Gini Dietrich

Value-Based Agency Compensation Models

By: Gini Dietrich | April 27, 2009 | 

I’m going through this process right now, trying to decide if our financial model makes sense for the future. I feel like billable hours is so archaic, but I also think we need to track time in order to be profitable. We are paid for our time so some sort of tracking mechanism is a necessary evil.

I’ve always been of the belief that you would never go into a restaurant, eat a meal, and at the end say to the chef, “That meal was fantastic – thank you so much! I’ll tell you what; if I don’t get heartburn tonight, I’ll send you a check in the morning.” So why do people always want to do that with our invoices, AFTER they’ve negotiated a program, the fees, and paid a couple of previous invoices?  Rather than be stubborn about it, though, I’m on the look-out for new ideas.

Therefore, I was interested to read “Coke Pushes Pay-for-Performance Model” in AdAge and “Changes Afoot in Professional Billing Rates” in The Australian Business.

The genesis of both articles is that clients want to know how advertising, PR, social media, marketing…all communication methods translate back to results. It’s the day old question, but now instead of shrugging our shoulders and saying, “But your brand awareness is off the charts!” we’re being held accountable for true bottom-line results.

So, you say, who determines the value? What do we do about the time it takes to ramp-up with a new client? Does this offend the PRSA Code of Ethics? Do you think we’ll try this and go back to the way things are now? Or will we do it only if forced by our clients?

About Gini Dietrich

Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.


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