Agency remuneration is a topic that is rarely off the agenda of advertising's chattering classes. It's a familiar tale procurement pushing down fees, agencies forced to cut their cloth accordingly, service levels consequently falling. And while trade bodies, most notably the IPA and ISBA, have preached about the need for agencies and clients to create a mutually respectful relationship, anecdotal evidence suggests little has changed as the focus on price rather than value shows no sign of waning.
But Ben Kay, the chief executive of Rainey Kelly Campbell Roalfe/Y&R, has come up with an alternative to the traditional ineffectual hand-wringing. RKCR/Y&R has introduced a system called "add one", by which an agency will split the cost of bringing an extra person on to a client's business if the client thinks it is under-resourced. If this works after six months, he suggests, then the client should bring the person on to the team and then pay for another. Sounds simple, doesn't it? But given the widespread mutual suspicion between agencies and marketers, is it one that is practicable? Does RKCR/Y&R's add one idea work?
Ben Kay, chief executive, Rainey Kelly Campbell Roalfe/Y&R
"'Add one' is supposed to be a simple way of rebalancing agency teams in the clientÕs interests, moving the conversation beyond what can be perceived as a self-interested plea for more revenue. It's about showing that fees aren't first and foremost about an agencyÕs profit margin, they're about the quality and quantity of people on the business. By co-funding for six months, the agency is putting some skin in the game. It has a vested interest in proving the value that it is able to add. By 'adding one', the financial risk to the client is infinitesimally small. The rewards? Well, it doesn't cost much to find out..."
Judy Mitchem, managing director and chief marketing officer, Ogilvy Group UK
"Good for RKCR/Y&R for trying out a more flexible model. But is this the best way of rebalancing resource? Throwing an additional 'body' at an account is not always the answer. Often, changing the existing mix of skills on the team is more effective. ItÕs also difficult to measure the incremental value of one person. And what if both parties disagree at the end of the trial? Ideally, resourcing requirements are agreed at the outset, with clarity in terms of scope and delivery, and then reviewed on a regular basis, with a degree of flexibility, as part of an agreed process. In my experience, this delivers the best outcomes."
Stuart Pocock, managing partner, The Observatory
"There's little doubt that pretty much every client is trying to get more for less these days and, arguably, we've overshot the resource v cost tipping point in too many cases. While one admires RKCR/Y&R's initiative to find a solution to this, what it is proposing seems to be a rather blunt instrument. Clients don't want bodies thrown at them, they want quality of skills across the mix - not a full-time employee in a particular discipline. Crucially, few agencies have got good people lurking around waiting to join another client team. That means people will be moved off other businesses, which, in itself, may present a whole set of other issues."
Martin Nieri, chief executive, Partners Andrews Aldridge
"It's an interesting concept and it will certainly bring client and agency together in a more honest and collaborative way. The issue of maintaining the right quantity and quality of resource is indeed an ongoing and serious one. However, each client is different. For instance, many clients today are working with a smaller headcount themselves and this puts immense pressure on their day-to-day teams to just get campaigns out. In many instances like this, they are happy to get around this shortage by pushing more fee to the agency for them to hire additional people. I've seen this happen a lot more over the past couple of years."
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