Bud anyone?

American beauty anyone?

So, the agency behind some of Budweisers’ most famous work (featuring the croaking frogs) has been axed.

Annheuser-Busch InBev(the parent company) has reviewed its roster of agencies (including DDB Chicago), specifically focusing on how they are paid.

Surprise surprise, they’re now favouring project fees, as opposed to ‘expensive’ retainers. The key sting in the tail however; it will now pay a set fee for specific projects (regardless of whether they take longer than previously agreed)…

There are clear arguments for an against retainers. An good agency on retainer is worth its weight in gold.

The agency can then enter into a real strategic partnership with the brand ,which really allows it to own the schedule of work. In theory, the agency grows with the brand (the brands successes being their successes), its stewards steering the brand through good times and bad. If they are lucky, the agency can become an extension of the brands own marketing department. 

An agency on a project by project basis throws resource at your brand in concentrated bursts, and never really gets under the skin of what’s required (massive oversimplification, I’ll do a proper essay type blog on this one sometime soon!). And if the project fee is fixed, they have a difficult choice; burn whatever hours are required to get the job done (and hopefully win more business), or do the bear minimum to get the work out the door…

What this does reflect however, is the need for agencies and brands to sit down, and comprehensively review how agencies are remunerated for their efforts.

The current agency payment model is outdated, rarely fit for purpose, and I predict we’ll see nothing but more high profile agency losses month after month as the recession bites, and procurement departments do what procurement departments do…

Iain Morrison is a senior marketer in the British Tourism Industry. And whilst I’m not a big fan of the Louie the Lizard campaign, you can’t deny it did the job it needed to for the brand…