It’s no secret agencies are finding it tough going and remuneration is top of mind. UM CEO Mat Baxter’s overhaul of UM’s positioning to create a “creative connections agency” and the shift of its payment model away from commission is based around making sure the agency has “skin in the game”, he said this week.
It’s about being a true partner to clients and sharing in the risk and spoils, not just a being supplier, he said. By removing the inherent bias in commissions, the agency is incentivised to find a better solution for clients because it’s the only way to make profit.
“In order to be a proper partner, you have to sign up for growth – that’s what clients are looking for. You either have to agree you’re going to be a growth partner and hold yourself accountable – just as the client does within their business – or not,” he said.
“But if you’re not willing to join the client on that journey you can't call yourself a partner. You’re a supplier with no skin in the game. Partners share the risk and share the reward.
There will always be circumstances where we might miss out on revenue as a result, but when we do genuinely contribute we share in that upside and it’s a far more appealing approach than working on a flat service fee.”
Performance-based pay is a tricky subject and one that is revisited often by media and creative agencies. Baxter said he hasn't come across a client that didn't buy into the concept UM is putting forward. Ever bullish about UM's capabilities, Baxter suggested that any agency not willing to take that route probably wasn't confident in what they're offering.
“The agency that backs itself to grow its clients' business – one willing to put your neck on the line for the result – is confident it can transform. If you’re providing a stock standard product, then you're probably not as willing to do this. When you’ve got money on the line it’s an amazing agent for creating focus,” Baxter said.
The agency already sees a better set of financials on accounts that are incentivised by performance, he said, adding that being results-oriented as an agency and paid based on performance “is a healthy thing for any agency in 2015”.
The agency is already growing in strong double digits, and by the end of 2014 it's understood that more than half its revenue was coming from non-traditional non-paid media work.
It only has two clients left that have not converted to the new remuneration model
UM won the Coca Cola media account back in May last year and it was the first account where it pitched its creative connections concept. It plays into the hands of the soft drinks maker which also talks about 'connections' in the media world.
You can read an interview with Ivan Pollard – Coca-Cola's global head of planning from 25 July last year. Get the iPad version here.
Baxter said the idea wasn't born out of Coke, but it did help guide the approach the agency took in the pitch and the subsequent coloured cans work.
But the key word in the creative connections positioning, Baxter said, is the creative side – something he believes the media industry has “lost sight of”.
“Without a shadow of a doubt the media industry has lost sight of creativity – we lost that having spun out of creative agencies. Media has become ore about the numbers and less about creative connections. We recognise the importance of the data and analysis but these are just inputs – the single most pivotal thing is creativity.” he said.
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