Marketing Procurement

Cannes Lions proved the need for nuance, not grand pricing manifestos

A fine line

‘We have always appreciated the nuances behind pricing and agency relationships’

“I’m so glad this panel is actually happening,” Stephen Lepitak, the Editorial Director of Creative Salon, remarked as he kicked off ‘Beyond Billable’ at Cannes Lions last month, a session dedicated to value, productivity, procurement and what comes after the timesheet.

Because, Stephen pointed out, amongst all the platforming of AI and the celebration of great work and the talks featuring celebrity creators, the tough question is still too often left unchecked: if you can’t price your work, do you really know what it’s worth? And why have we spent 20 years pretending to answer but never really addressing the question?

It was nice to see the topic being brought to a stage like Cannes, and I was delighted to be asked on to the panel to represent ‘the agency’s view’, with the brilliant Stephanie Frank, Manager of Partner & Industry Marketing at Booking.com taking the client angle, and the peerless Tina Fegent bringing her own procurement vision to proceedings.

The fact that, within 15 minutes, the ‘panel’ had evolved into a broader conversation, with audience members (from a leader of the IPA to the founders of one of the industry’s hottest new start-ups) chipping in to share their own experiences, proved to me that here is a subject that requires more intense scrutiny.

Stephen – as is his job as moderator – was sceptical. Agencies and clients have said they’ll change before and haven’t done so, he argued. The headlines around rate cards and benchmarks are still the same as they were a decade ago. No agency or client has really wanted to take the leap – everyone wants to be the case study, nobody wants to be the experiment.

And certainly, inertia of some of the bigger networks means that the operating model still too often rewards inputs. Having spent time as a client myself, I can understand Stephanie’s point that still one of the most frustrating aspects of being a client is when you end up as ‘an auditor rather than a marketer’, because your day is dedicated to ensuring what your agency is delivering aligns with the scope established.

Why now?

So, clients are craving new options. Agencies say they’ll provide them. But will they ever come?

For me, they have to. And, critically, I think it’s now going to happen far more quickly than many seem to think.

The subject is of course such a timely one because, whether they like it (and are prepared for it) or not, adopting new ways of contracting to cope with the benefits in volume, personalisation and relevance that AI brings isn’t going to be optional for clients or agencies.

Clients want the AI productivity gain handed back to them, agencies want to recover the tech investment and invest in training. Something has to give – and that ‘something’ is the pricing model.

Already, we are seeing new line items appearing on Scopes of Work that didn’t exist three years ago. Platform licences, apps with usage-based fees, credits-based usage models, agent subscriptions. Whilst the sceptics still focus on the lack of ‘headline changes’, the changes are happening at the line-item level, which are quietly creating hybrid models that are nudging agency-client relationships into a new era.

The agency response

That means that the smartest agencies are already taking new pricing options to their clients, not waiting for clients to come to them. At MSQ we don’t have a single pricing model – we have multiple – and it’s the job of a modern agency leader to deploy the right one to the right client in the right moment.

We match the model to five factors: the appetite for risk (from both sides), the stability of the scope, the measurability of the outcome (can we genuinely attribute?), the commercial ambition of the client’s procurement team (for instance, is a credits model clear and appealing to them?) and IP and tech involvement (if we’re bringing proprietary tools, methodology or platforms to the mix, how does that shape our relationship?).

Doing this requires – as Stephen put it post-panel – ‘grown-up behaviour’. A genuine appetite to embrace commercial conversations and find a positive model from those discussions. But we’ve always appreciated the nuances behind pricing and agency relationships – it’s why we started our own MSQ Procurefest conference in 2021 (before Marketing Procurement iQ brought in the outstanding Marketing Procurement Conference, of course!), and why we were keen to bring the Beyond Billable session to our Le Club MSQ space in Cannes.

And we’ve seen firsthand how those conversations spark benefits for all parties. We had one client where moving to an ‘always-on’ AI-based subscription model unlocked an entire category of small, fast, reactive work the old retainer simply couldn’t accommodate. They ended up spending a bit more – and getting a lot more, to the same high-quality standards – because the friction disappeared.

Another client bought a one-off strategy piece from us. We licensed the methodology back to them on an annual basis with refresh rights. A six-figure project became a seven-figure relationship, without us doing most of the work twice. Better value for both sides. Less waste. A relationship of continued respect focused on client growth.

It works on the flipside, too. We had a client who pushed hard for outcome-based pricing, but the conversation collapsed the moment we asked for the attribution data we’d need to actually measure it. Turns out they wanted the model; they just couldn’t manage the transparency.

The approach of the latter client doesn’t then bring the relationship or desire to find a better way of working to a halt. But it does show that AI doesn’t necessarily make outcome-based pricing easier, it makes input-based pricing untenable. It’s why pure outcome pricing is still rare – and will probably remain so.

What’s next?

For forward-thinking agency groups, we have the opportunity to showcase that overall costs are not just there to be pushed down, but value can go up. Clients should not simply expect to pay less money for their deliverables, because they need to contribute to the technology and training investments that agencies are making.

But they can expect to get more (quality) outputs, in a shorter period of time, and as a result they should anticipate better outcomes too, even if the pricing model can’t directly link to those outcomes due to the attribution challenges most brands face.

And that’s why these panels need to happen, even at Cannes. That’s why those in the audience represented the industry trade bodies, the big global networks and the fresh young start-ups. And it’s why the question posed by the moderator won’t be the same much longer. Because, soon it will be being asked in a world that no longer exists.

About the author

Kate Howe is Executive Director of MSQ