Campaign v retainer: Choose your weapon (1)

In the first of two articles, Andrew Hall examines the pros and cons  of campaigns versus retainers. Hall is the newly appointed joint Managing Director of Hero, an agency which has grown significantly without ever engaging a single retainer-based client. But  is this the right model in the challenging advertising environment of today?

 

For 18 years, we have lived from one campaign to the next without a contractual guarantee of any income, effectively relying on the quality of our last campaign to attract the next.  With this model, Hero has grown from 7 to 58 people, currently turning over close to R40 million in gross billings, excluding media billing. Given this success, should this approach be considered a blueprint for success in the advertising industry?

My answer to that is, ‘not really’. It is an extremely stressful way to run a business. Alongside the obvious business insecurities, working on a campaign basis, chasing hours, the work you deliver is reactive, and there’s no scope for the kind of proactive work that agencies with retainers can afford to do.

While the downsides of a campaign-based structure are very clear, the positives are not – but they can nevertheless be extremely powerful business success drivers. Why? Because a risk-based relationship drives you to do things which can have hugely positive effects.

First, you must commit absolutely to providing brilliant service, because that is what ultimately makes or breaks the relationship. Second, you have to understand your clients’ business and context at least as well as he/she does – and certainly way better than the competition.

Third, running on a campaign-to-campaign basis requires strong fundamentals in place. We run lean and continually self-evaluate and improve our systems and processes. We need to know exactly how many hours are spent and billed, what our pipeline is for the next four to five months, and what should be done to ensure it stays at capacity. We understand perfectly the overhead-to-revenue ratio. These are all critical success factors for any business.

Coming in part 2: A hybrid may be the answer

 

 

Twitter Digg Delicious Stumbleupon Technorati Facebook Email

Comments are closed.

block last