Jeremy Weisz 11:13
Obviously a hot topic of discussion is pricing. You mentioned that and you mentioned ROI based pricing. What are some of the mistakes that you see agencies making, or they’re coming to you that they are making around pricing?
Scott Knox 11:29
Oh, there’s the number one. That is an assumption. So, at the end of the day, what we want to do is have a client pay an agency on the basis of not how many hours it takes and how much that production cost, but actually get to the front end of what is the return on investment, what is the value for the corporation that’s delivered by this agency partnership. The problem is, is that the way that procurement works, it’s in a very much a commodity based understanding of what you’re purchasing is very easy to compare apples with apples if you’re purchasing commodities, tires, pens, grain, etc.
The problem is that trying to transpose that method of procurement from commodity purchasing in commodities over to consultancy services, whether it be advertising agencies, law firms, design, anything like that, is it becomes really difficult, because actually just making a price determinant assumes that every agency is the same and it’s not. And what may take one creative director 10 minutes to come up with versus 10 hours that may happen in other agencies to do with expertise and growth and knowledge and development. And so what we try and do is get the agency to say, look, we want to be remunerated on the basis of what value we deliver back to the brand, the success we drive with you.
The problem, from an agency perspective, is they normally because, actually, this whole problem with commoditized purchasing by procurement has led the agency sector into some very bad habits, but it’s got itself very much entangled in responding to client wishes on a commodity understanding. And so we often find when we’re going to work with an agency on moving from commodity based pricing, input based pricing, to outcome and success, value based pricing. They’ve got 75,000 reasons why the client won’t accept it before they’ve even talked to the client. And it’s based on assumptions and based on that sort of legacy of the past 10, 15, years of being beaten up by procurement, those conditioning questions that say, oh, yeah, we’d love to work with you, but the agency down the road is 28% cheaper.
What can you do about that? Those conditioning questions that procurement do all the time, which may work well in commodity purchasing, but they don’t work well in consultancy based services. So we find that assumptions are the real challenge once you get an agency over that, working with some of the best procurement minds and agency relationship minds of the world. We worked out that for every 1% of change from commodity based pricing to value based pricing will deliver an agency about 10% increase in profitability.
So it’s something to really work hard at and transition over time and being careful and consultative and working with your client, and being ready to have that conversation that says, why you want to be remunerated on the basis of your client’s success, is a challenging and so very cerebral conversation to have, but it’s something the agency sector needs to get its head around and procure need to be ready to have those grown up business conversations on behalf of their corporation. Look at the end of the day, the thing we know is that procurement in most corporations is charged with cost saving. So it is charged with getting partner businesses and achieving X percentage of cost once that partners on board, for most corporations, procurement, then wash their hands and walk away.
They’re never there to be part of whether — they’re never remunerated or reviewed or managed in a way that says well, did was outcome successful, and unless we get procurement to not only look at selecting and helping corporations select partners, but then being responsible for that partnership success, then we’ll continue to languish as an industry and marketing and it being a cost based commodity purchasing system.
Jeremy Weisz 15:56
Scott, what are some ways people because, agencies are used to doing things, maybe they’ve been doing it for five or 10 years that way, and now, like they know there’s a better way. And obviously the IC is telling them there is a better way. Value based pricing. What are some things that they can do to start to step into approaching it from that vantage point with the client. And I just want to say one thing before you answer that, which is, I love what you said. It reminds me. And I don’t know this story was attributed to Picasso.
I believe you probably heard it where someone approached Picasso and then took him, like, 30 seconds to, like, do some kind of piece of art. And it’s like, that’s whatever, 10, $20,000 that only took you 30 seconds. Then he responds, well, it took me 40 years actually, to do that, right, which is a similar thing.
Scott Knox 16:47
Yeah, a more up to date version of that would be Elton John. I mean, the various documentaries showing him doing it, he will, when he gets the lyrics from Bernie Torpin, it will take him maximum, 15, 20 minutes to write a beautiful piece of music to accompany those lyrics. Now, if he was remunerated, I mean, he would never afford the suits and the houses and whatever, if he was remunerated as a commodity on an hourly rate, he wouldn’t be the rich and successful musician that he is, and it’s exactly the same.
60 plus years of experience and dedication to his craft is what delivers that. So yeah, we need to treat consultancy and creative people with their legacy of understanding not how long it takes them to get there. That’s not how the world works. And actually, the long term effect will be, if that’s how clients want to work, they’ll drive down their marketing effectiveness, so everything will go down for them in the end.
Jeremy Weisz 17:45
So when people are asking that, like, what are the first couple steps we should start taking to really start offering more of a value based pricing, because some agencies are maybe used to just not.
Scott Knox 17:59
Yeah, the easiest thing. So one of the things that we do, and just to sort of put this into context with member agencies, one of the first things we do when they join, or we do on an annual basis with existing members, is a thing called an agency performance pit stop. This is where we did sit down with the management team and unpack the success and failure statistics and skills of that agency. So ask the leadership think team, what are you good at and bad at? And when we captured that, what that leads to then is invariably a much greater ownership of destiny.
The route to value based pricing can often be to start through a process like that, looking at something and Wade didn’t invent this. It was something that I heard of in the UK, and have heard of by many consultants in the US, and that is to look at client segmentation. Now, what that means is, in very simple terms, apply one of the five F’s to every single client that you have, fame, fun, fortune, fitness, and finally, fire. And that journey to owning your destiny and understanding why that client is in the building and you work for them, and you have certain teams working on them, you have to analyze and unpack how successful they are for your business. So if a client is a fame client, then it means it’s going to lead to other new business award wins, etc.
Understand that finance that means actually it’s bringing the dollars in. Is a very lucrative account to have in the building, and you may compromise the fame for it. Fame Fun. Fun is all about where they actually give you the energy to do something different. You often see within creative teams, they’ll deploy, or should deploy creative teams working on a good balance of fortune and fun accounts to keep their juices flowing, their creative integrity and hunger and innovation driving. Fame, fun, fortune, fitness is where you actually can show the capability of you are a specialist in a particular area, or you can transpose that specialism into another area of value.
And the thing with the fifth F, fire, is if the client doesn’t give you one of those four F’s, what the hell is it in the business for? So you fire them, replace them. So we start with agencies to unpack why every client is in the building, and the fewer F’s that leads you to a conclusion of, we’re not actually we’ve been so commoditized and so driven in a particular way. What we need to do is reverse the fortune on this, push it towards why, being purposeful and understanding why I want to work this client. And if they are not a fortune client, could value based pricing, deliver that to you. Because at the end of day, when a client is more financially, delivering to the agency business, you can grow that by training, developing your talent, by employing really high weight consultancy externally on to deliver more and better for that client. And so we start with, let’s segment your clients.
Let’s see what they’re all in the building for. And ultimately, the reason doing that so I’ve been 22 years now running trade bodies for the agency sector, 15 in the UK and seven here in Canada. And one of the things that I noticed is that when people start an agency, they start it with all the notions of they’re small, they’re nimble, they’re this, they’re price competitive, all of that is fine, great. That’s your rally cry when you’ve opened your doors. Fantastic. I’ve seen it so many times over the 22 years. The narrative is always the same when you were nimble. We’re da, da, da. We’re not like those big agencies, which in essence is saying, we’re cheaper, right?
There comes a point when that agency grows in its success, where it flips over into being a larger agency, and what happens is the agency and the clients end up driving the management team, rather than the management team driving the agency, because the management team end up firefighting and dealing with client needs, and they stop looking after the business. And you the whole point about value based pricing, client segmentation, anything about innovating, developing your agency, you have to take a stop, step back, create some bandwidth in the management team’s eyeline and brain capacity in order to go, yeah, okay, this is what we’re doing, and not we’re doing, we forgot that X number of years ago.
We got out of bed, we left our previous agency to set this up, and now we’ve recreated exactly what we left in the first place. Okay, we need to stop now and design the agency to work for us. And ultimately, when an agency management team design an agency that works for them, it equally works for the client. That’s what leads you to we have to value base price. We have to look a co join relationship on driving success for the agency, for the client, and a client should want that. A client should want its agency to be successful, because it will get better results and deliver marketing effectiveness, share price value, sales increase, whatever its metrics are, it will deliver that if its agencies are successful.
Unfortunately, we live in a world at the moment where procurement are not focused on the success of their agency partners. They just want to smack them down into a cost fight that is not in their interest, not in ours. So we have to create that bandwidth and agency management teams to take back their ownership of their agency and come out designing it to work for them and ultimately their clients.
Jeremy Weisz 24:06
Scott, I’m curious what brought you to the ICA?
Scott Knox 24:09
Ah, yes. So 2015 I happened to be in Toronto, my dear sister, who’s a doctor in psychology, fabulous woman, and she offered to look after our two kids during school term time to give me and my husband a break. And we decided, bizarrely, on a city holiday. Why we didn’t just sit by appalling Greece for two weeks, I don’t know, but this was our thinking in 2015 probably we were younger there, and decided anyway, we came to Toronto because actually had some family that I hadn’t met since I was a kid here, and we’d never been to Canada. But at the time, work wise, I was also involved in a bit of a battle with the alcohol giant, Anheuser Busch InBev on an E-auction platform they were deploying for agency selection, and it was one that was springing up as a similar problem in other countries.
So I was reaching out to other associations around the world to build a bit of an alliance to go what are we going to do with this people, and to share information and knowledge on this. And I’d never had anything to do with the Canadian agency Bobby. And so I just Googled it, found the ICA and met up with Gillian, my predecessor. We had breakfast, great chat, understood bit more and decided to cooperate on a few initiatives. I went back to the UK, carried on. Thought nothing of it. 2016 she contacted me and said that she was retiring. And had I ever considered moving to Canada? My instant response was, God, no, I have just put a deposit down a brand new car, which my mum and dad got two months after we got it, and we just finished doing up the house.
And so actually, no, it wasn’t a plan to move countries at all. But when we sat down and unpacked the whole thing, bearing in mind of 2016 we’d just been through the Brexit vote, and Britain was turning uglier, the racism of bigotry that was unveiled and in some quarters, celebrated as part of that campaign. And we, myself and my husband, been in a same sex marriage and having two mixed race adopted kids, we ultimately decided, actually, maybe Canada’s the right country to bring up our children. And so, I decided to go for it and apply for the job of running the ICA with Gillian’s blessing, and then started on the first of November 2016. So it was really looking at at it from a Family perspective, where is the best place for our kids and bringing them up, and that’s what Canada and the Trudeau hype. Okay, things have changed with things have unveiled about Mr. Trudeau.
Let’s not talk about the trip to India or the blackface scandal. But nevertheless, the narrative was that Canada was a better place, and actually living here it is. It’s not without its problems, but it is a far, far better country to be bringing up our children and actually for our lives, too me and my husband as well. So that was the attraction of Canada. I was aware of going from London to Toronto in terms of eyeline of ad perspective, because London and New York are the agreed global capitals of our industry. Toronto wasn’t. And what’s interesting is, seven years on from that, actually Toronto and Canada are better than they think they are. And so I’ve done a complete U-turn, and actually I’m really thankful for it, having moved here for family reasons.
Now I’ve got my teeth into it’s now for the industry too. Canada can kick ass when given the opportunity to deliver great bar comms, and there are some fantastic Canadians in different agencies and global roles around the world. And so I’ve done a bit of a U turn on my perspectives on how good, bad and different the Canadian marketing and advertising industry is but the initial driver was family.
Jeremy Weisz 28:44
Scott, when you say racism was unveiled, what did you experience?
Scott Knox 28:50
It was more to do with what friends were experiencing. A friend of ours the day after the Brexit vote, was in a supermarket. She is of Japanese descent but born in Britain, and somebody in that supermarket took the decision to walk up to her and say, why don’t you f-off back to your own country. The Brexit vote gave certain people in Britain the license to vocalize something they’d been because of political correctness, perhaps established in the 80s, they suddenly had permission to vocalize.
The narrative of the Brexit campaign was really racist and had resonance from propagandist campaigns that we’d seen in Europe before, in the 1930s and 40s and seeing that, watching the communications and the poster campaigns and the ads and the rhetoric of some of the leaders involved in the Brexit on the leave campaign side, and then seeing some of our friends experience it, and then our kids are mixed race, and even at school, you could see, in the school playground, they went to one of the best schools in southwest London.
But in the school playground, this is a primary school, you’d see the white parents, mums, predominantly on one side, and you’d see the smaller contingent of the mums of color on their own in another. It was transparent, the divide in the United Kingdom. And I don’t see that here. Yes, there are problems in Canada, but I don’t see that. It’s not as prevalent in Canada as it was in the UK. And when you look at it through the race lens, and saw the narrative, and then saw the experiences, and just went, okay, this is all wrong. This is absolutely all wrong. And we have to protect our children. And because their mixed race comes from their birth father, who’s Iraqi Muslim.
Of course, Islamophobia in the UK was prevalent, and people felt that they could say and actually, I remember one time one of the biggest things that dropped into my mind. And this happened in 2016 we were driving, the four of us, myself, my husband and the two kids, driving to go for lunch, and there was a local cab company that we always used to use. This is pre-Uber days, and the cab company was just around the corner from our house. Great family run business, but my daughter, as we were driving past the cab company, she said, Daddy, do I have to be a cab driver when I grow up? And I stopped, why’d you ask that?
Well, because they’re all the same color as me in the cab company and most other people are white. And that is where everything becomes in stark, the visibility, the seeing yourself representation, suddenly became much more prevalent in mine and my husband’s minds, and constantly unpacking and understand our own white privilege to go. We need to see this from their perspective, to help them and support them. It didn’t take much to have a comment like that from your daughter that makes you realize and understand actually, we’ve got to paint a different picture here, and it’s why we very deliberately live in Scarborough, because they go to a school where white is the minority in the school, they get to mix with people of color on a regular and daily basis, and that was important for us to facilitate.
So seeing the racism, my daughter’s question, Brexit, all of that mean, actually, there’s a problem here Houston. We need to protect the children. We need to get on with where they will thrive and flourish. And that’s why the Canadian decision was made.
Jeremy Weisz 30:01
What made you start PrideAM?
Scott Knox 33:47
That was a very interesting, so I went to in, and oddly, this was just before Brexit. In 2015 I went to an event in Rome called the global festival of media, and I was asked to sit on a panel talking about diversity, equity and inclusion. Now, this was before DEI was fashionable, so I flew into Rome, went to this event. This was this huge, huge auditorium space. God knows how many people were in there, and they all had desks. It was like huge. And then there was a session before us, and I can’t remember what that was, but the room was packed to hear this.
And then we were announced, me and three other people, three women were announced as in the next session, diversity, equity, inclusion, and we started walking towards the stage, and all but about 40 people left the room. I would say about 90% of the people got up and walked out. And we sat there and we did our DEI piece, and even the host, the moderator, apologized to us for the number of people who left. Because what became obvious is the people asking us questions and the conversation in the room with the 40 or 50 so left. They were converts.
They were already working on this. It was who. And that wasn’t who I was there to talk to. It was those who didn’t get DEI that I needed to express and engage and so on. And then later that afternoon, we were invited to a drinks reception out by the pool at this rather expensive hotel. I tell you how expensive this hotel was, I can’t remember the name of it. Penelope Cruz was lying by the pool right while we were all up having drinks, and somebody was playing a harp.
It was all very beautiful. And the thing was, I was talking to the group of women that I was on the panel with, and I just picked up this odd vibe at this drinks reception. And every time I turned round and looked at most of the men who are this, they would sort of bristle and almost turn away. I felt like I was back in the school playground. It was really bizarre. And I said this to one of my colleagues from the panel, and she was like, no, you’re being paranoid, Scott, honestly, these are business grown up people. And I said, right watch. And I turned to as if to motion towards walking towards this group of five men who were looking towards me. And they all literally turned their back towards me. And I thought, oh my God, this is 2015 people. What the hell’s going on?
And so I was asked to do a video piece by Starcom, their US office, one of their US offices. And the question that was posed as soon as I did this video piece to camera, was, what have you learned here at the festival of media that you’ll take back and get organized in the UK? And I literally, without thinking, without even knowing if there already was one, said I need to start a pro LGBTQ+ organization for those in advertising and marketing, because people shouldn’t have to experience what I’ve experienced at this event. And then I got home and my husband said to me, oh great. Oh, great. So we hardly see you as it is, so you’re going to do another volunteer thing. Oh, great.
He got what I was trying to do, but Mrs. And then I established it. It was actually my son who came up with the name, and he drew the logo. And obviously it was more digitized and finessed by a good creative team. But it was something organic and it was a reaction. It seems to be, actually, now that I’m saying this out loud, it seems to be able to do a lot of things by reaction. Move to Canada, reaction, PrideAM, reaction and but that is the truism PrideAM came out of a very horrible, almost triggering experience at a so called, extensive event for our industry, where there were lots of leaders from around the world and going, no, I’m not having others in my community experience this.
This is wrong. So that’s where PrideAM came from. And it just started. And then people got in, volunteered and involved and brought it here to Canada. They rebranded PrideAM of the UK. It’s called advertising now a US, one’s established called Do The Werq, so yeah, I mean, that’s where it came from. A reaction to some nasty men at a conference.
Jeremy Weisz 38:40
I’m sure Scott, that your video testimonial didn’t make to the front of their video pitch for next year’s event.
Scott Knox 38:48
Probably not. Probably not. I mean, look, they’ve actually, in fairness to the event, they’ve done DEI stuff every year, and of course, when it became the thing, then it was a packed room of attendance. So I applaud the organizers the event of the International Festival, the global festival of media, for putting DEI on the panel before everybody else was making their fashionable credentials to wear. So it wasn’t the event that was the problem. And it was very bold of them, and they were very honest with the room about what they thought was good and bad about the rooms, the audience’s response. So it wasn’t the event that was wrong. It was perhaps the audience.
Jeremy Weisz 39:37
Yeah. I mean, obviously they were featuring that panel, so, yeah. What was the original idea behind PrideAM? Was it going to be an association of sorts? Was it going to be an agency serving companies who were pro LGBTQ+, what was the original idea behind the organization?
Scott Knox 39:59
The original. Idea was to really look at two things, one, how LGBTQ+ people feel and are supported in our industry for being their true, authentic selves and new entrants into the industry, and also to impact our outputs as an industry. I mean, it wasn’t that long ago that Mars ran a campaign in Spain that was really homophobic. The whole strategy of, once you eat a Snickers and you’re not hungry, you are your normal self.
And the campaign that ran, and it was pulled when it was criticized, was of a rather flamboyant character, sat at a pool bar, flapping their hands, acting all those tropisms of being a camp gay man, and then as soon as he took a bite of Snickers, then turned into an ordinary Joe Blow and the homophobia of that was unreal, and so we were still seeing an industry pumping out comms that were utterly homophobic. So the idea was our outputs and our people was what we wanted PrideAM, it was never going to be an agency.
So it was never going to do comms work for brands, in that sense, but it was there to protect our people and support our people, but also to be part of improving our outputs as an industry. And that’s what all of the versions of it around the world. Well, the three of them, actually, there’s one in Ireland as well, actually, now I understand that that’s what they do. And we in Canada, we’ve set up an awards program for recognizing great LGBTQ work by brands and agencies. We even do consultancy, where we actually recently had a rather large financial client in Canada come to us and say, look, we’ve got this campaign.
We would really like you to have a look at it, and we consulted with them to actually change the script, to make it what they needed it to be, and take out any possible criticism of it being homophobic. And so we’re very open to working with brands and agencies to get to better work and actually to help them not be fearful of getting good representation out there in the marketplace. So yeah, he was aimed at helping our people, our community within the industry, and then improving our outputs.
Jeremy Weisz 42:38
Scott, I have one last question before I ask it, I just want to say, thank you for sharing your stories, your journey, your lessons. And I encourage people to check out theica.ca, to learn more. Also, if you want to check out PrideAM, it’s prideam.org? Scott, last question is, mentors? Who are been some mentors in the agency ecosystem? I mean, it could be board members of the ICA and maybe a lesson you learned.
Scott Knox 43:14
I would say that actually, here in Canada, actually, two of my chairs, former chairs, have been really influential on me. Andy Krupsky, who’s chair of one of our member agencies, The Hive, And Ira Baptiste, who’s president of the Evolved Group Andy is one of these people that flips on its head the notion that the older you get, you can’t improve and learn and develop and be a great person. Andy has been in the industry for many years.
He’s a very, very well respected guy, but probably one of the most open people I’ve ever worked with, in the sense of we have had conversations about some of the things he said and where he’s approached things and his first response is not to go, oh, wow. How could you? It’s actually to go, okay, I need to know more. Tell me. And I want to learn and I wish that there were many others of that senior nature in our industry that would be like him actually. Ira Baptiste just refueled my desire to be my true, authentic self. Ira is an amazing black woman in our industry who is exactly who she is in every way, shape or form, whether it’s with clients, presenting the industry and just that genuine, authentic and actually really knowledgeable, respected industry practitioner.
I’ve never quite worked with somebody like her. And the other person, actually, I would give a shout out, is to Leah Power, my EVP. I think when Leah and I talked before she started it, we talked about what she was wanting to do and be in the world, and she wants to really influence and change our industry. She’s the one who designed all the value based pricing. She presents at procurement conferences across the world, etc. And Leah makes me a better person. One of the things I’m very good at is ideas, and I’ll advocate and I’ll shout my mouth. But Leah is so good at putting a cerebral and a delivery overlay to that. She helps me get things done in a way that’s really senior and makes me put my money where my mouth is. The ICA is better and I’m better. Leah makes me want to do better, and is a phenomenal person to work with. And there are many other people that have inspired me over the years, but escaping my mind right now.
Jeremy Weisz 46:44
Scars are kind of like the head and the heart situation.
Scott Knox 46:47
Yeah, a bit, yeah. And what’s great is, is that Leah has the heart. She knows what she wants this industry to be, and she’s determined to get us there, and she’s as brave as I am in saying the things that need to be said in the industry. But she’ll then also challenge me go, you’ve made that statement. So what’s your alternative? And what are you going to put on the table to help people get there and holds my feet to the fire on delivery, which makes the ICA so much more robust. Yeah. And actually, the other person I’d shout out is my husband. I know this is really obvious. I am not a creative person, and my husband’s a former architect turned home Baker, and now is an award winning television presenting Baker.
And watching somebody who’s naturally creative and capable of delivering things, what he can do with flavors, I’m just blown away. He is such a natural TV person as well, in a way that I thought I was. But no, I think people find me very irritating on television. He has that calmness and knowledge and inspires and is, least once a month on things like the social and CTVs your morning. And what he does with black garlic, what he does with crickets, what he does with, in the most amazing baked desserts and breads and things of that is phenomenal.
And so he reminds me of what I do in my job, which is to protect great, creative thinking people and to work with them, and then go home and see somebody naturally creative in that way keeps me going. And what is quite a tough job.
Jeremy Weisz 48:42
Scott, I’m gonna be the first one to thank you. Thanks for sharing the journey. And everyone check out theica.ca and prideam.org and we’ll see everyone next time. Scott, thanks so much.
Scott Knox 48:54
Thank you very much.
