The billable hour was introduced by a law firm back in 1919. So were locomotives, dial telephones and prohibition. Trains and phones have certainly evolved thanks to changes in both society and technology, and prohibition was such a bad idea, it went away entirely.

And yet the billable hour remains. One could argue that in many agencies, it’s evolved and now we talk about a blended rate or a modified compensation model. But by and large, most agencies still bill their clients by the hour.

We’re a forward thinking agency, ergo, Adduco is moving select Advertising and Creative service billing structures away from the prehistoric pricing methods of yesteryear.

The argument has raged on for years. Agency leaders and clients both know that every agency hour is not spent in the same way or worth the same amount of money. For example in an hour, James – our Accounts Executive – could encounter a Social Media Strategy idea that skyrockets a local client into complete market domination and in hour two, James writes me a memo, surmising action steps taken in a follow-up meeting with said local client.

Same professional. Same client. But hardly the same work or the same value.

This is a strong point and of course the logical conclusion for our reason behind VBP, but not my primary reason – How long does it take to create and execute a brilliant idea? It’s almost immeasurable, vacuums up hundreds of hours and doesn’t correlate with value. If Adduco produced a Website within 100 hours for a local cafe, increasing their walk-in’s by 20% within 2 months, it would be a considerably successful investment for the cafe. But if Adduco produced a Social Media Campaign for a local tourism company creating and executing the idea within 100 hours, which resulted in international recognition and a 140% increase in monthly sales – the value would be of far more weight in comparison to the website.

You see the website and the campaign both incurred the same cost to the clients, but the value of the campaign was far greater the that of the site. I don’t like this!

But how do we prove value? Bottom line, there are two ways that our Creative Advertising Services provide value to our clients – drive up revenue or save on expenditure. Along with the typical calculations we make, we include measurement of two additional metrics:

  • The lifetime value (LTV) of customers for our clients
  • The client’s current marketing cost of acquisition (COCA)

The LTV of customers is crucial to understand because it ensures that marketing spends a commensurate amount to acquire that customer. Knowing this metric helps Adduco determine how much value, in the form of revenue, we will provide.

The current marketing COCA is an indication of what is acceptable to your client for acquisition cost. Knowing this metric us determine how much value, in the form of cost savings, we will provide.

Hourly-based billing means that Adduco would be like every other small Creative Agency around. Whereas a value pricing strategy, where our clients know up front exactly what the investment will be and feels good about the value they are receiving for that price — allows Adduco to differentiate themselves from the rest of the pack.

We believe in keeping the core business operations simple, honest and effective. This means our clients aren’t burdened with the worries of unexpected bills and a lumbering internal structure that demands high costs to feed the agency ‘machine’. Adduco is a team of the most talented and out-of-this-world creative minds that crash together to execute campaigns that work really, really well – we want the clients to not have to spend unnecessarily for that!