How do you compensate your agency?

February 20, 2013 § Leave a comment

Digital marketing has made one significant contribution to the world of marketing benefiting both brand and in some cases agencies. Digital marketing (we include social under this umbrella as well) is measurable – really and truly measurable. Unlike much of its traditional counterparts that require long lead times and some estimating – digital is immediate and accurate – no estimating here. We know, real time, who clicked on what, how long they lingered and who they shared that experience with.

So this begs the question. With all these agencies trying to sell you on a digital promotion, a website remodel or social campaign or a combination of ideas – how are you holding them accountable?

Brands have to insist on agencies becoming partners and by partners I mean having some ‘skin in the game’. Agencies need to be held accountable for their bold ideas and strategies where for most brands requires their full commitment (money and all), while the agency banks more hours without the slightest risk, other than reputation.

However, as good as this sounds, brands are the ones to blame, not agencies, for this lopsided equation. Most brands cannot seem to wrap their heads around the idea and how in the end they will be the largest benefactor. Too often we see brands sink millions into campaigns, that frankly are nothing more than a great idea on paper and don’t yield near the return expected.

For every successful campaign there are dozens of failures. As marketers we only hear of an agency’s success – never their failures. You walk into their lobbies being greeted by the shiny brass, silver and gold awards – all there to create an impression. In reality, for every one of those awards, there were far more failed efforts.

I am calling brands to challenge their agencies and agencies to challenge your clients. For both agency and brand this pay for performance arrangement can be mutually beneficial.

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