Georgescu enthusiasts for this idea? Absolutely. But they're also realists-from first-hand experience-about the special challenges pay-for-results poses for both agency and client. Moreover, their two agencies today are hugely successful, although it's hard to isolate the role such compensation play in recent new-business wins.
As this idea has gained more currency in the business, and reports have trickled out about how some initial efforts have worked in the real world, it's plain there are pitfalls: poor selection of performance benchmarks, for example, or clients who cynically see these plans as just another way of cutting agency costs rather the rewarding top work, to name just a couple. Yet Messrs. Reinhard and Georgescu argue there is little choice but to press on for such arrangements as a key tool in proving to marketers that agencies are willing to be accountable.
What this means for agencies is a willingness to share in some of the risks of their client's business. Putting a chunk of profit at risk is an uncomfortable leap for some in the agency business, but "clients take those risks all the time," as Mr. Reinhard reminds us.
When advertiser and agency sensibly share risks and rewards, isn't that a big step toward rebuilding the "partnership"?
It's easy to look back on Ed Artzt's May 1994 speech to the American Association of Advertising Agencies and conclude that the then-chairman of Procter & Gamble Co. had bet on a horse-interactive TV-that has yet to cross the finish line. But that would be missing the point entirely.
As Microsoft's Bob Herbold noted in last week's issue of Advertising Age, the specific technologies highlighted in the speech-written by Mr. Herbold, who was
then at P&G-are less important than the alarm it sounded in the ad industry. In early '94, few were talking about the Internet and almost no one in marketing had heard of the World Wide Web. The new-media market of three-plus years ago was dominated by interactive TV trials, commercial online services, CD-ROMs and kiosks.
What was already becoming clear, however-and Messrs. Artzt and Herbold crystallized the point-was that new technologies were set to turn the traditional marketing communications model on its ear, putting consumers in control of the information flow. Mr. Artzt wasn't the first to warn the industry it was in danger of being left behind, but his voice was backed by the authority of one of the world's fattest ad budgets. "The absolute key," he said then, "is to create ad-driven programming that suits the many new forms of media that are evolving."
His message did not fall on deaf ears. Although mainstream marketers are still trying to figure out where exactly the Internet fits in their overall communications plans, advertisers have in many ways emerged as this medium's venture capitalists. Since few sites to date have pried money from consumers' wallets, ad dollars are the only revenue source for most.
Ironically, we may soon look back to find Mr. Artzt was actually far ahead of the curve, not hopelessly behind it. As Mr. Herbold pointed out, 10 years from