Mediabrands Adopts Pay-For-Performance, Seiler Calls Other Models 'Horrible Disservice'
IPG Mediabrands will move to a pay-for-performance model that links the agency's performance and compensation to the clients' business outcome, according to global CEO Matt Seiler. Other ways create a "horrible disservice" to clients, he said. "It's simple, if our clients don't achieve their business plan, we don't get paid."
Last year, IPG Mediabrands hired McKinsey & Company to start shifting the business mode. "Frankly, we are happy to move the whole industry in that direction, too," Seiler said.
The move means tying IPG Mediabrands' pay-for-performance business contracts directly to the emerging technology focus spearheaded by IPG Media Lab, which continues to rise in applications, about 600 in its database total. The physical IGP Media Lab in New York highlights 50 applications, helping brand execs better understand emerging technologies by touching and feeling the apps.
Agencies might not have a choice about using emerging technologies in campaigns, even when they come from well-known brands like Motorola and Sony. On the hook to deliver results, agencies will need to give clients the best content or they won't survive, said Quentin George, chief innovation officer at IPG Mediabrands.
The pay-for-performance model isn't new. Marketers built search engine marketing metrics on performance, such as clicking on a text ad. Paid-search marketing and Facebook Ads rely on a pay-per-performance model, confirms aimClear President Marty Weintraub. Datapop head of sales and marketing Frank Lee points to affiliate marketers using remnant display and email marketing.
Attempting to connect Madison Avenue with hardware component suppliers, engineers at one of the world's largest electronic component distributor, Avnet, has begun working with ad agencies to design technology for use in ad campaigns, according to one source familiar with the relationships. These types of partnerships, using technology to connect behavior, will require a pay-for-performance model, another ad executive said.
Seiler said there is an intentional relationship between what IPG is doing in the lab vs. the performance model.
Last week, the company published a list of technology its execs believe will impact advertising this year. The list includes technology from Fulton Innovations, 3D system's Cubify Platform, LG Televisions, Kia's Users Centered Driving Display, MOTOACTV, 3M Multitouch Screen like the one built into the Lenovo laptops, Sony Xperia Near Field Communications Tag; and BodyMetrics.