‘Whole industry has lost its way’, says PHD CEO Mark Coad
The CEO of Omnicom Media Group (OMG) media agency PHD, Mark Coad, believes the whole industry has lots its way, which is bleeding into the pitch process and leading to contract misunderstandings between clients and agencies.
Marketers, he said, can’t hold agencies to a fixed-price model and then expect to have money returned to them. “Very rarely these days do we go into a pitch without it being some kind of fixed-price model, and if you’re going to hold an agency to a fixed-price model then you kind of can’t also have your cake and eat it too,” he said.
Sunita Gloster, John Broome, Anneliese Douglass, Jeremy Nicholas, Mark Coad and Paul McIntyre at AANA Media Challenge event
“We’ll do a pitch and we’ll get a 12-tabbed spreadsheet on nearly every pitch we do. And we’re asked to put a number in the box, right? Let’s say that number is 100. If I end up buying at 110, I’m meant to round it down. But if I buy it at 90, the client wants the change. So am I a principal or am I an agent? And I think we need to look at our contracts and understand the legal and structural relationship we’ve got with one another and I think we’ve lost our way.”
Watching back highlights from the ANA’s (Association of National Advertisers) recent conference in the US, Coad said he was frustrated with the discussions around trust and transparency, and marketers taking back control from agencies – and argued the onus was on both marketers and agencies to actually understand the contracts they’re signing.
“Any client who doesn’t understand whether they’re on a disclosed model, or an undisclosed model, needs to look at their contract. And if they don’t have an inherent trust in the people they’re dealing with, they shouldn’t deal with them,” he said.
“I think we’ve all got a responsibility here from a contract point of view… And we’ve all got a responsibility. I genuinely believe that. I think marketers need to understand the nature of the contract that they’ve got with their agency, and agencies need to understand the nature of the contract they’ve got with their client. And I think the whole industry has lost their way.”
Absolutely agree with Mark here. The agency model needs to change for the sake of not just the agencies, but all the production and creative suppliers that rely on them. I’ve been proposing that the practices of the film industry are a good model – where there is a fixed bid with disclosed production fee. This is more transparent and no longer relies on time sheets as an income source. Time sheets shift from being a focus of how to increase them and add people and time to a job, and moves to a focus on efficiencies. Brands win out this way in the end, and this also solves our ageism issues in the industry at the same time. More on this if anyone is interested: https://www.linkedin.com/pulse/ad-agency-model-broken-heres-why-anne-miles/
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There is no excuse for stealing from clients.
Mark Coad: and supporters, please stop dressing up non transparent behaviour, or client theft, as the clients fault.
What to do:
1st. Admit and reflect, like the Australian cricket team
2nd. Offer discussion and a new approach
What not to do:
1st. Be sanctimonious
2nd. Blame your clients for your behaviour
Be honest. Be graceful.
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