At the International Advertising Association’s World Congress, Dentsu CEO Tateo Mataki urged ad firms to seek out news ways of earning revenue, including investing in their own clients.
The business model in which the agency’s sole function is to create advertising and buy media is no longer viable… We need a new model. We need to develop relationships where both parties share risks and rewards equally. Rather than just accepting assignments, we must be proactive. To manage change, we must take risks.
Mataki, giving this strategy the unwieldy portmanteau “Dentrepreneurship,” offered up Dentsu’s recent campaign for noodle cups, which featured anime and manga characters that Dentsu spun off into their own line of comics and cartoons. Which is reminiscent, of course, London-based ad firm Mother’s recent foray into comics with their sci-fi book “Four Feet From a Rat.” The difference here is that Denstu did almost $3 billion in revenue in 2006, while Mother, while certainly generating lots of heat, is hardly in the same realm.
I talked with the chief innovation officer over at Method, Chris Tacy, about the move for firms to start taking client equity over cash. Method itself has arranged several partnerships, though he declined to state with who. Tacy pointed out this arrangement is new only in the advertising world. Law firms and product design firms have done it for years, particularly in start-up rich Silicon Valley
Upstart ad firm Anomaly generated a ton of press last year when the upstart agency created a deal with Virgin America’s fledgling airline venture, with Anomaly taking a cut of Virgin’s sales. The plan seemed to run aground, though, when Anomaly and Virgin America announced they’d be parting ways at the end of last year.
Investing in a client does make a lot of sense for both the firm and the client, binding the two together in way that ensures both parties are acting in good faith. The problem is that investing can also mean waiting years for a return on the investment, a tough pill to swallow in a short-term industry. But if Dentsu is making a move towards this model, others are more likely to follow.
