A New Client Model - For What It's Worth

We keep hearing about the “New Agency Model” and how Agencies need to adapt to service Clients, which I agree with (as Agencies) we only exist for our Client, however....

Not heard much about a New Client Model, so here’s a few thoughts. 

1. Clients Need to Pay for Pitches 

PR Agencies must spend a minimum of c.￡20k of time per pitch and probably a minimum of 20% on expenses and hard costs.

Let’s call that 3 months of costs for a 1 year retainer and 50% of the time it’s for a project.

That’s not a financially viable model.

4-5 agencies per pitch that’s ￡100k written off for the losing Agencies and 3 months to make a profit for the winning one.

Ok, you might just say "that’s just the way it is” and that’s just the cost of business. 

But you’re telling me that Clients don’t take anything from the losing Agencies strategic or creative decks? 

Isn’t only right that Clients should pay for that time and those thoughts.

I’d like to see Clients and the industry offer a ratchet mechanism:-

• <￡10k per month fees each Agency gets a nominal ￡2k 
• > ￡10k < ￡20k each Agency gets, say ￡5k
• > ￡20k per month, say ￡8k

This would:-

1. Reduce the number of pitches 
2. reduce the numbers invited to pitch 
3. make agencies feel valued 

2. Transparency is About Paying For What You Need 

Marketing Procurement was that amazing initiative where we embarked on a journey to find a fairer and more transparent payment model. 

We’d agree to open our books and Clients would pay for actual time.

The reality?

Production margin was stripped out and fees stayed the same! 

Great for clients, terrible for Agencies. 

3. Auto Increase annual fees by Inflation 

Every year Clients do their budget and the majority of the time the fees are pegged at the same levels.

Yet every year the cost of running those Teams go up, which forces Agencies to swallow a real time reduction.

4. Spend money on Researching Channel Effectiveness 

We had a client who independently researched all Agency contribution and found that of total impacts delivered by all Agencies we accounted for 67% (against a 12% spend).

This really focussed the Client on spending money on the right channels. 

And us on that fact we were being underpaid ??.

Joking aside when was the last time you had a client spend the required money on researching channel effectiveness?

The industry has to focus on delivering a Commercial Return and really getting into payment for results. 

But this requires investment from all sides on channel effectiveness. 

5. Stop Giving PR Managment to the Placement Student 

Respect the discipline and its ability to add real value to the commercials by actually investing in the staff to manage the Agencies.

It’s like putting a novice on a thoroughbred at the Grand National and being surprised when it performs badly.