Lee Clow: Agencies Paid Like They're Doing Clients' Laundry

Creative Icon Says Business Woefully Underpaid for Value Provided to Brands

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In a nearly three-minute video rant recently posted on the 4A's website, creative icon Lee Clow shares his thoughts on agency compensation and the value agencies provide by building brands. His comments were part of a series of recordings made last month for the trade group's "Agency Thought Leader Compensation Summit."

Sitting in an office at his agency, TBWA/Chiat/Day, Los Angeles, with client Absolut's work in the background, Mr. Clow speaks bluntly about his view that agencies are not fairly compensated -- and notes that it's agencies' own fault for allowing it to happen.

"For 40 years, I've believed that our business and what we do is to create things," said Mr. Clow. "To have ideas, to tell brand stories in an artful way. But somehow every other media artist ... whether they be photographers or filmmakers, directors, people that create TV shows, people who create music, people who perform music ... all of those creative art forms have managed to figure out how to get paid for the value of what they create. Get paid, get residuals, allowed to own what creative idea they have delivered to the world. If it's a bad idea, it will pay very little. But if it's a great idea, it can pay for years and years and years."

"Unfortunately, in our business, we get paid like we're doing our clients' laundry. We haven't figured out that the ideas that we create can become a very powerful asset to the brands we work for. Many of the ideas -- whether they be slogans or advertising forms and styles or a voice that we create for brands -- could be listed on the balance sheet of our clients as an asset with millions and millions of dollars in value."

"Somehow we've managed to commoditize what we do so that whatever agency gets hired for the lowest price they can negotiate with the purchasing agent gets paid the same as the -- I'd like to say -- better agencies. There are more talented and less talented companies in our business, but somehow that has no role in the compensation formula."

"We're supposed to be a creative business, but I think we have been probably the least creative industry in the history of the world in terms of figuring out how to get paid."

Incidentally, the going rate for laundry service in New York City is 95 cents per pound for wash and fold, and a 8% gratuity is expected if you want it delivered.

Mr. Clow will speak at the 4A's conference in Los Angeles next week, though not about the topic of client compensation. Alongside Ogilvy's Steve Hayden, he'll discuss his time working on the Apple account and creating the legendary 1984 TV spot.

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