The Coffee Bean Problem

“The existence of any method, standard, custom or practice is no reason for its continuance when a better is offered.”
— Theodore Roosevelt

 

A US Coffee company conducted a study and discovered that if they took one coffee bean out of their recipe, no one could tell the difference in their coffee. They then took that extra money and put it into their bottom line. As they continued this practice, they increased production and decreased fees but, eventually, people started to notice that the quality of the coffee was declining.

This is exactly what has been happening among ad agencies and clients steadily for the last 20 years.

Why?

With the onset of social media and emerging technologies, clients are asking for more content to keep up with their consumers but at the same time, they are demanding agencies lower their fees. As deliverables increase about 2.3% each year, the fees decrease about 2.2%.

This is causing a breaking point for the agencies, and the only way for them to satisfy both groups is to either sacrifice product quality or cheat.

What do we need?

In order for agencies to prosper, they need to develop or adapt a new model that will to provide more value to the clients by solving the crucial problems agencies are facing.

The current model that is favored in Adland is the Holding Company model.

The reason for this is because they are “the Integrator,” making it easier for clients to have everything they need in one place, especially since marketing is always evolving. And until there is a new model that helps solves the procurement/marketing problem, holding companies will remain king.

What are we doing about it?

TOMORRO\\\ LLC was founded in 2012 with these concerns in mind, with our goal being to provide high value delivery to the client. Taking inspiration from companies like Uber and Airbnb, we have created a virtual ad tech holdings company that does not own any of the agencies. Instead, Tomorro operates as a consultancy working directly with advertisers while offering unbiased solutions.

 

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Jon Bond is Chief TOMORRO\\\IST at TOMORRO\\\, a value accelerator using marketing and strategic business development to help take clients from start up to IPO or exit. Let's stay in touch.