The juxtaposition of two articles in this week’s Campaign magazine caught my attention. A piece about the Cannes Awards Festival says,
“The reason creativity matters, of course, is pretty obvious. In his book, The Case for Creativity, James Hurman tracks the share price of Cannes Lions’ Advertiser of the Year winners during the lead-up to their success. Without exception, they enjoyed their highest share price, biggest gains and most competitor-smashing results when they were producing their most creative work – Procter & Gamble, Nike, Volkswagen, Swatch, Honda… the list goes on and on.”
The author concludes that, “Clients value creativity more and more”.
On the other hand, a couple of pages later in the same issue an article entitled “Are agencies being screwed on fees?” reports on new research by the Marketing Agencies Association and argues that “Clients are squeezing agencies until the pips squeak.”
It continues, “Based on figures supplied by the finance directors of MAA member agencies, the research suggests clients have forced down agency fees by almost 20 per cent over the past decade, with creative departments bearing the brunt of the cuts….The MAA figures claim that hourly rates for creative talent over the same period have plunged by 26.5%. It begs the question of whether agency remuneration has reached crisis point.”
There’s a contradiction here: is it possible that clients value creativity more and more, but want to pay less and less for it?
It's hard to answer this question based on our experience at Wieden + Kennedy, which is not representative of the industry as a whole. It’s unlikely that any client who didn’t value creativity would consider working with an agency whose philosophy is ‘the work comes first’. But, even allowing for this, there’s no question that our fees are increasingly under pressure and that we are now pushed harder to justify the extra time and resource that goes into getting the work from good to great.
Of course, clients have always negotiated hard on fees. On every pitch I’ve ever done where a procurement department was involved, at every agency I've ever worked at, I’ve been told, “Your agency is significantly more expensive than the others.” I’ve never heard of anyone at any agency being told, “Your proposal is significantly cheaper than the others and we wonder if you can help us understand why that is.”
So, what's my point here? I think the separation of marketing and procurement in many companies means that clients can be schizophrenic about the worth of creativity. Marketers may prize it, while their procurement department will aim to buy it at the best price they can. As agencies, our job will be to continue to prove to clients that an extra few percentage points on the money invested in creative fees may pay much greater dividends on the bottom line. That may mean enlisting marketing people to help persuade procurement creativity can add value.
And, going back to those Campaign artcles, maybe so as to help them develop a better appreciation of what creativity can do, agencies should be inviting some procurement people to Cannes…? Mind you, on second thoughts, maybe not. (Shudders imagining Megacorp Global Head of Purchasing being confronted by scenes of profligacy and debauchery that would appal Caligula.)