Agencies are “colluding in their own demise” by perpetuating the age-old practice of charging clients by the hour for their products and services and must move to a new model where remuneration is a based on a commercial partnership.
So says former Marc Nohr, who to be fair knows a thing or two about building an agency into a financial powerhouse. Having co-founded Kitcatt Nohr Alexander Shaw in 2002, Nohr and his fellow directors built the business up into one of the UK’s most successful independent agencies before flogging it off to Publicis nine years later.
Nohr is now chairman of Fold7 and group CEO of Miroma agencies but it is his role chairing the IPA’s commercial leadership group that has got him banging the drum for the future of agencies. Today sees the launch of the industry body’s new pricing guide, which outlines practical steps for agencies to build a sustainable commercial partnership with their clients.
Price for Success, has been commissioned by the commercial leadership group, and written by marketing advisory service Alchemists, launched last year by three former Oystercatchers executives.
Aimed at agency leaders and decision makers, the guide explores the nature of client-agency commercial relationships and details a three-phase process for any agency to follow to help them evaluate and establish a platform for commercial innovation.
The guide focuses on three key areas for agencies, including a new model of commercial partnerships, based on eight core commercial components.
It is also gives agencies six key pricing factors, so they can score themselves and their clients against them to arrive at the right combination of the eight different components.
In addition, the guide provides a process and framework to successfully and appropriately price agency products and services and answers real-life questions from IPA agencies to explain how some of the more common commercial challenges can be addressed.
Nohr said: “Unless agencies face up to the many and varied challenges they face commercially and change the way they price their products and services, they are colluding in their own demise. This report gives them the tools to skill up, get good at it, and ultimately secure their own future.”
Alchemists founding partner Vlad Komanicky added: “Current agency commercial models are rigid and hinder innovation. We hope, therefore, that this guide will help agencies to adopt a process which allows greater agility and flexibility.
“By following this practical advice, it will enable agencies to build partnerships, comprising several commercial components, with clients. It will also allow an agency to understand where it is at any stage in the client and agency relationship. By identifying this, they will know where they stand in terms of the potential risks and rewards for any commercial partnership.”
The guide is available from the IPA website>