Friday, June 13, 2008

On Value Creation and Billing Madness in Advertising

For better or worse the advertising industry pioneered consumer culture by inventing a new form of value that enabled other industries to charge a premium for the magic wrapped around commoditized products in the form of branding and branded communications.

So, why is it that advertising doesn't get compensated for what its true value contribution is, the creation of that "magic". The "magical service" that great advertising and marketing produces is not a commodity yet the compensation model is increasingly one of billing hours against tasks. We're getting paid like plumbers and electricians.

We wouldn't recommend the "cost of labor and widget manufacturing model" to any client, so why are we strapping ourselves to that bomb? I don't know who is responsible but I'm quite certain that it wasn't a creative.

Thanks for commoditizing an industry that doesn't have a commodity product, way to think it through.

In this morning's New York Times: Ad Agency Abolishing Fixed Fee. The article describes the demise of fixed commission compensation (15% of the media buy) and a new trend towards compensation based tied to product sales performance.

Decisions, weighted too heavily from account and corporate finance (agency and client side) can be seen in the awkward compromises and questionable decisions.

For example, last year I was working on a pitch for Johnson & Johnson and learned that not only do they take ownership of any ideas that is pitched to them, regardless of whether the agency is awarded the work, the agency remains legally responsible for any litigation that results from the ideas use. (Johnson & Johnson... innovations in insult and injury.)

Tying compensation to market performance is dangerous for an industry that doesn't have the steel to call foul on things like the example cited above let alone defend and sell through work that isn't riddled with client compromise. There are plenty of other reasons not to go with this model but don't expect agencies to stage a fierce resistance.

What's clear is that the advertising world isn't doing a very good job of managing its own mystique. Take the recent slight on the Fashion Meets Finance website (a dating site that brings the vapid world of fashion and the douchey world of finance together):
FashionMeetsFinance facilitates destiny by purifying the dating pool bringing together only the most appealing populations in the New York dating game… Ladies, you no longer need to worry that the cute guy at the bar works in advertising.

What is noticeably absent is the presence of strong creative leadership. I'm not sure whether it's been boxed out or isn't knuckling up on these areas. There was a time (before mine) that creatives, not account people, ran the business. I've heard stories about creatives handing work to account people and telling them not to return to the office if they couldn't sell the work through.

(I was talking to Bunny this morning on this topic and she expressed a desire to re-reverse the model and treat account people like creatives are treated: "we should have them all lined up in boxes and depending on the "technique" needed to sell the work, we should be able to pick them out (like a theory suit or a DKNY jumper) and say "go do this"... "I swear... the leash is on the wrong neck".)

The "creative product" is at the center of all of this. If all agencies were producing stellar work, the industry landscape for these issues would be quite different. For agencies with strong track records and the aura of magic it isn't quite the mess it is for everyone else.

I do have a strong sense that the industry is underrepresented and under-embracing the creative spirit. A creative's pride over work would never allow it to be sold off for hours against task, everyone in an agency should front such arrogance, it wouldn't be a bad thing.

From The New York Observer (October 2007):
Why Have Admen Lost Their Mojo? The advertising business used to be the high-pressure playground of visionaries and scoundrels. Where’d they all go?

And as for the 3 martini lunches, we need to bring some theater and a few props back on the advertising world's stage.


king friday said...

I met Queen Saturday though the Fashion Meets Finance website. She used to be a very successful glove model. Actually, she used to be a successful glove...Model 378RT...

WOW GOLD said...
This comment has been removed by a blog administrator.