Former leads from WPP, Publicis and inVentiv Health will launch a Los Angeles-based boutique agency to give an old business new life and rein in how clients pay for campaign performance. The updated operational model makes fixed bids, hourly rates and huge retainers a thing of the past.
KPI Boutique co-founding partner Chad Childress calls the model "partners for performance." It allows clients to pay for results without retainers or hourly fees and gives the agency a vested interest in the success of the clients' ad campaigns.
One reason for the revised business model points
to advertisers no longer wanting to layout huge sums of cash before seeing campaign results. "Clients are shifting more decisions around agency selection to procurement to drive down prices and get as
much value as possible from the vendor," Childress said. "Brands also want to push out payment terms, so you'll see many advertisers ask agencies for 90-to-120 day payment terms, rather than net
Although agencies have "world-class analytics," their incentives are in the wrong place, Childress said. He explains how there's no need for 12 people in a meeting or an account when the agency can run the same or better campaign performance with three or four.
Co-founded by Childress and Nico Coetzee, KPI Boutique aims to fill a gap between what clients ask for and how large agency networks deliver services. "The old model incentivizes agencies to put too many junior-level people on the account and bill as many hours as they can," Childress said. "No guaranteed results or accountability exists the old way, because the agency runs away from reporting."
Childress said KPI will attach compensation to goal milestones or products sold, depending on the
agreed on key performance indicators, predefined goals, profit margin thresholds, CRM sign-ups or any other goal an advertiser has for their business. It should eliminate the conflict of interest
between clients and agencies.
KPI will offer services like search engine marketing, display and programmatic media-buying, video and more, such as direct mail and branding. The company plans to leverage partnerships with Rocket Fuel and Turn, among others.