centralasian (centralasian) wrote,
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centralasian

_____________________[PRO] сash on delivery :: оплата веб-дизайнерских агентств

Cash on delivery

обзор последних трендов в практике оплаты услуг веб-дизайнерских агентств (или шире - того, что называется new media design). оплата работы в зависимости от "успеха" в будущем - и возникающие в этой связи "вопросы".

Cash on delivery

Payment by results has grown in popularity as a marketing concept as balance sheets have weakened. Declining budgets and fierce competition have persuaded advertising agencies and PR firms that their fee should be proportionate to the business that the client gains.

In the world of new media, too, the idea of sharing risk and reward appears be undergoing a renaissance after the excesses of the dotcom boom. Encouraged by the improvement of site measurement tools, and by the fierce competition among web agencies, clients are increasingly asking for payment by results.

Andrew Rolf, client strategy director at Hyperlink Interactive, says his company is designing several sites for customers whose fee will depend on their site reaching certain usage or sales targets. It makes sense, he argues, in what is one of the easiest media forms to measure. "This is all about monitoring and analysis of sites, which we have been focused on for some time," he says. "The tools to monitor site usage, customer activity and sales have become more sophisticated and accurate, allowing clients to set certain metrics that the website must meet."

Luke Taylor, managing director of Oyster Partners, says clients are starting to ask for such arrangements more and more. "The procurement model is moving that way. We are open to the idea as long it cuts both ways - what clients often want to do is impose a penalty and potential upside," he says.

For instance, if Oyster is asked to conform to time restrictions with a penalty clause for late delivery, then it insists on a bonus payment for coming in ahead of the deadline. Some sites also set usage thresholds, with a penalty for the agency if they are not met, and a bonus that ratchets upward if the targets are exceeded.

Max Crosby-Browne is managing director of Real Slimmers, a start-up division of the privately held William Leven Holdings, whose site was designed by Hyperlink. If the site, selling slimming products, reaches certain topline sales targets, Hyperlink's fee will be correspondingly increased. The payment by results arrangement was not the most important factor in selecting the agency, but "definitely helped".

"We wanted to minimise the upfront costs of finding out whether our business model would be successful," he explains. "The advantage was that we could reduce the working capital needs while we found that out."

Yet the idea has drawn fire from many quarters. Patrick White, founder of the British Web Design and Marketing Association, says: "This is incredibly dangerous. I feel quite strongly about this."

While acknowledging that payment by results works in other areas of commerce, such as advertising and law, he believes that web developers should steer clear of this kind of deal, and that companies that have tried the method in the past have often failed.

He adds: "This is about setting up joint ventures, in effect, and it can result in undercapitalised and underfunded joint ventures that haven't been properly thought through. It's a very questionable practice when people try to use a supplier for cheap funding. And [agencies] might not realise that they can be jeopardising their own cashflow." He advises others: "This should not be seen as a panacea, or a new way to do business."

Liz Citron, chair of the British Interactive Media Association
, agrees. "People in the dotcom world did try this kind of deal prior to 2001, which was the great moment of truth, and it seemed like a good idea at the time. But a lot of people got very badly burned and some went out of business because of it," she says.

In too many cases, she adds, both partners are taking on such a deal from a position of financial weakness. Any agency taking on a payment by results deal needs to do as much due diligence on the site involved as a potential financial investor would, she warns, but most design agencies undertake very little investigation into their potential partners. She argues: "Some risk has to be borne by someone, but I have my doubts about any company trying to get off the ground that hasn't the required funding level."

Rolf agrees that companies should not take on too much risk, and Hyperlink always charges an upfront fee in addition to its reward payment. He advises that the type of metric used to judge a site's performance should also be closely scrutinised - judging a retail site by the traffic it generates for a bricks-and-mortar outlet is not appropriate, while judging it by the number of subscribers to an online newsletter is.

Another problem for web designers is that they are only indirectly responsible for the success of the site. The client's own marketing efforts will have at least as much impact on the site's traffic as attractive presentation and ease of use. For this reason, Rolf notes, agencies must delve deeply into the prospective marketing plans for any partner sites before getting involved.

As the climate for web design companies continues to look bleak, such deals may regain the brief vogue they enjoyed during the dotcom boom. Rolf defends the practice: "The main reason we are doing this is because we are keen to encourage companies to unlock their budget, and this approach allows them to dip a toe into the water."

By Fiona Harvey
FT.com site; Sep 08, 2003
fiona.harvey@ft.com


web_design
new_money
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