Since you all loved him so much for his previous dissertation on Sir Martin Sorrell, we couldn't resist bringing Dean Crutchfield back for another round of industry-related musings. A consultant and strategist whose other writings can be found in AdAge's Stories: CMO Strategy, Crutchfield now waxes poetic about client-agency compensation issues.
I was brought up on the notion that there were two things we could guarantee in our lives: Debt and Death. Today we've got agencies in debt and death of advertising smears.
In the face of this adversity, the often approached and avoided "value-based" compensation system is making a successful comeback via marketing heavyweights, Coca Cola and P&G; with P&G going to the extreme edge of the curve with one agency made responsible for all the other partners, including payments, budgets and hires! It's tragically ironic that whilst recession is a viable reason to reexamine how clients pay their agency partners, the solution is not to stop paying them!
My favorite face on a currency, Mr. Benjamin Franklin, advised that "a penny saved is a penny earned." And that's exactly the advice corporate clients have adapted to assuage their cash flow by holding onto what's rightfully yours. That, in a nutshell, is it, cash flow; theirs first, yours whenever...Facts are stubborn things so what's the ethical thing to do? That mostly depends on who is asking, in this case the agency, who is going to be affected (the agency), and the likely outcome: a defunct agency (maybe).
