Win-Win Performance in Client Win-Win Performance in Client/Agency Relationships

Ian Priest, IPA President & Founding Partner VCCP

The marketing and communications industry

Better commercial creativity

To reshape the business model to reflect an evolving and dynamic

industry

By adapting faster and better in 5 key areas

My ADAPT agenda

Who are we talking to?

What do we want to achieve?

How do we do that?

Why?

A Alliances less pitches /more

partnerships

D Diversification less one-dimensional/more multi-

dimensional

A Agility less set piece/more real

time

P Performance less time-based/more value-based

T Talent less traditional/more

diverse

The 5 key areas

 3rd October 2013 Alliances Adaptathon+experiments

3/4/5th February 2014 Diversification

Adaptathon+experiments

7th/ 8th May 2014 Agility Adaptathon+experiments

8th July 2014 Performance Adaptathon+experiments

7th October 2014 Talent Adaptathon+experiments

Adaptathon Schedule

Less time-based, more value-based

Add marketing article

Marketing Feature July 2014

Setting the wider context

From survive to thrive

Source: Bellwether

From tangible to intangible value

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

36%44%

38% 37% 35% 35% 37%

60%

48%42%

51% 50% 47%

4%

5%

4% 4%4% 4%

5%

8%

7%

5%

9% 8%7%

7%

9%

8% 8%8% 8%

8%

11%

8%

9%

11%10%

8%

53%

42%50% 51% 54% 53% 51%

20%

37%43%

29% 32%38%

Undisclosed Value Disclosed Goodwilll Disclosed Intangible Assets (ex g/w)

Tangible Net Assets

Global Enterprise Value 2001 – 2013 (%)

Intangible assets

Tangible assets

Source: 2014 BrandFinance® Global Intangible Finance Tracker (GIFT™)

From cost reduction to topline growth

From expenditure to investment

A new evidence base

Toward Win-Win Performance - Key findings from IPA/ISBA workshop

“We need to focus less on cost, and more on value to the business”“It ends up being a trust issue between the client and the agency”“Scope of work needs to be clearer so we can cost accurately”

All parties committed to a re-evaluation of time-based remuneration

IPA/ISBA Workshop – May 2014

Keen to explore the Coca-Cola approachSource: Unleashing the Creative in Everyone, November 3013: Jonathan Mildenhall in conversation with Ian Priestwww.youtube.com/watch?v=G1P3r2EsAos

Interested to make PBR work better

IPA/ISBA Workshop – May 2014

An appetite for new investment models

OpEx CapEx

VS

Business performance principles: Marketing should be seen less as a short term and discretionary spend and more as an

investment to help grow the business now and in the future A minimum 3 year brand perspective is essential in all cases , even for quarterly brand

activation programmes The industry evidence base should be more widely shared and used to set budget and planning

parameters (e.g. shared business and marketing objectives, shared econometrics, shared training etc)

Business outcomes, not just inputs and outputs, should be the frame of reference for Scope of Work

PBR should be used as an incentive for excellence in performance over and above base margin The marketing budget should aim to have a percentage set aside for innovation,

experimentation and measurement Opportunity exists for co-invention and collaboration on tech IP projects Reviewing win-win performance should be ongoing, on a quarterly/six monthly basis , plus a

view to the longer term, not just annually

Joint Industry Performance Charter (Draft)

Relationship performance principles• Investing in the client/agency relationship will deliver a business return • The basis of trust is a collaborative, clear working relationship, with shared objectives,

incentives and clear KPIs • The long-term value of relationships should be better evaluated and rewarded within a

relationship and across the industry by creating a relationship contract• Our approach to relationship management and remuneration has to hold weight with key

stakeholders from both clients and agencies ie CFO, CPO, CMO and CEO• It is the responsibility of client and agency thought leaders to set the standard for win-win

performance for the market • The way it’s always been done, is not the way it has to be! Sharing of new and interesting ways

needs to become more regular

Joint Industry Performance Charter (Draft)

Today’s Performance Adaptathon- Setting expectations

Who we represent

IPAFinance

Client Service

ISBAProcurement

Marketing

Intermediaries

Our narrative flow

Provocation Inspiration Investigation Experimentation

Inputs Outputs Outcomes

Our mental framework for the day

Fee Joint venturePBR

Your participation in three AdaptLabs

AdaptLabs

• Time-based Remuneration

led by Martin Telling, Omnicom Media Group, IPA FPG

• Value-based Remuneration

led by Deborah Cornwall, EE and ISBA Compag

• Risk-based Remuneration

led by Ian Priest, VCCP, IPA President

Actions not words