How We Compete As An Agency
Written by Luke Haslett
Written by Luke Haslett
It’s often said that agencies would take your watch to tell you the time. The industry has a stigma of being removed from the value it promises to create. The standard agency experience goes something like this; Agency heavyweights are drafted onto pitch calls to instill confidence in the prospective client’s management team whilst negotiating the minutiae of the commercial terms. Yet after months of negotiations, presentations & finally when the contract is secured, these heavy hitters fade into the background & an account manager is appointed to oversee the engagement. Junior members of staff are deployed to do the heavy lifting, whilst the senior team are onto the next pitch, selling the dream to the next sucker to buy into the facade...☁️
Fundamentally, this issue comes down to that of hourly billing & fixed retainer contracts. It weighs massively in the favour of the agency to spend as much time on a project as they can & encourages the allocation of deliverables to junior members of staff to to maximise profitability. It pays zero attention to the value that time must drive 🤔 This flies in the face of the foundations of performance marketing & I believe this approach to pricing to be disconnected from the commercial realities that eCommerce brands face.
When we founded iakoe, we set our stall out early. To build an agency that has skin in the game. An agency who’s profitability is directly correlated to the value it creates for its clients. An agency where...
👉 We only partner with 15 brands at any one time. This enables us to collaborate at speed, develop true business insight & both agency & client benefit from a continuous improvement cycle
👉 Each service we provide is tied to a performance-based pricing agreement
👉 We only have senior marketers working on each account. If we don’t hit our KPI’s, we’re leaving cash on the table. Our profitability is directly aligned with our client’s success
👉 We hire the best talent & pay the highest salaries. Both are intrinsic to how well we perform & the future of the agency
👉 We partner with brands who believe in value co-creation. As our clients' revenues scale, so too do our fees. This allows us to continue invest in new technology & talent to ensure we’re constantly innovating as an agency
Most agencies, unfortunately, view pricing as antagonistic: a win-lose relationship with clients in that what one party gains the other loses, or so goes the weakly held assumption.
Each commercial model we deploy has been designed to create complete alignment between client & agency goals. Effort, risk & reward are balanced in true equilibrium. Whilst value is contextual & KPIs will change, the two models that underpin our commercial agreements are:
👉 An agreed percentage of channel revenue with no fixed cost
👉 A hybrid model with a fixed component & a percentage of channel revenue. The fixed cost can scale according to the brand’s appetite for revenue sharing
Yes we do, but it’s not our preferred way of working. We’re empathetic that occasionally a brand may have their hands tied by legacy governance which lacks the appetite for sharing revenue & we must be able to adapt to that. Of course, performance-based pricing mightn’t be applicable if a project is a stand alone deliverable, high risk or where we don't control each variable that influences performance. For example, if an SEO engagement is focused on technical & content deliverables & we're not responsible for digital PR.