Ultimately, as agencies invest in their comms tech stacks, they’ll be able to expand the range of their offerings. The more needs that agencies can service, the less distinction there will be between types of agencies—so instead of getting hung up on the semantics, we’ll see a more holistic approach that places a greater focus on key differentiators, which will become increasingly attractive to clients. Eventually, procurement departments on the client side can vet agencies based on the makeup and performance of their tech stacks.
Making the shift
Amid the GenAI hype, fears around job displacement and other dangers are understandable but often lack the full perspective. This sort of fearmongering has prevented many industry pros—and agencies—from fully considering the possibilities that GenAI can unlock for them. Make no mistake: GenAI tools are not perfect and never will be, nor will they ever be able to completely replace human intelligence. But by and large, the potential pros of GenAI outweigh the potential cons for communicators. GenAI tools are already turning two-hour tasks into two-minute tasks, and the crazy part? They’re only going to get faster and better.
One of GenAI’s greatest efficiencies will be eliminating the mundane, “grunt work” tasks often owned by junior employees. From admin work like sending agendas and conducting research to tedious tasks like drafting client updates and reporting campaign metrics, GenAI tools decrease the drudgery, enabling industry pros at all levels to spend more time on high-value, strategic tasks and less on bureaucratic BS.
Of course, these changes can’t happen overnight, and every agency’s evolution and journey will be unique. To start making the shift to value-based billing, agencies should consider the following steps.
Productize your offerings. Create a detailed menu of all of the services the agency could possibly provide and categorize them by basic, medium and premium offerings. Draft detailed scopes of work and time commitments for each task to stave off possible scope creep.
Do the math. Figure out what each task, offering or service provided actually costs on average using a basic formula of compensation plus fringe plus overhead. Then, mark up lower-value tasks at a lower percentage (10-15%), higher-value tasks at a higher percentage (15-25%) and premium tasks above 25%. Determine average costs modeling your high-performing staff—that way, the agency will be forced to use only top talent and top technology to meet margin goals.
Get procurement on your side. The shift to value-based billing will not work unless you bring procurement over the wall and convince them that there’s savings for the client because you’ll be compensated for the work itself and for the value of the work based on the task at hand, not how long it takes to do the work.