NEW BUSINESS MODELS: Hybrid Agencies

Bernardo Carvalho – Projects/Business Director 2013

br.linkedin.com/in/bernardocw

bernardo@bravomedia.co.uk

BRITISH AIRWAYS AVIS

BLOCKBUSTER

TELEFONICA

BORDERS

Ø  EASYJET Ø  ZIPCAR

Ø  NETFLIX

Ø  WHATSAPP

Ø  KINDLE

Reason: easier, faster and cheaper

Where is the profitability going?

AGENCIES AGENCIES

AGENCIES

AGENCIES

Ø  FREELANCERS Ø  PRODUCERS

Ø  STARTUPS

Ø  GOOGLE/FACEBOOK

Reason: service more efficient, fast and cheap

Where is the profitability going?

To remain competitive, companies sometimes need to innovate, not

only in their products and services, but in their way of doing business.

Example: Pay-what-you-weight Samoa Air innovated by charging their passengers by the total weight

instead of obscure values without justification.

Simple, transparent and can be considered by some the fairer model to charge for a plane ticket.

Research from MIT found that, of 4,000 executives, 54% prefer a change of business model on new products or services, to achieve better performance in their companies. MIT - Management Review - USA

In research conducted in 2012 in the U.S., 82% of CMOs said they would like to remunerate agencies partly by performance, 71% say the agencies need to be considered based on results. Only 7% point to compensation/fee issues as a reason for instigating agency reviews. http://onforb.es/RqaQtg Forbes

What the CEOs and CMOs looking for?

HTC x Apple Both manufactured and innovated with products and hardware. However one of them has changed their business model, and has prevailed with greater market share and revenues: Diferencial: iTunes App Store iCloud

What makes the difference?

Rival print publishers threatened by digital platforms combine and launch online subscription service publications.

Sometimes the solution is to join forces

Current Models Media commision

Hourly rate Monthly Fee

Fixed project fee

New models:

Compensation for results Success Fee Profit sharing And more...

•  Bidding/Pitch processes

•  Reduced fees

•  Lack of innovation and creativity

•  New players

•  Increased costs

•  Lack of trust and transparency

•  High volume and variety of media

•  Structure inflated with added services

Challenge Faced by Agencies

•  Being connected with the best solutions and technologies •  Generating more business •  Long lasting accounts and revenue •  New sources of income •  Efficient management systems •  Recruit and retain talent •  Increase loyalty and trust of customers •  Build stronger brands •  Deliver results and value

What Agencies Want

New business model: [hybrid]

The focus is charging for intellectual property and its use. The result of the work does not necessarily need to be an advertisement or

campaign. EXAMPLE Step 1: Design (Development of the idea) Step 2: Execution / Production Step 3: Use. The agency charges for the use of the idea $ If re-used. $ If used in different formats. $ If used for a longer period.

Model "Photographer"

Instead of just selling advertising campaigns, the agency Anomaly sells a complete package of services: product design, advertising, strategic consulting and licensing technologies. With that their bargaining power is such that the agency is able to be included as a member of the client's product. See some examples below. Pictured: Carl Johnson: former COO TBWA, today founder of ANOMALY.

Model: Profit sharing

http://cnnmon.ie/11Jglwi

Campaign Creation Coca-Cola, a customer notorious for his tough negotiations are a fan of the new model: Anomaly launched Enviga, a tea that promisses "burning calories" with shared profits from sales, but without a campaign fee, causing a complete disruption in the current model agencies operate in. High risk, but the rewards can be very tasty.

Model: Profit sharing

Image: FWA

Product design Anomaly was hired by Virgin America to redesign their products, from pillows, blankets, luggage and more, which can be purchased on board. The compensation is a mix of consulting and sales commission.

Model: Participation in sales

Mobile Software Licensing

Allowing consumers to purchase products via SMS, agency has partnered with Paypal, and launched the service text-to-buy, which has been adopted by customers as the giant P&G. Result: Compensation per license plus a % of the sale of the products.

Incubate

Why incubate? Value / margin: Companies Technologies marketing: higher margins and growth potential. Commitment to learning and innovation. Attractive to talent and retention. Attracting businesses instead of hunting (inbound) thanks to the innovative model. Examples of businesses incubated in agencies: Digital publishing, mobile sales, media / video

http://www.wk.com/incubator

Victors and Spoils was the first ad agency to be built on crowdsourcing principles. A typical project for a client involves just what you'd expect from an ad agency with Account handling and planning teams. However the creative work is outsourced to a pool of of freelancers.

Agency nil

Crowdsourcing

http://buswk.co/cDA0oI CEO John winsor: @jtwinsor ex-Crispin

See also:

Thank you Bernardo Carvalho

br.linkedin.com/in/bernardocw bernardo@bravomedia.co.uk