Following its launch at the IPA Business Growth Conference, IPA Commercial Leadership Group Chairman Marc Nohr outlines the principles behind Pricing For Success - our new report into the nature of client-agency commercial relationships.
Innovation in the way agencies price their services has lagged behind the innovation shown in the products and services they offer.
Yet, unless the way agencies price their products and services changes, the challenges they face commercially will continue. And these challenges are many and varied.
For instance, sometimes clients effectively end up buying a 'yard of advertising' with little sensitivity to how challenging and complex the input can be. There can be confusion around what a deliverable is – suggesting a need to define interim deliverables because complex projects have many milestones. And, how can agencies avoid elastic timelines for delivery of outputs? You might be paid “when the end asset is delivered” despite delays beyond your control.
Given the many drawbacks of time-based charging, especially for creative thinking, it could be an attractive idea for an agency to move to an output-based model. But what if they have only ever operated on a time-based model to date? How do we change as agencies and clients if we measure everything through timesheets right now? And, what if we do change, and find out that we have driven our prices down without identifying any efficiencies in how we run, or service, the business?
In Pricing for Success, we want to achieve three things:
Ultimately, Pricing for Success should serve as a practical guide for how agencies can structure their commercial relationships with clients. It explains a set of process steps and shows you how to select the most appropriate commercial components for any agency assignment.
Examine any agency and client relationship through this lens, and you should find it a lot easier to develop a robust and objective model which works. Your creativity should then get the commercial innovation it deserves.
Marc Nohr is Chairman of the IPA's Commercial Leadership Group, Chairman of Fold7 & Group CEO, Miroma Agencies. This is an excerpt from his foreword for Pricing for Success, launched at the IPA Business Growth Conference 2020.Discover the full findings and purchase your copy.
In January, you have the opportunity to take part in a workshop with the Pricing for Success authors, Vlad Komanicky, Alchemists Founding Partner, and Henry Wisdom, Head of Commercial Consultancy. It will help you understand how to successfully innovate commercially as much as you innovate creatively.