Design thinking a creative proposition
How do we escape the constraints of head hours and deliver more value to our clients?
Last week, I mused about the need to reframe business propositions to keep pace with emerging customer needs and evolving zeitgeist in this Pandemic world. When I think about my own creative industry, I find a vast predominance of the hourly rate determined fixed price contract models - an ironically un-creative way to solve creative problems. No-one is doing much differently, and no-one is asking the clients what they need or want.
But the clients are telling us. We can view the growth of the in-house creative team as a strong message they are not seeing enough value from creative suppliers, and they believe they can do it as well, for far less. The ANA (Association of National Advertisers) reported in 2013 that content marketing was handled internally by 34% of respondents, in 2019 it has surged to 75%.
There are nuances around this growing trend that need to be considered. The end-to-end equation is now so broad, a single supplier rarely can offer enough breadth for a client to single source. Rather than proliferating a roster, clients might choose to take one part of the chain and build it internally. For a content-heavy, always-on, tech-enabled channel, it is easier to keep that close and efficient.
But perhaps another consideration is the way the client/agency relationship works, or more to the point, does not work. Let’s assume there are two types of briefs:
1. Where the client specifies the issue and the deliverable
If you are being told how to solve the problem, you are being paid for execution, a service that is prone to forces of commoditisation, and being beaten down on price in a master/servant relationship. The best you can do is hope to be famous for the ‘thing’ you are being asked to produce so at least you retain some creative control.
2. Where the client briefs the agency to solve the problem
Here you have the chance to use your objectivity and best practice thinking to challenge internal pre-conceptions and potentially create significant impact offering real value for your client.
Both scenarios however, are costed by how long it takes to solve the problem. In the first instance, you should know, you’ve done it before, you’re famous for it remember! But in the second instance, you are costing the process when you don’t yet know where what the solution will be. Either way, you give your team a set number of hours in which to complete the task, usually significantly less than the team would like. And you spend much of the process managing the client’s expectations about what is in and out of scope.
Is anyone winning? The team are rushed, and think if they had more time, the solution would be better. The client likes the thing they got but wishes they could have had some of the extra ideas realised as well. Sounds like everyone is OK, but no-one is thrilled.
Now consider this. In 2019, clients in the UK attributed their agencies’ contribution to business growth as between 11 and 50%. The rule of thumb for marketing spend is 5-10% of gross revenue for established businesses, and 15-20% for new entrants. These figures are not lining up. Agencies are taking a fractional share of the growth they have created. For a $100million gross revenue business, you take $700,000 fees for a $30million gain for the client. That is a 2% share of the growth you helped to create. Peanuts.
So what is the solution? Value-based billing: a share of the value you create. Determine the creative and commercial outcomes your client prioritises and can measure, and negotiate a share in that. A 5% share of growth would create a $1.5million payout.
And what’s the benefit? You decouple effort from fee, and create the conditions for more creativity, happier team and a happier client. When you do your job well, you get paid more for the pleasure. When your client is paying for growth, you become a creative-partner with skin in the game. Now everyone is winning.
Getting paid more, to be more creative and a true creative partner for your clients, yes please. I’m in.
I'd love to hear what you’re thinking.