I attended the AICP conference in New York on Tuesday. It wasn’t perfect. But it was a start. And it could become much more than that. I hope so. Industries facing the kind of seismic shifts going on in the world of advertising and marketing need provocation, illustration and guidance. In that order.
One of the themes at the conference was fear. The unwillingness of so many companies to act differently even when living a reality they can’t afford, and hoping that if they can survive, somehow that will equal success.
In the current production company model, $30-50 million in gross revenue generating a 5-8% operating margin is pretty common.
For agencies, 20% margins are the benchmark. Two thirds of which goes to the holding companies. Some do better. Some worse.
In both cases the business model is based on selling time.
Shoot days or people. The sell is dressed up in different ways. Director’s reel. Client case study. But the income stream is built on the same premise.
How long it takes to make the work is more important than the impact it has.
An approach which would radically change our view of value if applied to the rest of the world.
Suddenly a painting that took a year to create, is 52 times more valuable than a Picasso that took a week.
And we would price music based on its length.
Which would instantly make, ‘The Chosen Priest and Apostle of Infinite Space’ the most expensive piece of music in history. If you want to listen to it, start today and you’ll be finished just in time for New Year. It’s two months long. And on the basis that a 3 and a half minute song on iTunes is $1.29, The Chosen Priest will cost you a little under $32,000.
Price books the same way? Dickens wrote a story a week. Devalue him because of the ease with which he wrote.
And put aside creativity. Would you pay more for a longer or shorter flight to the same place? A longer or shorter dental appointment to cure the same toothache?
The truth is, time is money. But not in the way that creative companies use it.
For it is our time that we should value most. The one thing in our lives we can not control. None of us having the capacity to forecast our own death. Or, therefore, to place a ‘unit price’ on the value of a day. The language of procurement and cost consultants.
I believe the madness of creative companies has to stop.I believe that creative companies have to start selling their capacity to cause profound change in people’s attitudes and behaviors based on the value of that change.
I believe creative companies have to define the future on new terms.
Otherwise, as James Akers, the Senior Director for Worldwide Procurement at Pfizer promised on Tuesday, “we will.”
A call to action for an entire industry.
Next week I’m going to start examining in practical terms how that change can actually take place. And how your company can start to take action that will create a different business model, one step at a time.