How rethinking ‘value’ can improve effectiveness
There’s growing momentum around a refocus on outcomes over agency inputs, but by defining ‘value’ too narrowly, marketers risk missing the opportunity.
On my first day of secondary school, Mr Myers, our fearsome deputy head, asked the class, “What is art?” Being a bit of a prick, I asked: “Isn’t anything done well an art?” He glared at me with sunken eyes – remember Cyril Sneer? – and asked for an example. Being a lot of a prick, I said “ski jumping”.
Unsurprisingly, that didn’t end well. But prickishness aside, it does show that you can’t define art without subjectivity. Your agency relationships are the same – and the endless quest to benchmark value is just as fruitless.
Calling time on buying time
Marketing is riddled with subjectivity. From insights and creativity to concepts and logos, value is in the eye of the beholder. Like a house or a classic car, an idea – on a fag packet or buried in a 60-slide deck – is only worth what you’re willing to pay. And the time spent creating it has no bearing on value.
Despite that, we’ve been mired in time-based contracts since God was a toddler. So caps doffed to the WFA and IPA for pushing to change the conversation on agency pricing. There’s never been more impetus to refocus from inputs to this crazy little thing called ‘value’.
So what’s holding us back?
The performance misconception
Hurdle number one is the maddeningly widely held view that ‘value’ means connecting price to performance. From CMOs and agency CEOs to new-business directors and intermediaries, if I had a quid for every time I heard this, I’d have an even more debilitating trainer habit.
As an alternative to cost-plus pricing, value-based pricing simply means agreeing a number based on perceived value. Whether that price varies based on hitting certain metrics is a separate – often complementary – question.
This isn’t some arcane nuance. When healthy conversations about value immediately segue into payment-by-results, they tend to end quickly. You’re rarely wild about budget uncertainty and agencies are wary of hazy attribution. Before you know it, a progressive road closes and you’re back to buying time.
Another harmful convention is that ‘value’ means ‘outcome’, which in turn describes an objective, like an uplift in cost-per-acquisition, sales or NPS. These are fine as goals, but when did we decide that ‘value’ can only be an end result?
That’s as narrow as a sprinter defining performance solely by race times, rather than focusing on her start, acceleration and dip for the line.
Agencies offer all sorts of value. Access to certain talent? One concept or three? Unlimited amends? Insights only or recommendations too? Working prototypes? Experience? Credibility? Speed? Money-back guarantee? It all depends on what you need.
Quality of output is also an outcome, like a positive campaign pre-test, getting sign-off from your board or winning a career-building award.
And so it goes on – value is personal to all of us. Tate Modern or Tate Britain? Much Ado or Macbeth? Ant or Dec? None of the above? Not a problem.
The value of value
Within the broad church of value, faith is a personal choice. Price and expectation offer no guarantee, so ultimately we invest based on hope. A ticket to see a living legend will cost the Earth and you might be disappointed (I’m looking at you, Bob Dylan). Other times, you pay less and the music blows you away (Steve Mason, I love you).
That’s just how buying stuff works. It’s not about why things cost what they cost, it’s whether you feel you got value for money. The operative – and subjective – word is ‘feel’. And so it is with agency value. You need their talent and motivation – neither of which can be standardised in a ratecard or by benchmarking deliverables.
You just can’t make subjectivity accountable. That’s why the pursuit of time as a proxy for value is futile. Not only is the reassurance an illusion, but the commoditisation it fuels is a far greater problem for marketers. Poring over agency overheads isn’t ‘transparency’, it’s a threadbare comfort blanket – made of asbestos.
Embracing subjective value
From holidays and hairdos to gigs and galleries, there’s no antidote to subjectivity. Who cares what a snazzy restaurant pays for ingredients, just enjoy the meal. Sure, decide what you fancy and read the reviews, but informed judgement can’t replace risk. If the food’s good, keep visiting. And if not, then try somewhere new.
The same applies to your agencies. Accepting risk isn’t recklessness, it’s reality. Of course you should shop around to find the right expertise at a price you can afford. But what if you just pay them what you agree they’re worth, then fire them if it doesn’t work out? That’s effectively what happens anyway, so just bin all the faff that makes failure more likely.
By co-creating a partnership based on subjective value – from outcomes to intangibles – you’ll reach a more tailored scope, set clearer expectations and get the agency’s top talent chomping at the bit to move mountains for you. You can also agree a pricing model that suits both parties’ attitude to risk.
As well as breaking the lazy hegemony of time-based pricing, this alignment of incentives and commercials also recognises that a business outcome is far from the only value to be had.
Once you stop stressing the cost of the canvas, you’re free to embrace the quality of the art – in all its subjective glory.