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Publication Date: December 16, 2019

Martin Pedersen
CEO, Stellar

During the last decade with people looking to get both print and digital creative, design and development done more cheaply, companies have asked agencies to change their pricing structure, including getting rid of the retainer, discounting services, and providing creative ideas for free. In addition, a slew of services have emerged from the web, putting the agency model at risk of becoming commoditized. You have Fiverr, which offers freelancers on the cheap for everything from logo design, ads and infographics to voice-overs, illustrations and content, among other services. You have do-it-yourself website platforms like Wix and Weebly that provide you with templates (resulting in the tendency for many websites today to have a similar look and feel). You have projects brought in-house to trim outside expenses, which is fine –presuming the employees have the expertise and experience to produce work that garners similar results.

This new paradigm of not understanding the value of the work along with marketing budget cuts has shifted the agency model to compete on price and introduce discounting and other “of-the-moment” offers to get business in the door. In lieu of being rewarded and compensated accordingly for true innovation and creativity, agencies are more frequently being told that the bottom line—while always important, of course—is now the absolute key. In the process, everyone suffers.

In a landscape of homogenized, generic marketing delivery to the masses, clients are not getting the best of the best in creativity. How can they when time is money and care is not taken to really deliver specifically what each client needs? This takes a process that involves getting to really know the client, the company’s challenges, goals, personality, culture and the brand messaging it wants to convey –consistently and over time. You need to have a deep understanding of the business, client operations, competitive environment and anything that will answer the why. This isn’t accomplished by one brief call or an email. It certainly isn’t accomplished with a logo design for $40.00 from Fiverr.

It’s, of course, bad for agencies, too. Often, we’re not doing the work we want to do, utilizing our talent and experience to develop winning and creative campaigns, because budget constraints simply don’t allow enough room for creativity to flourish.

The only way to stop the race to the bottom is for us to stop running. Agencies should become more transparent about pricing practices. This means being honest about the fees we need to charge for the time and resources we are putting into doing great and custom work. I have not met a business owner who reacts badly during a negotiation when I explain what can and can’t be done with fees. With honesty, you gain respect. But everybody needs to take the same approach or we all suffer.If more agencies adopt this approach, we can get back to being an exciting and groundbreaking industry of which we can all be proud. We can have the time necessary to create incredibly effective campaigns that, decades later, continue to resonate with clients (e.g., “Like a Good Neighbor, State Farm Is There” wasn’t dreamed up in two hours back in 1971), that become part of pop culture, that are dissected, referenced and taught in university marketing classes. Remember, clients come to us for our deep and distinct creative thinking as well as the ideas we bring to the table.

In addition to being more transparent about pricing, we also have to rethink our structure and make sure we have the right team in place. Today’s winning agencies need to have web developers and creative working side by side to meet the demand for greater digital experiences expected by a younger generation. Only by using new technologies like predictive personalization, voice or AI, for example, can marketers reach younger consumers, many of whom have never known a world without theInternet. In order to integrate new technologies into their creative ideas, marketing teams need tech-savvy agency counterparts to help them.This will differentiate us and help support what we offer.

Being nimble is also important in today’s environment to win new business, along with the ability to scale when needed. It’s the agencies that can react quickly and keep their brands on the forefront of culture that will thrive.

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