MPG's Steve Lanzano Advocates Performance-Based Pricing Models for Agencies and Media

quotIf we let another ten years pass before we take advantage of new media technologies the agency business will be disintermediatedquot believes Steve Lanzano who has been chief operating officer of media agency MPG a unit of Havas for the past five yearsLanzano expresses concern that several marketers have been talking about working directly with media companies and are publicly questioning the value of agencies quotWe have to become consultants for our clients serving them in similar ways as Accenture Booz and McKinsey We have to create real insights and act on them We need to be more expert in vertical industries such as retail packaged goods and automotive providing custom insights on how our clients can move the needle in their competitive categories Our goal is to put ideas in the pipeline that grow our clients39 business and that demonstrate both our value and the value of our industryquot he saysLanzano a 27year industry veteran who began his career at NW Ayer Advertising acknowledges that the compensation model for underwriting innovation and new initiatives is a challenge quotSome clients recognize the need and opportunity for change but change in organizational models is difficult The agency business has to look at its pricing models which are broken We need to get paid for the value we deliver to clients and as an industry we need to come to grips with this need In every one of our contracts with clients there are performance based incentives but there needs to be more upside than we have now If we can increase your business we should be compensated accordinglyquot Lanzano believes there are similar opportunities for media companies especially emerging media to engage in similar performancebased pricing modelsIn this economy comments Lanzano quotlike everybody else we need to look at what39s bringing the greatest value to our business and our clients39 businesses Those that put in place information systems to measure performance and ROI will be the most successful They can show they are returning real value Those who don39t have those processes in place will have the greatest declines in budget There are many new opportunities for our clients and their value needs to be demonstrated The models for compensating them cannot be dependent on the same models used when there were only a few media optionsquot Lanzano and new media expert Mitch Oscar have recently launched the Collaborative Alliance a quarterly presentation of media advances that is open to all industry executives including MPG competitors In addition to the Collaborative Alliance MPG has been organizing a series of customized TeleVisual Day events for its clients inviting as many as 25 new media vendors to share details of their products and services in a trade show format Lanzano points out there is no historical precedent for where we are in the economy and where we are in terms of the fundamentals of the business He expects a quotvery slow build up and recovery for the economy and our businessquot While Goldman Sachs and others analysts believe there will be GDP growth in the 3rd and 4th quarter of 2009 Lanzano suggests that39s optimistic and adds that the advertising business typically follows the general economy by six to nine months quotIn the most optimistic scenario we can look toward an upturn maybe by late 1st quarter 2010 with the Winter Olympics but even that39s rather aggressive The real turn around will be mid2010quot he believes Although he says he39d like to believe things could also turnaround positively sooner he recognizes with the rapid global communications quotthings can get even worse very fast but it will be difficult for them to get good very fastquotLanzano says MPG is hiring and training its staff to offer clients strategic marketing insights and quotreal working knowledge of how all media work in tandem as well as individuallyquot He describes this as a quotunificationquot strategy as opposed to the more commonly used descriptor integration quotI don39t know what integration means anymore We call it media unification We need more research on how messages sequence With digital production it39s fairly inexpensive to put together different types of messages to create a messaging sequence based on how consumers interact with media throughout the dayquot Lanzano admits MPG needs to completely review its media buying operations across network television spot interactive outofhome and print to quotcreate groups that work in parallel with major media companies focusing on connecting all their platforms based on specific client39s needs amp8211 focusing on how we can bring assets of that company to bear for each of our clientsquotquotWe have to drive to where the vision is and demonstrate how we can provide value moving forwardquot Lanzano explains quotThe best we can do is deal with reality amp8211 lock hands challenge clients and not put our heads in the sand and just do what we have in the past We need to see what is driving the most returnoninvestment and identify where we think the communications business is going We are asking our clients and media partners to test with us so when the business does get better we and our clients will be ahead of the competitors and be preparedquot Contact Steve Lanzano directly through the Jack Myers Media NetworkJack Myers consults on organizational models and business development strategies with media companies marketers and agencies He can be contacted directly at jmjackmyerscom

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MPG's Steve Lanzano Advocates Performance-Based Pricing Models for Agencies and Media

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