Surveys of this and that are spewing out of the ANA (Association of National Advertisers) Financial Management Conference in Florida, as they do on these occasions.
One survey of the big advertisers present says that 65 per cent of them plan to reduce or restructure ‘agency compensation,’ but then such surveys always do. Which rather suggests that nothing much happens after the survey has been completed.
Rather more interestingly, 24 per cent of them say they plan to include ‘performance incentives’ into their plans, which advertisers have also been saying for years. The sum of advertisers ‘planning’ to do this over the last decade or so must be around 2000 per cent. According to the ANA the number of big US advertisers using such incentives rose from 46 per cent in 2010 to 49 per cent this year.
Well, I suppose that’s a fact.
Here’s another one, from a 4A’s survey: performance incentives account for just three per cent of holding company revenues. Three per cent!
So what ecactly, you may ask, is the point of performance incentives? Either agencies are signally failing to perform or the targets set are unachievable. Or maybe achieving the targets results in such piddling rewards that nobody bothers with them very much. Is the real point to allow the CMO to show the CFO (and ultimately the CEO) that he or she is trying to do something? And then it all gets kicked into the long grass until the next survey comes round.
But all this stuff costs money, not least in payments to the serried ranks of auditors like Accenture and Ebiquity who get paid handsomely for coming up with these schemes. And lots of client time too, which might be better spent on nurturing more compelling communications.
The other aspect to this is the way it extends, complicates and generally buggers up pitches. One consultant told me recently that, by the time a winning agency (of any description, creative, media or whatever) is eventually publicly annointed there’s usually been so much eyeball-to-eyeball horse trading than neither party can stand each other.
The recent $3bn General Motors media pitch, won by Carat, may be a case in point. Carat ‘won’ the pitch in December 2011 but the decision wasn’t made public until February this year when it emerged that it had agreed for work on a cost-only basis for two years. Did relations between GM CMO Joel Ewanick and whoever did the deal at Carat (Aegis CEO Jerry Buhlmann ultimately, presumably) improve during this period?
Aegis, by the way, hotly denies any such deal even though it’s hardly shocking or even that surprising in today’s ‘low costs at any costs’ environment.
It does all seem to be a case of turning what should be a relatively simple matter (paying your agency properly while keeping your costs in check) into something fiendishly complex and ultimately pointless.
But that’s what a lot of clients seem to want to do these days.