David Benady should be congratulated for his concise, well-researched analysis of the downturn in ad spend (MW last week). I endorse his view that the crisis is in marketing, not in the economy. He is right to identify a trend away from mass media towards more direct and accountable forms of communication.
But as marketers shift their budgets into direct marketing or more niche media, new pressures emerge. Marketing plans will comprise more, smaller items, each with a lower individual price. One peak ITV spot may be replaced by 50 Direct Response TV transmissions on niche channels. So spending is reduced but workload increases. Agencies working on commission are squeezed despite improved efficiencies.
Marketing budgets become more fluid as they move between creative, media, direct and Web agencies. Those workloads often increase even when budgets reduce as the team strives for more cost-effective answers to tougher briefs. The client team suffers as they strive to re-educate their agency colleagues, make new commercial arrangements and defend their budgets.
The net result can be excellent, but often the only outcomes are strained relationships and a marketing department with too little time to do anything really well.
Agencies can help by embracing payment by fees rather than commission. But the real benefit comes from payment by results. Great ideas get rewarded irrespective of their cost, provided they deliver. PBR encourages better teamwork and more thorough briefing. It forces those of us in agencies to ensure we’ve done everything possible to make our work as accountable as our clients’ own efforts. And that’s no bad thing, irrespective of what’s happening to ad spend.