Question:
Coca-Cola launch their new multi-million pound ad campaign. People like the ad but it doesn’t make them buy more Coke. Should Coca-Cola still pay the advertising agency?
Answer:
No. (According to Coke)
The biggest brand in the world (business week) recently unveiled its revolutionary new advertising strategy. Worried about dwindling levels of creativity in its campaigns Coke plans to introduce a new pay-for–performance scheme judging work solely on how it performs in the marketplace. Basically, this means that if an ad achieves the pre agreed consumer response Coke play ball and the agency could be in line for a whopping 30% profit. If it fails however they could be left staring down the barrel of a big fat zero with Coke only willing to cover costs.
Now numbers really aren’t my thing but if Coke can make this work it could have a significant effect on the creative industries as a whole, pulling into question how we value creativity, recognise success and claim intellectual copyright of our ideas.
Coke’s idea is that this incentivisation will increase the creativity and innovation of its agencies resulting in them consistently producing world beating advertising. I’m not convinced however that for Coke’s roster of super-star agencies with their equally super-star budgets that this new requirement will pose too much of a problem. The question is, if this approach becomes commonplace, will it really stimulate creativity at all levels.
It would surely seem like an attractive option for the risk averse brand manager who could keep his cash should everything go tits-up. But, is a smaller agency, without the balls of Fallon or the track record of Wieden’s, really going to put it’s neck (and the necks of its employees) on the line to tread new, exciting but uncertain paths? For many, playing it safe, sticking to what the competitors are doing would seem like a better option. A tactic already demonstrated on our supermarket shelves with row upon row of nearly identical products all vying for a safe third or fourth place.
But as designers do we really care about those guys in advertising? I’ve long been bemused why good design is worth a tenth of a mediocre ad. However if this sets the standard for the way advertising is bought then surely our shared clientele will soon demand the same practices from us. But nervous I am not, in fact I think this potential shake up could be a really exciting prospect. My reasons are thus:
If more financial accountability rests with a design agency then so should a much increased share of creative ownership. Where previously the ambitions of a designer may not have been matched by those of a client they could soon be met with ‘on your head be it’. This change could breathe forth a new era of daring and bold design. With designers given a creative freedom not experienced since the heady days of university. Design will be forced to step up to the mark and in doing so will move and evolve at a faster pace.
Also, if an idea, brand or identity continually performs well year on year, allowing a company to grow, innovate, capture a market then the originator should be able to recoup profit periodically. A sort of design-as-investment rather than a one off product.
A new design process would have to be established with new planning and structures to accommodate this change. The end of a project would not be finite. Solutions would be reviewed after launch, a tinkering and adjusting which is contrary to the big ‘TA-DAA!’ and glitzy reveal that we all covet today. Phases of transition normally left in the hands the client could now provide the opportunity to ensure things live as they were meant to live as well as providing more revenue for the agency.
Change like this wouldn’t and couldn’t happen overnight; it would involve massive shifts in attitudes not least in how we appraise each other and ourselves and how we value success.
We are an extremely inward looking industry. Our major design awards rarely focus on the commercial success of work. They are often reduced to a self-gratifying circle – designers judging design that appeals to designers. Awards for effectiveness and commercial success gather dust in the shadows of squat yellow pencils because we are all guilty of a desire to stand pigeon chested among our peers. Too often industry challenging, market transforming work is overlooked because someone didn’t like the typeface or the colour and we are in danger of loosing touch with who it is we all do this for.
I may sound like I don’t value the craft of design. Quite the opposite, craft should remain of the upmost importance but it can be difficult enough to describe its value let alone to prove its results. What is needed is for the industry as a whole to develop new ways to sell design and prove its impact. To explain the value of work that might not be reflected in pounds and dollars but is the lifeblood of what we do. Change is coming, the political clean-up has set the tone. By embracing it we put ourselves in a stronger position to push for things to be the way we need them to be. By turning our heads the other way we miss the opportunity.
The design company of tomorrow should be looked at on the same level as a management consultancy. Not because they talk figures before fonts and form but because the impact of good design and creative thinking is clear, visible and valuable to all.
So I fear not the coke side of life. Let them shake things up lest our industry be left flat.
Sources:
Campaign Magazine
http://www.brandrepublic.com/magazines/campaign/index.cfm
Guardian (Media)
http://www.guardian.co.uk/media
Your Voice
What do you think? Fill in the form below to submit any discussion points you like to raise and we'll do our best to get a debate going, in the immortal words of Bob Hoskins, it's good to talk.
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What a great article.
I hadn’t heard of this new ‘incentive’ approach by Coca Cola, and to be honest my gut reaction was that it is unworkable. There are overheads to be considered — if the campaign is to work across a variety of platforms, including TV and cinema, then there are added costs to be factored into the whole process. I wonder if the 30% promised stake is enough to cover such a gamble (though, being such a huge brand, I’m assuming it would).
However, after reading through the post you’ve made some really valid and insightful points. When you think about how many times agencies (big and small) commit to free pitching (’given the current climate’ being the usual excuse), is there really a great deal of difference between the two? My only stipulation would be wanting complete creative control — too often the success of design is compromised by the clients demands, and with the studios lively-hood on the line I wouldn’t consider that unreasonable. The agency is after all no longer a supplier, it is an investor.
I wonder whether that is the case though, or if the agencies are still forced to jump through restrictive, coke branded hoops once committed to the project?
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[...] A new (and mercenary) way to commission, rate and pay for communication design and advertising, from one of the biggest brands of all time. [...]
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I like Matt’s point, if the client says no to an idea, does the agency feel that they are being done out of their percentage should the design decisions have been completely on their terms?
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It’s a good point. It seems difficult to believe that clients would give over total control. They will still have the overall image of their brands to protect but a much increased decision making power might be more realistic.
It’s a very grey area because of all the different parties involved in making a product or brand successful. (The ad campaign could be great but if the store selling the product is running reduced prices on a competitor).
I think the overall point highlighted from this possible new approach is that with more accountability and the ability to prove results comes more power. Something we’ve all felt a bit light on at one time or another with various clients.
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In reality this will stymie genuine creativity not encourage it as it all depends far too heavily on the “pre agreed consumer response”.
The goal of making a campaign with a predictable outcome is the antithesis of original thought. What if the campaign is amazingly successful in an unexpected viral metric?
This is one for the moneymen and nowt to do with ‘Creativity’ at all but you knew that anyway unless you’re thick
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I can only begin to imagine how hard it will be to agree with a client what makes a successful campaign, as it is already difficult to pin down campaign success through quantitative research and manipulative ad stats.
I agree that if this was a model going forward, the creative ownership would have to lie solely with the agency, and therefore create more distance between agency & client. This can’t be a good thing, it takes great effort to get good work out the door, it’s made easier when you’re working as harmoniously as you can with the client towards a common goal.
Thanks for your comment Ian. Initially I too thought that this approach could drive a wedge between designers and clients but that’s not really going to help anyone. It’s much more beneficial to both parties to ensure the result is as big a success as possible. So rather than clients waiting for us to fail or succeed either way, surely client and designer would need to create a tighter relationship. With more trust and more understanding it would be much easier to produce effective work.
Sounds a bit Utopian i know but I’ve just come across a similar article in the economist (thanks Martin) and it says that a couple of agencies have already voluntarily moved away from a time based billing system. “Jeff Hicks, chief executive of Crispin Porter + Bogusky says this approach has helped his agency work more closely with clients by aligning the agency’s compensation and the advertisers profitability.” It also mentions that change is afoot in other industries with some consulting, law and accounting firms adopting this approach”. If those guys can figure it out then i’m sure it will become more commonplace. The article ends with a good point. “[we] sell ideas not time… just imagine if J.K Rowling had been paid by the hour to write Harry Potter”.
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[...] you imagine if this is how our industry goes? Go read this article over at Design Assembly (Awesome [...]
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“…When you think about how many times agencies (big and small) commit to free pitching (’given the current climate’ being the usual excuse), is there really a great deal of difference between the two?…”
All companies should be discouraged from ‘free-pitching’, we all know in our hearts it’s immoral and in reality never free, even in this ‘current climate’ .
Matt you say you would want complete creative control, do you really think that a company that values your work so little they won’t invest a dime will suddenly give you free range?
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J: I absolutely agree that companies should be discouraged from free pitching — as an industry we have a hard enough task educating clients in the value of design, a job made much harder when we give it away for nothing. However, with many agencies of all sizes struggling through an uncertain economic climate free pitching is becoming an unfortunate necessity for many. This is why I used the term ‘excuse’ in that sentence — it doesn’t make it right, it’s just an observation, and I actually see MORE rewards in the Coca Cola scheme than free pitching against 8 other creative agencies, which invariable ends up being a beauty pageant of work presented to a board of directors.
I couldn’t answer your last comment because neither of us know the answer, unless of course you have worked with Coca Cola on this scheme and can therefore offer some insight into the client/creative relationship? I am guessing that, as Neil pointed out, there are a number of brand guidelines that the ad campaign would have to adhere to which I fully understand — beyond that though I am saying full creative control would be a must in order for the relationship to work. If an agency is taking a risk investing it’s time, energy and expertise then in return unrestricted creative control would seem a fair trade.
And to be fair they are valuing your work, to the tune of 30% of the spoils.
“People like the ad but it doesn’t make them buy more Coke. Should Coca-Cola still pay the advertising agency?”
I think depends on their core intentions. Is the campaign designed to get people to ‘buy more Coke’ or is it more strategically and cryptically positioned, in order to raise public brand awareness - where as by nature the results are inevitably far less measurable.
And what about influence from popular media (remember a certain rap tune called “Pass the Courvoiseur…” and it’s effects on the sales figures of a particular cognac brand in the states a few years ago)?
If sales are boosted as a result of influence from outside the design and advertising circles aswell, surely they ought to receive their cut?
Where do we draw the fine line here?
i agree with Grez
if the intention of the campaign is to increase sales and sales don’t increase. its a good tactic. there is no reason advertising should not be paid by results. considering the budgets coke has rolled out on advertising in the past few years it seems totally reasonable to apply strict measures.
i’m not sure how a brand agency would apply the same measures as, like grez pointed out, it can be influenced by many other factors, not to mention the product’s quality control.
all in all it’s a bold move by coke. considering they are the world’s leading brand they are the ones to make a change.
bring it on.
Incentives have been doing well in other creative areas - such as product design, where the designers take on part of the risk involved in investing in the product, but then get paid a royalty for each sold product.
Result based advertising is nothing new, really. During the dot com heyday, several agencies opted for a performance based bill, but it is immensly difficult to agree on the terms for a number of very obvious reasons.
When Coca Cola gets involved in this from a client perspective, I am looking forward to any disclosure of how they will handle the agreement between themselves and the agency. Any news on that, perchance?
Best regards,
Frederik Andersen
It’s an interesting idea, but one that seems to remove all responsibility from the client. Will their pay be performance related as well, because that is exactly what they are suggestion? Commissioning design is a collaberative process involving the creative ideas of an agency, and the decisions and vision of a client(s). Cadbury’s and Sony must have some very astute and intelligent staff who trusted and believed in Fallon and their ideas. Although there’s always an element of the unknown, surely the clients role is to judge their market and what communication will be successful with in it? What will happen when an agency is pushed into a direction that they believe is poor or misguided? Do they walk away midway through a project and invoive for the costs upto that point, or continue and hope for the best?