Agencies have talked for years about the notion of billing only for the business outcomes they help create, but the model has never widely caught on. Despite continued attempts from agencies to sell it to clients, the idea might be getting less appealing to brands.
Maybe it’s the explosion in direct-to-consumer brands or just the effect these newer companies are having on the industry, but most brand founders I speak to regularly tell me increasingly say they don’t trust agencies because they do not think the interests are aligned: The agency will often recommend investments that ultimately benefit the agency, not the brand. And the agency’s ultimate goal, then, is more billable hours, more investment (and more commission) — all of which directly affects a brand’s bottom line.
The issue was highlighted by Jason Stein, who founded and ran agency Laundry Service, earlier this week.
Confession: over the past six months it’s become clear to me that when you own a brand, your marketing investments are consistently the opposite of what most ad agency’s recommend. As an agency, you get rewarded for growing the agency, not the client. Impossible to be aligned.
— Jason Stein (@jasonwstein) March 12, 2019
Some places are going pure performance. Horizon Media just launched a new agency last week called Big, specifically designed for e-commerce and emerging brands, for example. The agency is performance and outcome-based, the idea being that agencies shouldn’t be allowed to push for certain metrics that just make them look good, and should focus instead on sales.
I’m interested in seeing if more agencies are creating new deal terms that focus on outcomes. One way to prove you have skin in the game is equity — especially with startup clients — teamed with decreased retainer fees. But agencies say that clients are not interested — they’d rather just bring it all on in-house, and are worried that if they give up equity, that might be bad for them in the long-run. — Shareen Pathak
Leave it to the company formerly known as Oath to bungle the seemingly straightforward process of getting publishers to agree to new terms.
Multiple publishers are reporting that they’ve received termination notices from Oath recently related to its SSP business. Reddit users have wondered whether the company, which has been renamed Verizon Media Group, had suddenly shut down the publisher monetization side of its ad tech business. It’s not.
Based on the text of the purported termination notice published to Reddit, as well as conversations with other publishers contacted by Digiday, Verizon Media does not appear to be terminating its SSP business. Instead, it appears to be trying to clean up that business following the division’s rebranding late last year. The company is terminating its existing agreements and asking publishers to agree to new terms in order to continue selling their inventory through Verizon Media’s SSP. A Verizon Media spokesperson did not respond to a request for comment.
But publishers that have received the notice remain in the dark about what exactly the new terms are, while other publishers that use Verizon Media’s SSP have yet to receive any notice from the company regarding new terms at all. Some are confused.
“I don’t know how to read the email; are they simply terminating the existing relationships under the Oath contract and asking publishers to sign up under new paperwork from Verizon Media? That’s what it reads to me,” said one publisher.
At the same time as it is trying to get some publishers to agree to new terms, Verizon Media appears to be culling the list of publishers using its SSP. An exec at a publisher that did not receive a termination notice said they have heard that Verizon Media is trying to rid its SSP of dead accounts and publishers that do not sell much inventory through it. An exec at a publisher that did receive the notice said they no longer work directly with Verizon Media’s SSP, but try to maintain an active account in case they want to.
Verizon Media’s communication breakdown could be explained by the high turnover among the division’s publisher representatives, further aggravated by its recent layoffs announced in January. One publisher that received the termination notice said they have gone through four different reps in a six-month span. Another publisher that continues to use Verizon Media’s SSP but did not receive the termination notice said they had not heard from the company in months; this publisher attributed that lack of communication to the layoffs.
“My rep didn’t even know the notice went out. It actually makes me a little hesitant to continue working with them, until I hear from others they got their act together,” one Reddit user posted. — Tim Peterson