What will happen to the client-agency relationship in a post-retainer world?
The traditional agency model has been built around long-term client relationships, supported by the stability of agency income from retainers – so what happens to headcounts, agency models and conflicted clients when project work takes over? Dan Beaumont explores the new world order.
In a world where we are all increasingly reluctant to commit (no lock-in contracts), it shouldn’t come as a surprise that project work has become the new normal in client-agency relationships.
Brands are no longer locking in agencies for work
Our experience is that a growing portion of clients are shifting their agency remuneration model to project-by-project work and away from contracted retainers. Of course, this isn’t anything new. Agencies have worked project by project for decades, but now it’s becoming the norm rather than an anomaly. From conversations I’m having with other agency principals around the world, this is a universal trend and it’s impacting agency business significantly.
The traditional agency model has been built around long-term client relationships, supported by the stability of agency income from retainers – it’s this guaranteed income that allows agencies to maintain a steady headcount and grow as more clients join the portfolio.
Fantastic article.
Welcome to the real world….
Good article. I think we’ll see more ‘collectives’ – i.e. freelancer networks organised under an agency banner, and a healthier market for freelancing in general. There’s always going to be large retained work – just less of it and quite specific in nature, i.e. customer acquistion, engagement/CRM, CRO – anything that needs to be run efficiently and is CLV/ROI driven.
Can’t wait for media agencies to disappear. Hopefully some of the arrogant little staffers will be pulled into line when they are forced to go client side.
No more free publisher lunches!
Nice article…but not sure of the relevance of your comment on this one except to highlight that you have an unhealthy hatred of media agencies.
“unhealthy hatred” is a bit of an exaggeration.
God forbid a media buyer on $45k who works 10 hour days getting rammed by clients all day gets a free lunch. I’d love to know where you’re from, you clearly have some sort of uninformed gripe with agencies.
Well they should act like they are $45k juniors and in need of a free lunch… the level of entitlement among some these kids is downright disgusting!
Time to pull a few NGEN cards and get them out in to a real office – let’s see if they pick up the phone then!
You left the ‘n’ out of Sneer.
Good piece but I don’t know if the parallel between retainer/relationship/marriage and long term brand building is particularly relevant. Or project work and tactical outcomes.
The retainer does feel like a redundant concept now. Hope it’s not relied upon by many.
nice article Dan
a greater move towards a project model could actually drive ‘per hour’ costs up for clients too. fewer retainers = fewer full time employees = more contractors who’ll have to charge higher daily/weekly/monthly rates to offset the variance/lack of security in their employment prospects
I also believe it’ll diminish our industry’s ability to retain our best talent. The contract/project/freelance life is not a choice for most people working in our industry…both because of the lack of security and also because the best people favour the opportunity to build long term enduring case histories as a platform from which to build their careers. Forcing them to work on project could drive more of them to other industries with greater security and longer term opportunities
Drive them client side, particularly to start-ups and challenger brands that are eager to be creative, but don’t have the budgets for swollen agency fees from the big-four groups.
A strong in-house creative and strategic team (offering the perks and culture that are rapidly diminishing agency side), supported by a per-project team of talented freelancers seems like a pretty likely future for a lot of brands.
1. No young talented creative person is going to work in-house for a pharma brand. This is why you need agencies. Not every brand is Adidas.
2. To say agency fees are “swollen” just proves you have no insider experience. The big 4 are working on 2-5% fees for most of their big clients while also trying to pay their staff, rent, and overheads. Hell, some agencies work on clients for a loss. That’s the whole reason this article was written, because clients take advantage of retainers and squeeze agencies as hard as they can for 3 years and then pitch and go to someone else who is willing to do the same for less money. So they’re being forced to resort to project work where everything is tracked and accounted for so their can be no pisstaking.
3. As someone who has worked countless nights, weekends, and even over Christmas, comments like this just makes me sad, because there are clearly clients with this perception. Spend a day shadowing your media buyer or client director, maybe you’ll get an idea of how far they’re stretched when they leave work at 10pm because they’re working on that a client request that came through at 5pm and is needed first thing in the morning.
Agencies need to push back on insane client demands and turn around times, instead of passing it onto all the other 3rd parties involved. So much suffering because a client hasn’t been told they are not God’s gift.
agreed AD.
Why does project work equal instability?
You can have 2-3 year projects with committed resourcing attached. Just means that the contracts are far more specific in their KPIs than traditional retainers.
No bad thing in my view.
Isn’t a 2-3 year project with committed resourcing effectively a retainer though?
I think Dan’s talking about smaller projects that are 3-6 months long and don’t allow agencies to commit resources and hence rely on a freelance model. It’s only unstable insofar as it’s hard to forecast and therefore hard to plan and resource for.
Well said Dan
Collaborative partnerships with talented complementary companies and individuals will help us all create better opportunities for our businesses. As long as we can leave our egos at the door and we rid our agencies of the us vs them mentality.
Waaaaaaa
I this “new world” of project orientation we all need to recognise that pricing is our single biggest lever for ongoing success.
We can’t continue to price solely on headhours and rates when being asked to do project work, it’s simply not sustainable.
Procurement can’t have their cake and eat it too. Something has to give and it should be making sure we price on value delivered not cost.
“…the most pressing of which are shrinking marketing budgets and the pressure to deliver on short-term objectives. I won’t get started on my frustrations with ‘short-termism’ again here.”
Too true, Dan. These short-term ‘goals’ – which actually should be results, will impact companies over the long-run more than we all realise.
What a wonderful relief that someone has eloquently enunciated the ‘mature valuecost view’ that enhances effective performance for both parties. Having dealt with this [understandable] dilemma for many years I hope this most sensible evaluation is positively, seriously considered and implemented by all. We all gain and in particular by cooperatively building and maintaining brands’ integrity. Well done.
Are we still talking about this shit? FFS.
I have worked and managed in both ‘Tech & Design Project only Land’ and ‘Agency (Retainer) land’. Let me tell you the truth, the retainer model is better for EVERYONE, why?
Less management on ALL fronts. Project land does not protect spend, you simply bloat spend cause you know 10-20% blowout happens most time.
Run a business project only (with a team of ‘gig; types) and you will see the overhead on ensuring every dollar (from accounts to project teams, resourcing, reporting, etc) grows exponentially.
With the retainer, in most cases, the client wins because they get 10-20% more on their spend in service and design, as the agency can run faster and be far more nimble (You know what is coming in the door and give the favours when needed as well).
You can have transparency through the retainer, through daily collaboration (burn reports/usage etc) and in good times, take the hours across to the next month. Shit, run Confluence and give them automated updates.
This article smacks of fucking buzzword bullshit in regards to managing projects, people and budgets. When you have a small team and specialists joining that team, try managing the blowout from a guy doing animation whilst travelling Bali cause that is all you could get at the time.
I lost a major pitch to ‘Coopers’ because I based it for/on them saving by using this exact model.
What did they want? Redundancy in the roles…
They wanted to know if some of the team fell over, it could be absorbed easy… When you have the plug and play model it is MUCH harder to show this type of stability.
This article content has been argued for 10 years and nothing has fucking changed cause big business wants a big team… They have the budget, don’t fuck it up they want results.