Goodbye, billable hours
Welcome back to Ad Age Briefly! A lot happened while this newsletter was on vacation last week, so let’s jump right into it.
This week’s edition includes a shift in agency compensation, a guide to election marketing, a tribute to the late Jim Riswold, and much more. —Ad Age Web Editor Mark Fischer
Agencies change the way they get paid
The lowdown: Independent agencies are leading the shift away from the traditional yet controversial hourly billing model, Ad Age’s Lindsay Rittenhouse reports. Fixed fees, deliverables-based compensation and equity stakes are just some of the alternate ways these agencies are now being compensated for their work.
Example: X&O, which was founded by former Anomaly executives Eric Segal and Brett Banker , gives clients the option to purchase one of three packages. The medium package, priced between $150,000 and $225,000, promises a “big platform with multiple ideas within it” from its network of anonymous freelance ad executives, Banker said. X&O’s clients include Minute Maid and Shutterstock.
Why now: New indies are popping up in waves (X&O was founded in 2022), and they aren’t afraid to mess with the status quo. Some believe these alternative payment methods offer transparency for both sides and protect agencies from the potential reduction in headcount and billable hours as AI takes over more tasks.
💴 Lindsay spoke with 17 agency executives, marketers and consultants to learn more about how agencies and a major marketer are ditching billable hours. Read the full story here.
📖 Related readings: If you're interested in exactly how X&O works, our Brian Bonilla recently profiled the agency. In non-payment agency news: Brian and fellow agency reporter Ewan Larkin get to the bottom of why more shops are launching design units. Plus, Ewan looks at 8 fun pitch tactics agencies deployed to separate them from the competition.
🚗 Calling all auto professionals: Ad Age and Automotive News are teaming up to uncover the automotive industry’s most innovative, strategic, creative and effective marketing campaigns and work. Enter the Global Automotive Marketing Awards today.
Brands are wary of election marketing
Expect fewer brand-backed get out the vote efforts as “marketers navigate a hyper-politicized backdrop where even nonpartisan efforts can receive backlash,” writes Ad Age’s Adrianne Pasquarelli , who offers a guide on how brands can avoid sparking partisan backlash.
One brand that hasn’t shied away from politics is Ben & Jerry’s, which recently introduced a “Churn Out the Vote” flavor (made up of vanilla ice cream, pretzel swirls, fudge chips and swirls of chocolate mousse). Our Erika Wheless recently spoke with Ben & Jerry’s Global Head of Integrated Marketing Jay Curley about the brand’s activism approach on the latest edition of the Marketer’s Brief podcast.
Remembering Jim Riswold
Jeff Goodby penned a touching tribute to the late Jim Riswold, who “might have been the best writer ever to work at Wieden+Kennedy,” writes the GS&P co-founder. Riswold, the longtime copywriter-turned-artist, died last week at the age of 66 following a battle with cancer.
Writes Ad Age Creativity Tim Nudd : “Dan Wieden may have written Nike’s legendary tagline ‘Just do it,’ but it was Riswold who Wieden said ‘wrote like a god’ on Nike for two decades.” Riswold was behind the Michael Jordan-Mars Blackmon ads, “Bo Knows” with Bo Jackson and Tiger Woods’ “Hello World,” among many others. His family asked that any gifts be made to the Knight Cancer Institute and the Interstitial Lung Disease Program at Oregon Health & Science University.
Creativity Corner
Apple accessibility: With the Paris Olympics still fresh in everyone’s minds and the Paralympics just around the corner, Apple this week debuted “The Relay,” a four-minute spot that highlights the tech giant’s accessibility features. The short film culminates with eight athletes—four with disabilities, and four without—competing in a four-stage relay race. “The result is a race that can be truly equal.” our Tim Nudd writes.
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👋 Hi there, thanks for reading: This newsletter was curated by Ad Age Web Editor Mark Fischer . Have any feedback or tips? Reach out to him at mark.fischer@adage.com.
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2mo👀
Wrench Turner Apprentice | Freelance Copywriter
2moGreat to hear indie shops are disrupting the billable hours model. Anomaly, the NYC ad agency, has been project based, even performance based in the past. Not sure if they still do that.
Visual Storyteller, Creative Director, Brand Designer
2moOur agency uses Mixed Rate. It's more work on us and not as profitable initially, but clients LOVE it and typically reward us with many years of repeat business. They love the fact we offer more than package-based options because each brand and their needs are so unique. The economy and business are changing so fast that package deals would need to be revised every quarter anyway. We inherit lots of clients from other agencies who do high-profit package deals that they can't sustain. Those businesses and non-profits are very vocal about those agencies. While "packages" profit is initially good there can be serious brand damage if the agency is volume based. We do project based pricing on things like surveys and brand guides. For items that will evolve (so the client can stay nimble and competitive) we price those hourly. We also do that if a client will have their in-house creative or marketing team continue the work we empowered them to do. We also assure the client we will report to them if we anticipate estimated hours being exceeded. In the end, our clients get upfront numbers even on hourly work. Less profit initially, but long term clients who refer us a lot of great business. They become a major sales channel for us.
Owner & Professional Photographer @ Home Frame Pro | Real Estate, Commercial, and Product Photography
2moI think this is great. Way back when I was in the Ad space my worst nightmare was tracking time. Plus, we all know that it didn't take Jane 5 minutes to compose that email...and that, sometimes, it could take up to an hour to do the same thing...