Cannes Lions 2024: How to redefine value in creative agencies

New Delhi: The traditional way advertising agencies have been priced - by the hour - is under fire. At Cannes Lions, Gautam Reghunath and PG Aditiya, the co-founders of Talented, presented a session that tackled the challenges and proposed solutions for reforming advertising pricing practices.

“Before we get to this any further, I just want to be clear, the procurements are not the enemies here. They just have conflicting agendas,” said Aditya, setting the tone for the session. 

For decades, the industry has relied on models that don't distinguish between the cost of creative work and employee hours.  Reghunath argues, "When we base our pricing on the time our employees spend, we undervalue our most critical asset: our ideas and creativity."

Procurement teams, tasked with reducing costs, demand ever-increasing granularity, including salary data and profit margins. This pressure to drive down prices pushes agencies to reduce staff compensation, impacting quality and leading to burnout. 

"And we wonder why there's significant burnout issues and mental health issues in our line of work," said Aditiya, highlighting the human cost of the current system.

The reliance on time-based pricing creates a vicious cycle.  Agencies are paid for hours clocked, not the quality of ideas. This focus on deadlines discourages creativity, ultimately leading to lower quality work and further price reductions.

"We can price soda bottles, burgers, clothes, and social media apps. We can price tangible things. Then price creativity. Simply because it is not tangible. Because it is challenging. Because it has the highest ceiling," Aditiya pointed out, emphasising the inherent difficulty of valuing creative work with a time-based system.

The co-founders proposed a move towards pricing models that reflect the true value of creative work. They highlighted Talented's hybrid model, which combines project-based pricing with traditional methods, allowing for fairer compensation for employees and sustainable agency practices.

"Every aspect of how we present ourselves, from our office decor to our social media presence, reflects our pricing," Aditiya said. Moving away from time-based pricing, agencies can foster a culture of innovation and efficiency.

The path forward requires a significant shift in mindset and collaboration across the industry.  

"It requires a significant shift in mindset and a willingness to face rejections," said Aditiya.  The potential benefits, however, outweigh the challenges.

“And finally, ask yourself if you're willing to invest one hard year trying out a bunch of these new things. It will be filled with rejections, but that's how you know it's important. And there are other things also,” concluded Reghunath, urging the industry to embrace new models.