Their report appears to have been met with open arms by agencies and clients alike (page 17). Such a welcome is a reflection of how badly some guidelines are needed.
It is the first step towards fairer, more consistent remuneration for agencies. If clients begin to understand how to evaluate the effectiveness of an agency's work, they can then begin to understand how to pay for that work.
One of the report's aims is to encourage clients to equate improvements on their respective bottom lines with the effect of their communications strategies (only 20 per cent of client companies measure the contribution communications makes to overall profitability). If marketers learn to talk about the effect of their advertising in these terms, chief executives will listen. This is the best-case outcome of these new recommendations: advertising being taken more seriously in the boardroom, so when times are hard at the client company, the chief executive's first reaction might not be to slash marketing spend.
The IPA's heavy involvement in compiling the report is a sign that advertising and media are taking the argument to their clients, not just bleating about unfair payment. Constant proof of the value of communications is required, and this report will encourage agencies to supply that regularly.
Nevertheless, this is only a step in the right direction. Agencies complain bitterly about ever-shrinking margins, but much of the blame lies at their own door. Until agencies stop undercutting each other on price in pitches, recommendations such as these will have only a limited effect.
The report shows a laudable spirit of collaboration between agencies and clients. Until agencies assume a similar sense of collaboration with their peers, they will find that their remuneration will remain on a downward curve.
This article was first published on Campaign