experiment, with learning’s derived from failings.
Have a look at a list of old friends. The report breaks this down in detail.
Engagement Types
Output-based
Fixed-price
Pre-negotiated Price List
Subscription Pricing:
Input-Based
Hourly Rates
Cost plus
Performance-Based
Incentive Compensation
Base fee plus additional results-based compensation
Hybrid Models
Use of multiple and mixed models for larger brand/agency endeavors customizing where needed. Like in Karate - if this doesn’t work, try something else. The report goes into detail on pros and cons for most approaches.
Winners
People partnering with companies who exhibit empathy. Potentially more smaller than larger companies. The one time I threatened to walk (with my spouse’s blessing) was changing payment terms from Net 30 to Net 90 days. This change was proposed as a “best practice.” For who?
Companies who can capture out-of-pocket production fees as revenue. Holding companies want what the smallish production companies have. It is what it is.
Losers
Anyone who cannot accomplish the above.
Working with companies brandishing a rate card for all endeavors regardless of scope and creative intent. “You make money on some, lose on others.”
Summary
Read this report. There is some gold in there as far as a point-of-view. Implementation? Remains to be seen. Gaming the AI system? Absolutely. Faster, cheaper, better. Pick two. I hope “better” is one of them.
Download and read the report for yourselves. Here is the link at the ANA.
Bonus
A colleague complained last week about a job posting looking for a Creative Director/Office Manager. I believe I can top that one. Presented for your consideration is the Chief Operating Officer / intern. Sorry, no pay.
2. #NFW.
This is happening. An unpaid COO internship. This made my day. Presented without comment.
Yes, it is a COO - unpaid internship. One again, this opportunity is a COO - unpaid internship.
Evidently, candidates for this 30-day life experience are proving quite competitive. The job market is sh*ttier than all of us thought.
You won’t be paying much in taxes, of course.
Feel free to leave comments at the bottom of the page. Best response (or any response) can have your picture in the middle of the front page for all to admire for one calendar day.
Exciting times. Have a great week!