Reinventing the Agency Business Model for Digital BACA Advertising - - PowerPoint PPT Presentation

Reinventing the Agency Business Model for Digital

BACA Advertising Forum Sofia, May 26, 2015

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Money follows eyeballs

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4,000,000

Bulgarians online today

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Internet penetration of households in Bulgaria

Eyeballs are shifting online… fast!

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2,500,000

New Internet users coming in the next 3-5 years

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The next 2.5M won’t be anything like the first 4M

4M 2.5M

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For them, all media will be digital

4M 2.5M

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But something’s not right...

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Money follows eyeballs

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Yet, in Bulgaria there’s a misalignment

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What will this chart look like in 2020?

2020

?

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Are media agencies prepared?

2020

?

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Digital is NOT a slice out of the media pie

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It’s a whole new pie

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Incremental change won’t cut it

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Neither will this approach

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The agency model must be Reinvented

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7 Factors to Reinventing the Media Agency for a Digital World

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• 1. Redefine the Agency Value Proposition.

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New model: ROI from global platforms Old model: Access to local audiences

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• 2. Client relationships must change.

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New model: Mutual interests and co- dependencies Old model: Negotiating in a zero sum game

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• 3. Different People. New skill sets.

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New model: Analytical growth hackers Old model: Sales, Accounts, Creatives

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• 4. Success Metrics & KPIs.

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New model: Targeted engagement + Audience Insights! Old model: Reach, GRPs, Impressions

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• 5. P&L margin management.

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New model: Time management of experts Old model: Commissions & discounts

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Fee structure Pros Cons

Fixed project fee

• Simple and clean
• Predictability / Stability
• Time overruns are costly
• No incentive for results

Hourly rates

• Focus is on experts
• Revenues scale with workloads
• Incentive to work slow
• No drive for efficiencies

Percent of media spend

• Translates easily from current

model

• Scales with client budgets
• Time overruns
• Incentive misalignment: asking for

more budget is suspicious

Fixed plus performance

• Guaranteed income with upside

for performance

• Hard to measure, can lead to client

conflict

Pure performance

• Perfect alignment of incentives
• Biggest profit potential
• Complete transparency
• Accurate measurement that both

sides trust

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• 6. Speed and Agility.

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New model: Always-on, Mid flight iteration Old model: Campaigns, spending spikes

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• 7. Transparency.

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New model: “I believe in their approach.” Old model: “I can live with their price.”

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