Carolyn Hansen

on March 26, 2010

category: integrated marketing
Vice President/Marketing

Measurement isn't everything

If someone in this blog says “measurement isn’t everything,” you may be expecting the next phrase to be “it’s the only thing.” Or maybe that’s just me. I grew up in Wisconsin, where Vince Lombardi’s famous quotes were tattooed inside our eyelids.

I mean it. Measuring your campaigns isn’t everything. But it’s the way you’ll know whether everything else is done right. If you run track or swim, a stopwatch won’t make you better at what you do. It just tells you whether you’re doing better or worse than in the past. The data you get from your stopwatch can tell you whether your coach is giving you helpful advice – if , of course, you’re following the advice.

Lots of people in marketing and advertising dislike being measured.

• They say it impinges on their creativity.
• They say measurement is single-dimensional and branding is so much more than just selling things.
• They say measurement stifles risk-taking.

There is some truth in each of those statements.

When you have a particular goal in mind, to be successful, you need to become fairly single-minded about reaching that goal. For example, if you want to lose weight, you can’t be as “creative” in your eating habits as you might want to be. If you want a promotion, your goal stifles your ability to be as lackadaisical at work as you might want to be. So, yes, goals and measurement may have an impact on your freedom.

Yes, branding is about more than just selling. But selling the product is the single biggest brand impact possible. No matter how many lovely commercials you may see about a Lexus, owning a Lexus will have the highest impact on your brand perception.

And measurement may indeed stifle risk-taking. Marketers who measure results are more likely to slip into the tried-and-true than those who value creativity above all else. On the other hand, success brings more possibility for experimentation than failure. Too many failures and you’re out of time and budget. If you know what works and do it, you live to try again another day.

So, measurement isn’t everything in marketing. But it sure influences a lot of things.


 

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Spyro Kourtis

on March 23, 2010

category: miscellaneous
President and CEO

Win-win agency compensation

A new Ad Age opinion piece, “Why Ad Agencies Need to Embrace Value-Based Compensation,” suggests that agencies should be “compensated above their basic costs if they achieve or exceed results as measured by agreed-upon metrics.”

This is an interesting approach – and my own agency is open to it. Yet it’s almost as full of pitfalls as the current compensation approach.

Most agencies and clients aren’t very adept at measurement. My agency specializes in testing and measuring marketing results – and, believe me, it ain’t easy. When compensation is at stake, people will find ways to game the system. We trust our clients and I’m sure they trust us, but when it comes time for giving out credit for results, we don’t want to have a financial axe to grind.

On the other hand, conventional agency practices are painfully inefficient for the advertiser. The two groups start out with goals, get agreement on how many FTEs that will take, come to a blended rate and – voila! – they have a retainer agreement. If the agency takes more time to do something than was planned, they may bill the client more. They will rarely bill less if they are more efficient. If the client looks like it will not reach the goals, they usually must pay a several-month penalty on the retainer to release the agency.

Hacker Group has always used a different model. We call it our “fixed-bid approach.” When a client comes to us with their goals, we determine how much it will cost to reach those goals and set a budget. If it takes more time or expense to get things done than we budgeted, we don’t charge any more to the client. This includes all outside expenses. We are responsible for tightly managing all outside expenses, so our compensation is tied to how efficiently we buy things.

If the client’s goals aren’t met, they can release us without penalty. In other words, Hacker Group is willing to accept more risk in the deal than most agencies are.

And another difference: We depend on the results to drive our strategy, but we don’t usually depend on it for compensation.

That way, if the client doesn’t reach their goal, they may still continue to use us because we beat past performance. Perhaps the goal wasn’t reasonable. That’s okay. We learned something and we can move on with our relationship intact. However, if it makes sense, and we can agree on the metrics, it’s easy to incorporate an additional performance-based incentive bonus to our fixed-bid model.

We believe this is one of the fairest methods of compensation. The client isn’t stuck with all the risk. No one needs to argue about the details or what was within our control and what was not. Win-win.


 

Comments:


5/11/2010 at 9:42 p.m.
Impressive
I really admire your “fixed-bid approach.” As you mentioned, it's risky, but it shows prospective clients that you're truly confident in your abilities as an agency.
>>Kim, Bellevue WA
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