• WTW@hyperproduction

The unit cost model is useless for 21st century marketing

Unit costs, like a Victorian Bingo Hall, loved by some but totally outdated

We live in a 24/7, 365 world, where we need to produce 10 times the content we used to, for 5 times the number of channels we used to deliver in.

The industry is awash with creative agency & network criticism and the need for them to ‘change’. But little has been said about marketing production agencies, their old school methods used to make huge margins and procurement’s inability to understand the new marketplace.

Why are unit costs on a global scale useless?

1. Assume a global budget of $1m for masters & local market adaptation at an average $300 unit cost. Assume you need 6,000 ads a year but your budget limits you to 3,300 ads (without any change requests). Your marketing team can’t deliver a full, truly successful campaign.

2. Change requests costs eat up vast amounts of project budgets. It’s this very change request system that agencies use to claw back gains lost on procurement agreed rates, leaving marketeers less budget for content they actually need to deliver a truly successful campaign.

3. [Client] ‘Can you change a word for me?’ [Agency] ‘Of course, that will be £175.00.’ [Client] ‘Please, it’s a really quick change.’ [Agency] ‘I know, but in the SLA that is a change request and I’ll have to quote.’ 6 hours later, quotes raised, PO’s signed off, bargaining occurred and agreement, the change begins. YES, UNIT COSTS ARE DEATHLY SLOW.

4. If you have to create 10,000 global assets at an average $100 an asset, that equates to a $1m annual cost. But if a team + automated production can deliver the same for a flat annual fee of $800k, then who is more cost effective?

5. In an always on, personalised world, you need optimised, always on ads and content, ready to be produced and delivered by small, lean and automated production operations, not flabby, top heavy, cumbersome operations, worried about units figures & quarterly profit shares.

For too long have creative agencies been the domain of retainers, filling hundreds of seats for account and project managers, whilst marketing production has been seen as the low end, unfashionable, back-end of the process.

To truly deliver $millions in savings, always on unlimited global content for the hungry consumer, and a personalised, globally successful reach, then go back to basics and look at your unit cost approach; ‘there is more than one way to skin a cat.’

Are you ready to change your unit cost approach for real financial and local marketing success?

#procurement #hyperproduction #marketingproduction #advertising #cfo

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