Released in November 4th 1970, “The Man Who Sold the World” is for me one of the greatest songs of all time. Apart from being an amazing song written by the late David Bowie (a personal hero of mine), it also has a strong message that can be applied to many situations, both personally and professionally – even within our industry. Stick with me…
“That song for me always exemplified kind of how you feel when you’re young when you know that there’s a piece of yourself that you haven’t really put together yet. You have this great searching, this great need to find out who you really are.”
– David Bowie
Personally, I think the way we handle commercial arrangements, not just at iProspect but as an industry as a whole is in the same adolescent stage that Bowie described. We know something needs to change but we haven’t really put it together yet. For something so important, I don’t feel enough consideration is given at the initial stages (when entering remuneration) as to how these quite simplistic solutions can manifest issues further down the line for both client and agency. To be more specific, I’m talking about retainers and commission-based remuneration structures.
Good commercial agreements are a two-way street. They should not be dictated by one side, but instead be developed collaboratively by both parties, identifying goals, and working backwards to produce an achievable strategy.
This open and honest communication is crucial if we want to create a concrete foundation on which we can choose the best team and deploy the right resources in order to achieve the goals set out and allow for long-term strategic development. Basically, commercial models need to be focused on outcomes if we want to develop client-agency relationships that are more meaningful and robust.
This is the piece of ourselves I believe we’re missing.
CMOs are facing more pressure than ever to cut costs wherever possible, agency fees included. I can’t help but think that as an industry, agencies haven’t matured enough to have a sensible two-way conversation with clients about remuneration, that are more balanced and outcomes-focused. As a collective, clients also need to steer away from simplistic models in which we use KPIs to keep agencies “in check”.
Nowadays, the ability to harness data has made it easier than ever to create remuneration models that are based on actual bottom-line contribution. This, in turn, gives CMOs the ability to manage their teams more efficiently. By freeing up time and resources, the focus can be shifted to the development of new, creative approaches to old goals, or hopefully even the creation of a healthier innovation map than can then be trialled and honed.
Aside from being commercially unimaginative, our client agreements also tend to be quite risk-averse – not a great combo. I believe it’s this lack of risk-taking that has created these regressive models that reward basic transactional behaviour rather than real monetary gain.
So am I saying that the future is about forming relationships that align with revenue sharing? Perhaps. Why not? Will it ever happen? Probably not.
We are constantly banging on about how effective and efficient we are; I think it’s time we all put our money where our mouth is. That being said, it isn’t often that clients (nor agencies) are keen to share their own revenues, so I guess it’s a case of embracing change as a whole – “I’ll show you mine if you show me yours”.
Moving forward, I think it’s imperative that all parties’ interests and priorities are aligned when coming to commercial agreements. This model doesn’t have to just stop at reward and recognition; ultimately, if we can create a true win-win model, we’ll be able to grow out of this adolescent win-lose reality.