FeaturedNews

Should we be afraid of life without retainers?

BY SAMIR SHANBHAG, PARTNER, RAIN

Samir Shanbhag, partner, rain

“We will work with your agency, but we won’t do a retainer arrangement. We’ll work on a project-to-project basis.”
I don’t know how often you have heard this, but this is getting increasingly commonplace. Clients are working with more than one creative agency and prefer not to have a retainer arrangement with any one of their partners. They choose which agency to brief for a project based on their judgement of who will deliver better quality and better value. And almost always they will have a fall-back option within their roster.
This means the creative agencies’ preferred remuneration model is under threat of becoming extinct, much like the agency commission model it replaced. Retainers give creative agencies the assurance that they will have an ongoing relationship with the client for a period of time. Some work is bound to happen, resources will continue to be deployed, money will keep coming in and the business will keep running. So a retainer arrangement is like a safety net for creative agencies. But is the end of the retainer era really bad for them?
While there could be some advantages to the retainer fee model, I believe one of its dangers is that it can lull creative agencies into a false sense of pseudosecurity, leading to complacency. It is possible that not every assignment will be given the best shot because you know that the client is bound to you. If the client doesn’t like the work, you will get another chance to get it right. And another, if the client is in a good mood.
In the absence of a retainer arrangement, there is no guarantee that briefs will continue to flow from the client towards the creative agency. The creative agency-and-client relationship lives on a project-to-project basis. This means if the client likes your work, you will get more briefs. And the more work you do for the client, the more you get paid. This also means the creative agency is only as good as its last work for the client. If the work didn’t perform as expected or if the process of creating the work was not a pleasant experience for the client, then chances are the briefs will stop flowing.
While this sounds like a dangerous existence for creative agencies, I believe a project-to project relationship also encourages creative agencies to be at their sharpest and effective best. Creative agencies will listen to the client more carefully and more empathetically. They will pay attention to the smallest details and nuances that the client is sharing. Listening will help in asking the right questions. And asking the right questions will help understand the challenge, the opportunity and the constraints from the outset. If there isn’t the assurance of a second chance, agencies will put in more effort to get the brief right in the first place.
Creative agencies will be more proactive. They will invest more time and effort to be fully immersed in the client’s business so that they can spot opportunities and create opportunities. Coming up with
proactive ideas that help advance the client’s business is the agency’s only chance of higher earnings, so being proactive will become second nature. Which client doesn’t love an agency that thinks proactively and impresses her with new ideas and possibilities?
Creative agencies will be lean and staffed with experienced talent. Without the comfort of a retainer,
the role of every person on the team will be closely scrutinised and only the people who punch above their weight will make it to the team. This helps cut layers of fat and the client will interact with
senior, experienced talent more often. And when it is senior-level talent interacting with the client, the creative agency can work collaboratively with the client rather than just do their bidding.
Wouldn’t a client be happier meeting agency folks who bring a studied point of view to the table?
Creative agencies will be price-competitive. Another advantage of having experienced talent working directly with clients is that agencies then have a better chance of getting it right the first time. This not only gives clients a time advantage but also allows fewer agency folks to take on more work. This will give creative agencies cost savings and make them more price competitive.
Agencies shouldn’t be afraid of life without retainers. We are better off coming to terms with the new reality of doing business. The one that makes us focus on getting the fundamentals right and prepare ourselves for a new era where we learn to survive and thrive on a project-to- project basis.

Comments

");