Agencies are vital, here’s how we pay - Airbnb

Paul McIntyre
By Paul McIntyre | 11 August 2015

It’s still a touch early for a tell-all but a high profile brand in Australia has built an in-house creative unit and is taking a massive chunk of its creative work inside and off its creative agency roster.

The marketer, which AdNews can’t yet disclose, has already done likewise with large swathes of its digital and media work.

The move is not new – and could indeed just be part of another broader industry cycle to in-house which will flip again as it has historically – but the local move is indicative of the flux and frustration many advertisers have with their agency partners at present.

Staunch agency supporters remain though, like Airbnb’s global CMO Jonathan Mildenhall. Even Telstra’s Joe Pollard has publicly stated agencies are being undervalued by many brand marketers.

And there are some interesting new alliances emerging. Sky Media in the UK is striking three-way deals with advertisers and agencies in which it delivers free airtime and online ad space in return for revenue share deals. Sky is publicly upbeat on the potential of these arrangements.

But Airbnb’s Mildenhall should be a superhero to the agency business – unlike a growing number of his marketing peers, he thinks agencies are being treated poorly (in a previous life he was with Mother, TBWA and BBH).

Mildenhall lifted the hood slightly on Airbnb’s unconventional remuneration model at a CMO panel put on by The Economist in Cannes.

He said both TBWA/Chiat/Day and Starcom MediaVest are paid based on the number of booked nights through Airbnb.

“Too many clients are squeezing the financial lifeblood out of advertising agencies and then they complain that the work’s not great.The compensation models and creative aspirations of many brands are not aligned,” Mildenhall said.

“A huge source of brand vitality comes from agencies and as marketers we’ve got a huge responsibility to enable those agencies to stay vital and recruit the very best people. And a lot of that comes down to compensation models.

“Agencies are important. They might be more important than ever. You’ve got Facebook and Google which some argue are de facto agencies. They’re certainly recruiting more from there. The ecosystem is much more complicated.”

Mildenhall also took a swipe at the “massive abuse of data”, saying too many companies simply don’t know
what to do with it.

“Working with talented people who understand how to use data to build a foundation on which the creatives are asked to work; that’s pretty robust,” he said.

“When you get those people handling data, it can be a springboard [to creativity]. But the problem is in most organisations you don’t get intelligent people managing the data. And they use it to bulldoze creative ideas. And that’s heart-breaking.” 

Interestingly, Sky Media’s deputy managing director Jamie West is a media company exec increasingly noticing the rise of the creative agency in his dealings.

"That's the big change happening in the UK market," he said. "Creative agencies are no longer ring-fenced in
the corner. They are coming into the process. I'm not suggesting the return of the full service agency but the number of meetings I go to now, that include the creative agency as well as the media planner and the data strategist, is tenfold."

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