Campaign v Retainer 2: Going for the win-win

Andrew Hall, the new Co-Managing Director of Hero, an agency which has lasted long and grown significantly on a campaign-based structure, outlined the pros and cons of this business model in his previous article (Guest Spot).  Here, he considers whether the current industry conditions are conducive to retainer-based business, and whether a hybrid could present a WIN-WIN scenario for advertising agencies and their clients.

“As economies are changing and the possibility of recession looms again, corporates are assessing how they are doing business and making decisions based on measurability,” Andrew points out. “For large agencies getting large retainers from large corporates, this means that there is currently an ever-sharpening client focus on: What are we getting out of the retainer we pay every month?  What can you show me to prove that we have got bang for our buck in the form of increased sales or driving new acquisitions? It stands to reason that if there’s a perception that the retainer-based model is not working optimally, then clients start to consider a shift to campaign-based fees.  It’s a serious challenge for well-established retainer-based agencies, as the very foundations of their businesses are built and shaped by retainers and cannot support the very different campaign-based structure.”

Hero has matured beyond the point where the traditional shift to a retainer-based structure would have been organic; because the state of the industry in this economic environment has changed what might have happened traditionally. “There is a sword hovering over the neck of the retainer-based structure,” Andrew continues, “My assessment is that the current opportunity for Hero lies in going from a campaign-based structure into an innovative hybrid structure.  We have to find where the balance lies so that we get what we need as a much larger agency and have sufficient security to express ourselves creatively; while our clients have confidence that they have an agency that’s still hungry, that’s still driven by knowing more and that delivers measurable returns.  That balance may well be found not in an ‘either-or’ solution that forces a win-lose battle between campaign-based or retainer-based structures, but in a hybrid business model that offers opportunities to capitalize on the different strengths inherent both in campaign-based and retainer-based structures.”

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