Major Brands Shifting their Marketing Efforts Towards Performance
by Ryan D. Swadley, 2/3/2012
The largest Marketers are beginning to put more pressure on their definition of ROI tied to performance. This comes as demand from their shareholders is increasing. The latest example is a realization of P&G CEO Robert McDonald
stating "he cannot keep
increasing P&G's ad budget forever, regardless of what happens to
its sales." Companies like P&G need better financial results on their $10 billion annual ad budget.
Read More
Other companies such as Unilever are falling suit. According to Jorgen Bartch, their VP-marketing...
"Currently we work with hundreds and hundreds of production
companies," "That's far
too much. We need to bring them down to a manageable number." Read More
The old paradigm is shifting and the way marketers pay agencies based on performance may be inching closer to a reality. According to a recent Ad Age article, Interpublic cos hired McKinsey consulting firm to research other industry compensation models and piloted some of its key findings with Interpublic's, media group UM.
"Half of the firm's clients, which include Chrysler, are engaged in
compensation in which at least 20% to 75% of each media-buying contract
is earned through pay-for-performance, according to Guy Beach, chief
operating officer."
Among the challenges cited for a pay-for-performance model are a lack of efficient analytic tools. Read More
"The current model is not sustainable when you think about the level of
analytics and investment that needs to be made to deliver what clients
want," Jacki Kelley, CEO UM
Recent developments certainly indicate the day a marketer may begin to pay differently for media looks like it is on the way. The question is how soon? It looks like 2012 could be an interesting year to watch.