Now, we're telling clients we're the same, but better, leading clients to compare the two media as if it's an apples to apples comparison-- which it is not!

This mindset is the impetus behind two questions I am frequently asked, which are: I'm only paying five percent commission for TV and what equates to 20-25 percent commission for interactive; so why is interactive so much more? Which inevitably triggers the follow-up: why not just let my traditional agency handle interactive since they offer it for "free?"
 
So, why does it cost "more" for an online campaign?
The rationale behind the differences in fee structures is inherent to the differences of the media vehicles. With traditional advertising, the job ends when the insertion order is sent to the station or network. At that point, the buyer doesn't really think about the campaign until it runs or the ratings book comes out for that period. Then, they compare the points they purchased to the actual ratings, requesting make goods where necessary. But by that time, the money has already been spent ineffectively.

With interactive, the real works begins after the insertion order is sent. The creative needs to be flighted and the optimization process started. Once a campaign has launched, we are continuously assessing the creative, the placement and the messaging. At the end of the campaign we know that nothing has been left on the table and that the dollars are working as hard as possible.

While a client may be paying a larger percentage of the "spend", they are really paying less overall to achieve significant, measurable ROI. Since traditional agencies don't include their fee in ROI, clients have a hard time paying a larger percentage for interactive. Because of the effectiveness of online advertising and search, the fee and spend are both calculated in ROI. If you reach your goals, what does it matter what percentage of a spend you are paying? At the end of the day, what you're paying is worth it because the campaign is achieving real value.

Why don't I let my traditional agency handle online since it's essentially free?
As clients would still pay a percentage of the spend in this scenario, they're really not getting anything for free. Having said that, there's a reason why traditional agencies waive the fee for an interactive spend. Whoever is a low person on the traditional agency totem pole "gets" interactive. The consequences of inexperienced buyers and planners handling interactive campaigns often results in zero return on the media spend. So, even though clients think they're getting interactive for free, they're really wasting money as the result-free spend is still billed to them.

Regardless of whether a client is spending 5K or 500K, we apply the same process to every campaign. For us, planning and buying go hand in hand. We don't just look at where something is running, we look at the creative, the environment of each site and the size of ads. Every site is different, so we consider each separately to come up with creative ideas for maximum effectiveness.

Continuous, post-launch optimization is also an integral part of interactive. Optimization should not be viewed as "fixing," but rather making a campaign even better. A lot of agencies use optimization as a crutch to get to market quickly and "fix" later. Even for a high-performing campaign, there are always areas for improvement.

Stand Hour Ground
Since I started this piece with a cliché, I figured I might as well end with one: you get what you pay for. While an hourly fee structure may force some clients out of their comfort zone, it is dictated by the nature of our business. If we were to compromise on this, we would ultimately compromise on the quality of what we do and the ROI we are able to achieve for clients.

 (Gerry McGoldrick)