Regarding compensation, and the larger question of how best to conduct agency reviews, today's U.S. government advertisers are not neophytes. They've picked agencies for substantial assignments for 25 years, ever since the birth of the all-volunteer armed forces rocketed the government into the ranks our 100 Leading National Advertisers list.
For most of that time, agencies found themselves in the unfamiliar and complicated territory of complex government contracting regulations. Today, the Air Force and Army are in the midst of new style agency reviews with prominent roles being played by consultants that advise private sector marketers on selecting their agencies.
The business and government worlds, while similar in some ways, are not the same, however. Finding a formula for tying compensation to performance when the business is military recruitment will test how far private sector ideas can go in the government world. Cut loose from the familiar if complicated world of past contracts, some agencies may be queasy, and rightly so. If pay-for-performance is not handled smartly here, the worry is more agencies will ignore government work.
Minority-owned agencies, on the other hand, are eager for a crack at more government work. Yet the recent report by the U.S. General Accounting Office suggests Washington has a long way to go to meet its own professed goals of directing more ad work to "small disadvantaged businesses," a bureaucratic category that includes small minority ad agencies. Even when working as subcontractors to larger agencies, smaller shops only got a relative trickle of business. When the GAO examined 12 reports by agencies acting as prime contractors, it found only 8% of contract dollars were spent through small disadvantaged businesses. No wonder minority agency managers sound frustrated and angry.