What if we asked clients to adopt the project-by-project model they want from us?
We all know that agencies need to adjust to a post-retainer world. And the pressure to work on a project-by-project basis is only becoming greater. But how would that model hold up if we asked our clients’ marketing departments to do the same, asks DDB’s Priya Patel.
The conversation around delivering cost efficiencies, being nimbler and potentially working on a project-by-project basis is something every agency needs to wrestle with.
Most of us are acutely aware of the perils of being labelled ‘big, slow, expensive – a global monster’ and are actively taking steps to ensure that isn’t a reality.
Bravo Priya, well argued thought experiment
Agree to disagree – I think Ad Agencies must go project based to survive.
Agencies are definitely not coping with the idea of a project based business model as they are not designed for it. They’ve been operating the same way for decades but it doesn’t make it right. Don’t be fooled into thinking that this crying ‘poor’ means that there aren’t really easy alternatives to deliver project based work, to retain a consistent team, and to work towards a long term brand goal with high volume work. We need to think of brand strategy, and creative strategy as projects too and not an overhead to the business or the client. Nothing can’t be treated like a project and resourced with a leaner model with deliverables and outcomes at each step. Agencies can resource their projects more effectively for their clients by shifting the model. I don’t agree that a client side business is the same thing at all (sorry). Resource the client’s projects directly against the cost of servicing each individual client (and not wearing the brunt of inefficiencies in other clients work) and manage the pitch process better. The agency would have less write offs as well and therefore not impacting all clients across the business with these overhead costs too. Agencies can be more profitable by changing their model. Project based work can be win/win if managed right. Just saying…
Except that’s not the way project by project really works. You are looking at from the position of people stuck in the old business model otherwise they wouldn’t be demoralised after that successful campaign. What they do is take that to the next client pitch and win it based on the learnings and by the time they come back to the original client -because that CEO would be even more incompetent if she/he didn’t get them back – they have learnings from the last company.
As for projects, they are engaged for as long as it takes and can cross over. Not so linear and short term. From the clients point of view, they have preferred suppliers that don’t take their relationship for granted. Yes, the CMO would be a fool to open tender every project.
The downside is the supplier doesn’t have the security of contracted clients which has it’s downside.
But, with 80-90% retention, our business is enjoying the clients, their referrals, the freedom and the variety. No contract, no exclusivity.
So, most of the clients are under pressure. We’ve got profitability pressure, industries that are being disrupted. Constant ‘cost saving’ projects being thrown at us under different guises. I can’t see the majority of the arguments in the above article landing well in any C-suite office. It’s a nice sop story,
Committing to huge retainers in place for a year or so at a time is rapidly becoming an old model. The pace of change is fast. The competitive landscape is changing fast. How many start ups work with having ‘retainers’ locked in place for extraordinary amounts of time?
We’ve seem the rise in the gig economy – that’s people making themselves available to work at speed, often on a project basis. Fresh blood coming in on a project by project basis can actually be a good thing – providing new sets of eyes to look at things differently vs locking in the same people, who often can’t solve the problem or deliver what’s required, for months on end via a retainer model. If the big agencies don’t change, they will become dinosaurs.
This shows a total lack of understanding of what your clients do all day. Working on marketing/creative projects (aka the agency work) is only about 5% of a CMO and teams day. A common misconception by agencies. There is a lot of BAU work that sits outside of this that requires a continuous team. Similarly, it is easy to ‘blame’ the client for the rise in project work. There are not many options when the same $ amount now has to stretch so much further (even when looked at, at quite a basic level, with the amount of content that is now needed). An agency on retainer has even less budget for production, which doesn’t help anyone. Believe me, I’d love to have someone on a fee structure that I could turn to, when I needed some strategic advice/outside view etc, but can’t afford it.
It seems to me that the problem Agency heads are trying to solve is accurately forecasting and delivering revenue for the Regional Mangers. Dressing this up as continuity of thinking is clever, but ultimately it is a solution for a nonexistent problem.
The agency is making their problems the client’s problems. For an industry that prides itself on creativity, Adland is rubbish at applying that creativity to its own business problems.
smart, thought provoking article Priya
“The marketing team feels demoralised, like a disposable resource. On an individual level they don’t feel like it’s worth their time and personal sacrifice. Nor can they see any future growth. Collectively, while they may have cracked it once, they certainly don’t feel like have the time or energy to arrive at a similar ‘quality, fast and effective’ answer the next five times it’s required.”
Nice way of telling the world what goes on at DDB after every project.
At the end of the day, agencies forget that they’re nothing but a company providing services to a paying customer. So if it’s an issue about money, fix your prices. It’s strictly business, not merry-go-kumbaya “value-partnership”.
Honestly, this just paints you, and DDB, like an entitled child.
An interesting read indeed. Agencies whilst looking down the barrel of the project-to-project model need to look outside of the box they currently live in. Applying the current way in which they work to the project basis is only ever going to fail. You can not apply the old ways to the new. Agencies need to look as new ways of working, new ways of managing and new ways of delivering if they want to survive.
The project structure can and does work. It wont work for big agencies who hide expensive heads across multiple retainers, it wont work for agencies who spend all their money on top level management and bugger all on the delivery team,. It’s time to turn this on it’s head, get the right people in the right roles and this will work.
Absolutely agree. These points of view are not popular with businesses with engrained processes that’s for sure. I know from my own experience of innovating constantly you can be the bad guy until everyone else starts to do it too. Some of us have the luxury of building a new thing from the ground up and therefore more likely to make this work. I really do hope agencies learn from it, as I want the industry to survive. I can’t find the data now but I read that for every one person in an agency they support 17 people across the industry. So, please agencies… let’s shake it up. Clients also need to be open to a new model too.
The challenge is that retainer models have come from a history with big, consistent deliverables. Marketing has changed. Science has shown it is better to be more consistent in brand.
Tactical executions are becoming more data-driven. The whole ecosystem is no longer setup to do the big, quarter by quarter creative ideas. (also: I’m not saying big ideas aren’t good, they’re just financially different today)
Retainers tend to be waffley and focused on executions instead of milestones and results, so CFOs understandably hate them.
Maybe the solution is a hybrid (and this is something we’ve already worked well with at Mutiny):
– Long projects (perhaps multi-year engagements)
– Clear milestones across projects
– Clear commercial reviews on progress / objectives
That’s the Bain model and it seems to work well. Hell of a lot of stability in that model, too. Creative retainers aren’t the only way to create monthly recurring revenue.
Given the short tenure of CMO’s nowadays, the above hypothetical is probably the ideal scenario for CEOs. I’d argue that scenario is basically already happening, unless the brand is number 1 in the market.
The real question is what is causing project-by-project to be demanded/desired? Pointing to budgets going down, more stuff needing to be made, less effective/efficient results, sme’s with non-existent overheads chewing into market share etc are the typical answers, but why is advertising less effective, despite more stuff being made and costing less to do?
And why are retainers suddenly a risk for clients when it’s meant to be the opposite?
The short answer is that ad land has stuffed up majorly in the past few years. Hit the reset button. Make retainers appealing. Guide clients to effective campaigns by making less crap for the sake of filling out a content calendar. Tell the Facebook and Google sales team parading as creative and media geniuses to f off with their inconsistent, hypocritical and biased advice. Get senior leaders who are busy drinking on yachts at Cannes to do some tangible work.
Project by Project model is going to be the best thing for the industry, because it will make retainers mean something again when clients can’t access the talent they want, and open themselves up for taking the hit on the work done. It will only take one stuffed up campaign to figure that out. It won’t be a post-retainer world.
“The marketing team feels demoralised, like a disposable resource. On an individual level they don’t feel like it’s worth their time and personal sacrifice. Nor can they see any future growth. Collectively, while they may have cracked it once, they certainly don’t feel like have the time or energy to arrive at a similar ‘quality, fast and effective’ answer the next five times it’s required.”
So this is how DDB reacts when projects are completed? Nice way to tell the world.
This just makes you and DDB sound like an entitled child.
Nicely put Priya.
And just ignore all the Anne Miles of the world until they can a) prove the long term sustainability of their business and b) that they can even deliver any great work that truly shifts numbers for clients.
For a) you need b) and for b) you need paid properly – whether by retainer or project. And I think that’s the argument you’re making.
Thank you for speaking up.
Hi,
Thanks for the taking the time to read and reply. I really agree there are solutions. I almost wrote this article as ‘Why scope is everything’ (!) as I really believe it’s a huge unlock for many client/ agency relationships.
Our retainers aren’t usually just a big lump sum – they are a very granular breakdown of the projects, people and long and short term goals that fee is designed to achieve.
We love it when we agree on this type of ‘quality information’ (either specific deliverables or ultimate business goals are great) because it does – as you suggest – enable us to manage each element as a project and minimise any wastage of people/ time.
Without that detailed information on scope – which does perhaps happen more often than people think – it is harder to manage a permanent workforce’s time efficiently. And especially hard to service clients at the quality and speed they often require.
We could move more people to freelance – and just pull them in when needed – but again we believe that great ‘creativity’ (which is our ultimate product) is something that genuinely needs the right talented people to deliver. Those talented people often need the stability of a fixed income.
People are also harder to ‘guarantee’ if they are a gun for hire – which again can be tricky as many clients have quite specific preferences as to the individuals and teams they like to work with.
So overall I do think ‘projects’ can work – and in many ways are the fundamental building blocks of any good retainer. But I think the model needs even more transparency, good information and alignment on ambitions to be truly successful for both parties.
Good stuff, @Priya – This seems more like the article that should have gone to print. I do think that you might like to explore a new model of freelancers. This is the biggest problem for agencies, as they see freelancers as a bum in a seat for an hour or a day as a transient commodity – again, if you follow my POV in press and LinkedIn you will see that I blame the time sheet model for this problem and the ageism it also creates too.
My whole network is filled with consultants who don’t want to be in an agency all day any more and are delighted for long term relationships by client and serial projects – and you get all this without the overheads too. Yes, you can have a consultant creative director on a piece of business as a regular part of the brand family, and not just by day. I have creative directors assigned to accounts and as far as the client goes they have no experiential difference than if this person was in the agency all day every day. It can be done.
Think Film Companies – you can have an in-house director and producer for the everyday stuff that is predictable and factory-like, but you really need the big guns by specialty now and again and with the knowledge of the brand, or at least the processes in place to capture the brand accurately in order for those who work on it less regularly to stick on brand. We currently miss the strategic opportunities through the entire creative process and can easily change that. I believe the new model is for creative services to act like a film company but with long term loyalty like film companies are with their key crew – that’s my vision anyway and I’m bringing what worked for me when we set up Exit Films years ago. I can’t see it working any other way.
People mistake freelancers for wanna be employees, when they’re not. They’re specialist services who can become a long term partner, without the overheads. That’s my whole point of being anyway and if agencies embraced this model too they would be more sustainable.
I used to coach creative businesses on profitability, process and brand… that’s why I decided to do something different because I could see the end otherwise. I want agencies to survive. For every one person in an agency there are something like 17 other people who have jobs created. Let’s work together as an industry to fix this. I feel like a single voice sometimes, but this is for the better of the industry I care greatly about. There’s another way.
Being ‘paid properly’ is nothing to do with what model we run @Well said Priya. Moving from retainer to project fees is NOT at all about being paid less, as you are suggesting, and in fact it is about improving agency profitability and removing write offs. Thinking that project fees reduce the agency’s value is just ignorance. It is about improving their overhead costs, increasing the output, and I believe it can improve the quality of the work too by accessing better talent.
That’s a very personal attack of yours, so let me respond… Just because Suits&Sneakers as a business is young, doesn’t mean my 35 years deep in agency, film company and creative services of diverse kinds account for nothing (inside as a manager turning cost centres into profit centres, and outside as a coach). If Suits&Sneakers doesn’t survive, despite everything to the contrary so far, then I will happily eat my words. At least I gave it a shot to make a difference and make for change. Sometimes I feel like I’m doing this all on my own, and the likes of you just criticise, pull people down and don’t actually DO anything practical or with any care for the greater industry.
How about being brave enough to say who you are, qualify your statements properly and share your credentials and experience in improving agency profitability yourself? I stand on experience, and I care about bringing that to help the industry survive. For me, this is all about giving a voice to good people at the top of their game that the agency model is unable to retain because agencies are not profitable and the culture pushes out some of the best.
I’m doing my little bit to fix this – feel free to share your efforts too.
Just saying…
You get my vote for best post here @Anonymous (Although don’t agree with anonymous commentary in our trade publications).
Hi Anne, I’m not the person who commented above but I have a question (or perhaps questions about your business model and how it is meant to save our industry.
Looking at your website, the vast majority of your people are established professionals. 10, 15, 20 years of experience. These are valuable people for clients, but if our industry is to have a future we both need to make use of what great people we have now and nurture those that will be the great people of the future. If this model of project-by-project, casual labour is to become the norm, how do you propose to do this? How do you propose to provide a steady and stable learning environment for the suits, strategists, creatives, producers etc etc etc of the future?
In fact, how do you propose to provide stability to the future agency workforce? There are very few of us who are cut out to freelance our whole careers. The majority of our industry sit in agencies where they don’t have to worry about invoicing, prospecting etc etc etc. They don’t want to, in essence, have to run their own business. There are other, non-industry related issues as well. For example, I’m freelancing right now and getting a home loan is much more complex because I don’t have a permanent position. How do we solve an issue over which we have no control?
My point is that, for the more established, stable members of our industry, consulting may be attractive, but for those of us that are still establishing ourselves, both professionally and financially, it is stressful and risky. We don’t have ready access to senior professional from which we can learn, and we’re not able to charge a rate that is high enough that we can afford not to work for a period of time.
The casualisation of the workforce is happening in other industries – Mining for example. Progressive companies in those industries see casualisation as a threat rather than a solution, and that it will result in a large number of people leaving the industry for more stable employment. My question to you is why is our industry different? Why in an industry where people are our biggest asset, will destabilising them provide a sustainable future? Why, in advertising, will people not desert the instability of a project-by-project existence for the stability of full-time, permanent employment elsewhere? We may be passionate about creative problem solving, but is that passion more important than a home or a family?
Hi Josh, thanks for being transparent about your identity, and asking professional and meaningful questions. I’m happy to answer as best I can in this space.
I can see that you might be used to the agency environment and miss the community there. I do too sometimes, and been working on finding my own way to fill that void.
I agree with you that not everyone is cut out for being independent and the idea of running their own business is too much for some (it isn’t easy). I hope to make it easier for independents, by becoming a channel to find them opportunity without all the hard work actually. That also makes it easier for businesses (any business) to find them and qualify who is best fit as well. By moving away from an hourly or day rate we also reward the outcomes and efficiencies rather than time.
Separate to what I’m doing, project based models don’t have to change the way that agencies hire full time people, it is just about billing. If they are doing great projects and get multiple projects and run them efficiently then they can still hire full time people for the economies of scale. The shift to project based work shouldn’t impact the need for full time people but I know it encourages efficiencies and working in different ways. The cost of the job stays on the job with more accountability.
In my time as a coach and in agencies, the agencies that made a profit on each individual job are the ones that are still surviving, and the ones that live off the P&L alone they end up over-resourcing jobs and go broke (or end up over-charging). They rely on cashflow from each last job to keep them alive, and if that funnel dries up they end up – belly up. Each project need to be a stand alone profitable entity which means a focus on efficiencies pays off, and the resourcing matching the quoting. You can’t go to a project based model unless you start to learn how to be profitable on each job. If agencies listened to this alone it would change the industry right there. A cost per chair calculation is essential and many don’t even know what that is.
The people on my website who are showcased are some really amazing talent out there, yes. There’s a giant network under these lead creatives who do the everyday work as well. The business is deeper than it looks. Each project is tailored to the brief. The people working right now range in age and experience from 19 to 65. I’m an ageist activist and it goes each way. There is plenty of opportunity to learn and mentor and I also will be expanding the training work I do to support the community soon.
I already have my a small group where we get together and learn from each other and this is expanding. I do training to develop creative skills too – especially strategic performance of the work that is produced with a focus on unconscious bias. I also do LinkedIn training too right now and more to come.
Project based teams can work on several projects at the one time and sometimes they work remotely and sometimes they get together. It doesn’t have to be in the office all the time to get the opportunity to learn. You can also learn on Zoom it seems, with shared screens and marking up on documents electronically. I think a balance of both is the sweet spot – the collective coming together but the freedom to run your own calendar and where you work.
To get a home loan as an independent person is a bit harder, I do agree. But if there is consistency of work and some ongoing relationships that makes it easier. I have creative directors appointed to businesses, just like an agency would and for the client’s experience they wouldn’t know it wasn’t a typical agency. Consistency of work and loyalty will help you. Being a gun to hire by the day or hour makes you more vulnerable – that’s another way I hope to help independents.
The intention with my model is to make it more attractive to work with the independents as a collective group. This makes us a great option to businesses that wouldn’t know how to hire one person on their own or wouldn’t consider them at all. The great talent out there gets lost if not under a roof where the right fit can be found. Suits&Sneakers becomes a marketing machine for the freelancers out there in essence too. Rather than having them hired by the hour as a commodity we are also providing tangible value by deliverable and to a creative brief which is more valuable than the hours it takes. We can have loyalty to a client just like an agency would.
This model isn’t for everyone, no, but there are a lot of people who don’t want to be full time in agencies, who want the variety of work, who want the freedom to bring all their multi-talents to a project when the agency model doesn’t allow them with the silos in place.
It would be nice to think that I personally could have impact enough to save the industry, but I do doubt that. I definitely will be doing my darnedest to make a mark though!
To put this in perspective, it is very much like a film company model. I started up Exit Films with a similar vision in mind, only now it is everything from research to visual effects, end to end as a flat line of services without all the margins. So, if you’ve ever worked in a film company you will know that everything is project based, but the feeling of community is there, the ability to mentor and be mentored is there, the ability to be profitable and accountable by the project keeps the businesses alive, and the scaleability from small to huge based on the projects keeps the overheads down but the resourcing perfectly tuned to the job.
I’m still a young business with unbelievable talent behind me at least. I do this for them. I believe that I’m making them accessible when they wouldn’t be otherwise….. if that’s you too, then give me a call. If you are awesome at what you do then I want to talk to you, regardless of age or skillset.
Thanks for asking. Given the confusion and uninformed talk about what I do, it was probably worth taking up the airtime. Feel free to catch up in person – that’s anyone actually.
Regardless, everyone should stop worrying that project based billing will mean everyone is jobless. It wont be like that, but it will be different.