—And that’s a good thing for the future of adland, says NFA's Serge Rancourt—
Around 20 years ago, agency holding companies embraced the efficiency service model. They were—and still are—competing on price in a race to the bottom. Consolidating operations by folding agency into agency. Commoditizing output with rate cards.
I know this because I was the one making those consolidations and competing on blended rates as the Canadian president and COO for one of the industry’s biggest global holding companies. It was a different world from my time in the ‘80s and ‘90s at then-independent Y&R.
Trouble is, the networks got this value equation dangerously wrong. And they have dug themselves into a hole most are still trying to climb out of today.
Somehow, along the way, value was poorly defined solely on price.
Value doesn’t equal price. Value is about the quality of work relative to price. And not everyone wants to eat at a drive-through.
When you only focus on cost, rate cards are weaponized and talent takes a battering. Proposals are loaded with junior talent to drill down blended rates. Hours are inflated. Delivery expectations are misaligned. And—soon enough—arguments ensue around burn rate and hours rather than, well, the quality of work.
This is the beginning of the end (and right as you’ve begun). In chasing the bottom line to win a client, the long-term has been sealed with the kiss of death. Staff burnout and “B-team” talent that underwhelms relative to client expectations lead to shorter AOR tenures and increasing client turnover.
Soon enough, talent starts to migrate, too. Seeking personal growth, and speed, and mutual respect (and quite frankly, fun), they jump to independents built on greater flexibility, nimble foundations and future-facing client compensation structures unshackled by legacy. Or, like us, they start their own.
There is another side of value most networks have been too slow to recognize. And, for some, it’s too late altogether.
And that other side is better talent delivering better work.
There is no shortage of agencies that sing the “people-first” song. It’s a tired narrative. But math doesn’t lie. For every dollar of fees in our network, 70% is poured back into people, versus the industry average of 55% to 60%. That’s for current staff (raises, promotions, and rewards), as well as new talent. We do this by keeping overhead low.
This simple model has allowed us to remain financially healthy while also investing most aggressively into what should be every agency’s number one asset: its people.
Our people are not numbers on a rate card. We don’t even have rate cards. We price by deliverable, which we’ve found our partners prefer as it puts the focus squarely where it needs to be: on the work, not burn rates.
When you have the best people, and treat them better than anywhere else, you need less of them to get to amazing work. Fewer, better people. It creates a whole new efficiency model.
For our network, it’s created a self-fulfilling cycle in which clients come because of the work, and stay for the people. Because, ultimately, people buy people.
A heavy over-index on prioritizing talent often means longer tenures, too. And longer tenures often means longer client retention. Mischief is three-and-a-half years-old, has a staff retention rate of 98%, and a client retention rate of 100%. That correlation is not random.
Creativity cannot be commoditized because people cannot be commoditized. The mistake networks have made for too long is treating people like a commodity.
Faster, better, cheaper is not the answer.
Faster, better, people is the answer. And they’re out there if you’re willing to invest in them.
Serge Rancourt is co-founder of The Grid, a network of independent shops including No Fixed Address, Courage and Mischief. A version of this column originally appeared at Campaign US.
