Tuesday, October 06, 2009

Child, please! Agency compensation and the suspension of disbelief

Any explanation is better than none. - Nietzsche

The 4A's (Amer Assoc of Ad Agencies) have a salary survey out ($350 for members) that, according to Advertising Age, shows top creative 'talent' billing out at $978 per hour [here] with lesser talent averaging $400 and up. I put the word 'talent' in parentheses because it takes quite a bit of talent to convince someone to pay you $978 per hour...for anything.

If you were working 2000 hours per year, that would value your labor at $1.95 million. Of course, it would also mean that 4A's members only have to work for 21 minutes at that rate to pay for a copy of the 4A's confirming survey.

But what is it that makes America's top creative talent worth that much? In the spirit of Nietsche, here's an explanation:

These talented men and women are creating campaigns that, as a directly measurable result of their efforts, sell at least $1.95 million worth of something.

How else to explain these rates? Some people might use terms like 'great' or 'impactful' to describe the work product that warrants this type of agency compensation. Others might throw in 'award-winning' to modify the noun 'work'. But those are not business terms.

One other explanation does come to mind, but that would require something less noble. Maybe these rates aren't justifiable? Maybe they don't actually exist at all except in a world where reality is suspended in favor of imagination? Maybe they are reported, like capitalized billings once were, as a way of creating the impression of importance...of shoring up an industry pricing structure under duress.

Whatever the explanation for the incredi-rates being reported in the 4A's study, the buyers of creative talent can always ask for a measurable explanation of the return on the investment.

There are quite a few highly competent creative talents and agencies who are compensated at a fraction of the 4A's-reported levels...here's a few ways to recognize them:

  1. they embrace discussions about campaign measurement + can show you how they've worked with their clients to create measurement at every level of campaign (not just using awareness studies!).
  2. they are able to work with value-based or milestone-driven, fixed fee billing approaches that minimize the financial risk inherent to the client in spending on any campaign.
  3. they can define 'the work' with specificity around deliverables, costs + support for business objectives.
  4. they use the word 'strategy' in the proper context of accomplishing objectives rather than as a separate creative exercise and thus expect client involvement in the creative process.
HT to Chad Ochocinco for inspiring the headline...and for delivering measurable results in the Dog Pound!

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