Many of us in agencies, record labels, music publishers and music consultancies are looking to answer this question.
There are many issues to consider, most of which concern how one interest group is changing its relationship with another:
* Brand & agency relationships
* Music talent & music industry relationships
* Music consumer & music industry relationships
For this piece, let’s look at the changing nature of brand & agency relationships. We need to look back first before looking forward.
Agencies (of all kinds) have historically been the gatekeepers of client relationships. Agencies recruited and managed supply chains, and suppliers were kept away from clients. Agencies were always positioned as the experts to make the best decisions on:
* Creative collaborators (or creative assets) for a particular project. In ATL, key collaborators include the director/production company, the on-screen talent, the post-house and the music production company/composer. Creative assets include stock footage and existing music tracks.
* The commercial terms on which these creative collaborators were engaged or creative assets were purchased.
Many agencies liked to maintain linear top-down operational relationships with suppliers in order to :
* Control the creative agenda
* Control the financial agenda (allowing mark-up on supplier invoices)
Where the agency’s creative agenda (i.e. getting the client to sign-off the work) was served by delaying creative decisions, this would often impact the financial agenda by raising supplier costs. Nowhere more is this true than for licensed music where 11th hour clearances inevitably come with premium level licensing fees. Given agencies aren’t spending their own money, this situation served both agencies and favoured suppliers well. This became even more true as client procurement departments shaved margins on agency fees, which agencies sought to replace with mark-ups on supplier costs.
During the early-mid noughties, the linear top-down model began to be challenged through the rise of client procurement departments and independent production/marketing procurement consultancies. These specialists started to demand better justification for agency creative decisions in relation to the corresponding costs. Invoices were demanded and examined, and in some case poor (or borderline negligent) practices were uncovered. The harsh economic realities of 2008 & 2009 have exacerbated clients’ need to secure best value in all purchases. Cost inefficiencies (i.e. overpaying) that might have been tolerated in the good times pre Summer 2007, are certainly intolerable during 2009 into 2010.
So what next? What will the future look like?
The obvious answer is decoupling – the removal of campaign execution from agencies. Of course agencies are fighting back hard against this trend. They need to protect mark-up on supplier costs which frequently covers the overhead of in-house production staff (where the agency fee no longer does). The truth is that decoupling won’t work in every case, though increasingly clients are considering it.
One interesting recent development here:
Campaign’s graduate-focussed issue of 25th September ’09 included an article by recent agency recruits entitled “If I Launched An Agency”. Common predictions about future agencies throughout the various pieces were:
* Minimal numbers of employed staffers
* High reliance on outsourced expertise
* No fixed physical presence
* Constantly adapting agency identity including name
This points perhaps to a future where lean agencies hold the high ground on brand strategy & creative, but outsource execution to avoid the overhead of hiring & housing production departments. Remote contractors across all production disciplines (including music) will work directly for clients within an outsourced web, coordinated by production and marketing procurement consultants. This situation already exists for some clients who no longer want to support the overhead of large roster agencies – sadly this has led to redundancies in many places. The opportunities are now there for specialist contractors who can add more value, at greater speed for lower costs.
So what are the key tips here for clients?
1. Insist on competitive tendering for production suppliers and don’t rely on one recommendation as the sole solution.
2. Insist on greater visibility in the supplier chain. Know the end-recipients of your production budget and ensure you’re receiving the full value of their product/service and not losing it through mark-ups.
3. Take advantage of best-practice process from those with niche expertise in specific fields – this will include music, on-screen talent and photography. Demand that those who buy products/services on your behalf are fully aligned with the brand’s agenda. A loyal partner should be able to look the client in the eye and truthfully answer the question: “What’s a fair price to pay for ….?”
4. Audit productions after the event. Was the optimum cost-efficiency achieved? If not, why not? Learn from mistakes and instil process to avoid repetition.
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