Dan Douglass on direct

Dan Douglass

I've just read 'Magic and Logic', the report prepared by the IPA, ISBA and the Chartered Institute of Procuring & Supply - and I love the fact it dares to think big. Understanding how agencies create value is one of the biggest stumbling blocks to achieving a mutually rewarding client agency relationship. They note that the way forward is not the tired fee-based arrangement of yore, but a more radical re-think on IP. Some agencies have succeeded in negotiating the IP rights in their work, and licence ideas to clients for a fee on the basis of a tariff for the use of the idea based on geographic usage and media usage and time. Agencies are beginning to own rights to music, characters, brand names, properties, brand entertainment, content, games and brand creation. In other words, owning more of the output. What creative agencies do every day is surrender original thought - names for new products and promotional themes, etc - as part of a fee. Traditionally, the idea has given them the permission to charge a fee, produce the work or take part the media commission. But as the fee becomes the sole form of remuneration (and even that's getting squeezed), where does the value get recognised? As one agency said 'we know our IP has value. Nobody makes us give our IP away - it's our choice. We've decided to sell it. We charge a different amount depending on whether we keep the IP or not; we ask clients to decide if they want to pay less and licence the idea from us, or pay more and keep the IP rights'. And it's far easier to wrap up all the diversion, distraction and contemplation needed to arrive at an original thought within the IP rights. Jeremy Bullmore has described the current agency business model as 'insane'. 'Agencies', he writes, 'are not only members of a cottage industry, but they also work on a sale-or-return basis. Everything they make has to be different so there are no economies of scale. If clients don't like the first product they're offered, their agencies have to make another one for free. And maybe another. They can spend three months producing nothing of value - or can make a client rich on the back of an idea that took less than a minute to flower. Accepted definitions of efficiency are at best irrelevant and at worst destructive.' And so say all of us. So isn't it time to reflect true creative value based on the rather more familiar parameters of intellectual property?