And this, ladies and gentlemen, is why clients hate ad agencies

I came across this snippet from a memo sent out by the owners of an agency in the New York Metro area.

Ironically, their attempt to do the responsible thing for their business’ bottom line they exposed perhaps the most irresponsible aspect of the industry: charging clients based on time.

So why is it so wrong? Agencies are getting paid for getting things done, right?

I would suggest rewording the latter to say that yes, agencies are getting paid for doing things. But there’s no incentive (or accountability) for being successful in the things they do. This is the stuff that has always driven clients nuts because their jobs are on the line if they’re not successful. Agency people’s typically aren’t.

We’ve always gotten paid the same whether a project or initiative was successful for a client or not. Thanks to blended rates, the critical thinking and strategic work we do appears no more valuable than banging out mechanicals. And how many times have agencies had to quietly scale back resources or put fewer (or more junior) teams on projects just so they don’t go over the estimate?

If you can explain how this is good for a client’s business, I’ll explain nuclear physics.

The net of it is we need to be more accountable for the work we produce. Compensation agreements should work to align clients and agencies, not put them at odds. That’s the only way they’ll get, and see, the full value of a strong agency partner.

It’s called shared success.

And it’s why at my company, Firehouse, we tell our clients that our time is not for sale.

Instead, we prefer to be compensated based on the value we bring to the relationship and the results we achieve…together.

Benchmarks are set, metrics put in place and score is kept. Our clients know for absolute certainty that our mutual success is tied together so that we don’t win unless they do.

 You can’t ask for greater motivation in a partner than that.