ideas are the currency of the future

I love this insightful article (with a short video) in Advertising Age . Especially love the following part,

“But it quickly turned into a session of strident complaints about a system that requires agencies to give away ideas for free in an era when ideas have become the primary currency for a marketing industry being torn apart and remade by technological revolution, media fragmentation and consumer control.” [Kempton: I added the bold and italics.] I think Kevin Roberts got it right with Lovemarks and the business model that he established for Saatchi & Saatchi where they are not just an hourly rate sweat-shop but they get to share some backend actions (like an equity investors) if the products sales take off as a result of their ideas. By the way, as my regular blog readers know, “ideas are the currency of the future” isn’t my idea. It is a quote by Kevin that I love and used a lot. And it is very fitting for this post.

Note: As I don’t know how quickly does Advertising Age take down its article (or ever?), therefore I am reposting the article by Hoag here for your reading pleasure. (Just so they will be happy, please go to their site to check out some of the other really interesting stuff.)

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Bitching About Pitching and Agency Compensation

Source: Advertising Age

By Hoag Levins

Published: September 17, 2006

NEW YORK (AdAge.com) — In surprisingly strong comments before a gathering of the nation’s largest advertisers, three ad agency creative chiefs last week criticized the account pitching and compensation models that currently govern their business relationships with advertising clients.

Agency relations
In comments during presentations or Q&A sessions at two panels at the Association of National Advertisers’ annual Agency Relations Forum at the Grand Hyatt in New York, executives complained about a system that requires agencies to give away ideas for free in an era when ideas have become the primary currency for a marketing industry being torn apart and remade by technological revolution, media fragmentation and consumer control.

And while the subject of pitch-related frustrations is not new, the day’s events underscored the simmering levels of anger the issue provokes in top agency circles.

‘I hate pitching’
“I hate pitching and I don’t think we should do it,” said Neil Powell, chief creative officer of Margeotes Fertitta Powell. “I wish we had an industry where everyone felt a solidarity that enabled us to not pitch creative ideas [for free] because rarely are pitches even playing fields, regardless of what the client says. There’s always something going on. Somebody’s got a favor. Somebody’s got a friend. There’s always something.

“We spend hundreds of thousands of dollars every year on pitches where we would be better served if we took that money as agencies and went out and proactively pursued clients that we really want to work with,” he told the audience of marketers and potential clients.

“It’s remarkable how client’s can’t believe it if you don’t want to pitch –‘What? You don’t want to pitch; you don’t want to spend three months of your life coming up with ideas for free?'”

‘The model’s broken’
Fellow panelist Robert Wong, senior VP-executive creative director at Arnold Worldwide, said, “Why don’t we just say we don’t pitch and then we can tell all our clients that instead, all the resources the agency would have spent on new business we would take and pitch our existing business so that every year we’re guaranteed that [they would] have the best thinking and most progressive ideas for their brand. But the reality of the industry doesn’t allow us to do that. So, I think the model’s broken. I would love for you guys to be in more solidarity with us to say ‘You know what, maybe there’s a better way.'”

In a Q&A session following a separate panel presentation, the third executive, David Lubars, chairman and chief creative officer of BBDO North America, seemed to carefully point out to his audience that he did not object to pitches. In fact, he said, “I like doing that. It’s a chance to show your stuff.”

“My issue is not doing pitches,” he went on, “it’s the getting paid part after you win the pitch. I understand how costs have to be driven down but the fee-base that we’re on now, it’s like being an hourly worker — like the person who does the drywall, and I believe we should be paid by the idea. If we spend four hours and the idea is worth $50 million, it doesn’t seem right to just be paid for four hours. I think it’s the compensation model that really should be looked at.”