MorganAnderson POV: Fixing Broken Agency Models and Establishing New Risk/Reward Approaches. “Two takes on fixing ‘broken’ agency model” by AdAge 4/14/08

In a report to the IAA World Congress in Washington, DC, CEO Maurice Levy of Publicis correctly points out that the traditional agency media-centric model is no longer valid and a new “eco-system” is needed. How to do it, of course, is the question. Dentsu Chairman Tateo Mataki, a welcome voice from one of the largest global agencies, references profit sharing with an agency for developing new revenue streams for the client and provides a case history. As this MorganAnderson observer (Arthur Anderson) sees it, agency creative content and execution are what most clients look to their agency to provide… and the agency’s challenge – account management, research and strategy have largely gone by the boards, as clients provide much of that themselves. Agencies will need to be structured, evaluated and compensated differently and new models and Web-enabled tools are being developed by consultants and other industry observers to do this. Another observation: certainly agencies should participate in success substantively contributed by them (“reward”), but they must also participate in the client’s marketing failures the agency is involved in (“risk”)? The key will be new risk/reward models and metrics, for example, resurrecting the old practice of sharing agency performance fees earned with THE TEAM working on the client’s account.

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