Crossmedia CEO says guaranteeing outcomes harvests only the low-hanging fruit
Publicis raised a few eyebrows when it hyped its recent launch of The Pact by Epsilon. The Pact is being sold as a “business outcomes solution powered by Epsilon’s identity management platform and machine learning.”
Pact guarantees that digital campaigns will deliver on key performance indicators (KPIs) that could include sales, new client acquisition and return on ad spend. If agreed-to metrics aren’t met, clients get 100 percent of their money back.
On its face, a great idea. Most procurement folks at brand marketers will certainly think so. But take the time to examine all this more in-depth; the red flags will fly.
In fact, color me skeptical about the whole thing. Here’s why:
There is nothing new here
Every few years an agency will come out with a grand pronouncement about outcome-based solutions tied to compensation. Like the Olympics, enough time passes where people forget about it and then when someone in our industry decides to bang that drum again, it sounds like a new beat.
Nowadays, every marketer already requires specific KPIs be met and ties remuneration at least partly to results along with pricing demands and other guarantees. They will terminate agency contracts if pre-set outcomes are not met. Any client who reacts as if The Pact is some paradigm-busting move might perhaps want to reevaluate just how hard it’s pushed its agency in the past.
The easy way out
Sure, customer-back guarantees are great in theory, but let’s live in the real world. Publicis, or any other shop, will be tempted to resort to the pursuit of easy results. By that, I mean the ones that while easy to execute, often lack creativity, rigor and inspiration. Essentially, this pact will all too often lead down a path of mediocrity, not greatness. Not all outcomes are created equal and brands should resist reaching for the low-hanging fruit, which may leave a bittersweet aftertaste. Guaranteed outcomes are too often tied to short-term results.
Instead of “guaranteeing” outcomes, agencies and their clients should focus on outcomes that aren’t bound like a cross to compensation packages. Agencies who guarantee outcomes will find it all too easy to slip into the habit of underselling what’s possible—that which may actually create the most impact—on behalf of brands so they can meet pre-determined guarantees. That becomes even more alluring when agencies are dealing with P&L pressures caused by a cataclysm like COVID-19. At the same time, chief marketing officers—also under intense P&L pressures and limited job security—will also forfeit greatness for survival.
The principle driving affiliate marketing is a good analogue of how paying for outcomes relies on iffy proof and mediocre results: sure, marketers only pay affiliate marketers for eyeballs that have made a purchase, but more often than not, you are just paying for the equivalent of a billboard in front of the checkout, a far cry from the true desired outcome, which is incremental traffic and purchases.
It’s still about the big idea
Demanding results is great PR, but tell me with a straight face that any agency worth its salt isn’t already on board. By tying remuneration to results in a contract, the client is holding the Sword of Damocles over agencies’ heads that saps all impulse to chase the big idea. Yes, you remember the mythical big idea—the one that Madison Avenue was built back in the days of Ogilvy, Bernbach and Clow. Creativity is an elusive power source that when harnessed can lead to breakthrough work and results. The threat of getting fired for missing short-sighted, misguided guarantees throws cold water on that energy. This dynamic diminishes the value of the very results upon which the client insists.
Finally, let’s remember that “favorable results” are ironically not that easy to achieve. If they were, clients wouldn’t covet the best of Madison Avenue to figure it out for them. In fact, clients need the brightest and most creative anchored by committed collaboration across disciplines and departments. Even then, some courage and even dumb luck is required. Increasingly, some brands have taken to expecting miracle results at bargain basement prices. But instead, they all too often wind up with cheap results at miracle prices.
Sure, be creative on how you pay your agency and how you share the risk of success. But think twice about why you cannot pay a doctor only if you stay healthy. Or why you never trust lawyers that ask for fees only if you win the case. If your results are ambitious and your hurdles are not trivial, then you need the same formula you’ve always needed: smart, honest, courageous, hard-working partners at your side who have your best interest utmost in mind.
No amount of technological bells and whistles that dress up today’s outcome-guaranteed pacts can distract the fundamental flaw in its basic premise. At the end of the day, not all agencies are created equal and neither are outcomes.