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Engagement partners

MM: Right. Trae, let’s use that at a segue into a topic that we’d talked about offline. I wanted to bring it back here. That’s the notion of engagement partners. Specifically, the evolution of the traditional ad-agency or digital-agency and/or marketing service provider — into a real partner that really differentiates the value proposition. First and foremost that, “Were a center of excellence.” Secondly, “We have mastery of the technology and the analytics.” And thirdly, “We make our offerings available to our clients for not only a baseline compensation, but there’s performance upside.” Such that when we generate revenue or key performance indicators of revenue — we get compensated for that. Because we’re dealing in such transparent, audited processes, basically, you pay for the value that we help create for you.

Right.

MM: Could you take us through the evolution or the other way of expanding upon the notion of an engagement partner? And what that really means, in terms of systems, processes, accountabilities of that organization?

Like I said before — at least in my experience — I think that is still an emerging thing. I’m not sure that anyone including we at Targetbase have really come through to the other side, in terms of what this is going to look like in the relatively near future.

But I certainly agree — and we’ve been talking internally at Targetbase for many years — that that’s the way we not only should be going, but eventually we will be compelled to go.

The old school ways of approaching it are not going to be as effective. Let’s take it from the client’s perspective. The client’s not going to get the same bang for their buck if the way they’re executing their marketing programs is in a very siloed agency or old-school agency way.

Even when you have agency partners that work well together, it’s still not ideal. Frankly, that’s I think for some of our longer-standing client relationships, why we’ve been so successful. Those that have been around the longest tend to lean on us the most for that strategic, analytic partnership. Not so much the execution side of things.

It’s because they want that — what I mentioned before — agnosticism. They want that objective third-party. Someone they feel they can trust to help guide them through all these decisions.

From the client’s perspective, we see — at least our greatest client relationships and longest-standing client relationships — that’s what they value most. Even when times are tough, they may cut our budget, but they still hang onto us. Because they know when they come through the other side of a tough time, they’re going to need that partnership. They’re going to want that relationship — that engagement partnership as you call it — to still be there.

But from the Targetbase perspective, I think one of the things that we’ve recognized — the first piece, for some time, now — but what I think we’re just now in the last couple of years coming to grips with… . The old school model… the fee-based model of working with our clients… is becoming increasingly challenging.

So much of the revenue under that model is on the production and the execution side. That’s not to say that’s not important. It certainly is, and we certainly need to continue to maintain that and deliver on that in a very best-in-class way. But that’s also the lowest margin. The production and execution side. And the most “commodified” — if that’s a word — part of the business.

Take, for example, “database.”

We’ve recognized now for a few years that the database that used to be — being a database marketer — used to bring along a certain level of margin just by virtue of the fact that you were advancing a relatively new technology. The understanding of that technology and how to make it work for the client. That is increasingly commodified.

So much so that — granted, to a lesser degree — you can go online right now and, for free, start your own database.

Again, we’ve had many of these discussions recently. We and — I think agencies, in general — people who provide these services — have to do a really good job of identifying what a commodity is, and price it accordingly. Then the thing that you’re describing — the engagement partnership — that’s where the real value is.

Then the question becomes, “Okay. That doesn’t require as many man-hours to execute. Or at least not as many people to execute. How do we realize as an agency the payoff for work that resulted in millions of incremental dollars for our clients, when in fact, we would’ve normally charged them $50,000 for that?”

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