Photo Copyright Mike Korn. Courtesy RGB Stock.

I spend a lot of time reading, thinking and writing about how marketing agencies can capitalize on their intellectual property. I suppose it’s natural for an IP lawyer to get “preachy” about the importance of protecting intellectual capital, for clients in any industry. But I’ve always felt it was even more critical for creative businesses. After all, intellectual capital is what marketing agencies build and deliver every day for their clients.

Imagine how happy I was to find a “kindred spirit” in Tim Williams, President of Ignition Consulting Group in Salt Lake City, Utah. Tim works with agencies globally to accelerate their businesses in many ways – speaking, consulting, and training among them. Tim also has a point of view about how agencies can create revenue and add value with intellectual property. He took some time to talk about it with me recently.

L+C: Tim, thank you so much for spending some time to share your thoughts about agency IP. You communicate a lot about different ways agencies should think about the value they bring to clients beyond time and beyond service. How can agencies shift their perspective about what they are delivering to clients?

TW: The immense brainpower and creativity in agencies is wasted on the increasingly routine and somewhat mundane production work that now accounts for around 80% of a typical agency’s revenues. Many agencies have been pushed so far downstream that they now sometimes compete directly with printers, publishers, and production companies for work that is seen by clients as increasingly commoditized.

Marketing dollars are being spent in new and different ways, and the budgets that were usually allocated to traditional agencies are being reallocated to initiatives and channels that have to do with “marketing” but not necessarily “advertising.”

It’s an unfortunate fact that the term “marketing” has become associated almost exclusively with only one of the four P’s of marketing: “Promotion.” But of course, marketing is also made up of Product, Place and Price. Agencies and client marketing organizations alike have been marginalized in the business world by allowing themselves to be boxed into just the Promotion business.

Each of the other overlooked P’s of marketing – Product, Place, and Price – represent an area where agencies can create tremendous value for their clients. Organizations like IDEO are already playing in this space, applying “design thinking” to marketing issues ranging from the optimal design for a bicycle to the experience patients have coming to an emergency room.

L+C: And what role does intellectual property play here? Do you think agencies put enough value on the intellectual property they create? Should they place a higher value on or pay more attention to it?

TW: One view of the future of our business is that increasingly agencies will make the majority of their revenues from the intellectual property they create instead of the hours they work. The “work for hire” model that has persisted for the last half-century is becoming a less and less profitable way to make a living.

Consider that most of the creative services that agencies themselves hire – actors, musicians, voice talent, illustrators, photographers, etc. – are paid based on usage, and most retain actual ownership of their work. There’s no reason why agencies can be paid in a similar way.

L+C: Is intellectual property a revenue building tool for agencies?

TW: Absolutely. The best way for agencies to wrap their heads around the concept of intellectual property ownership is to first separate the concepts of ideation, execution and usage. These are three different things. Currently agencies derive most of their revenues from execution, followed by ideation (although most agencies undervalue and undercharge for this). Most firms don’t even consider usage as a potential revenue source, even though this is how most of our creative partners make most of their money.

L+C: Have you seen examples of agencies who have monetized their IP well? And how did they do it?

TW: Yes, and there are more examples every year. Agencies like Anomaly, BBH, Mother, Taxi and others have found ways to capture ongoing revenues from the creation and ownership of IP.

Chicago’s Coudal Partners takes the concept of IP ownership so seriously this agency literally got rid of its clients to focus on its own entrepreneurial ventures instead, which include a line of highly-designed memo books called Field Notes and an online ad network for web and creative types called The Deck.

L+C: Your business is global. Have you seen any differences in the way agencies outside the US approach IP?

TW: Not really. The challenges and opportunities seem similar around the globe. The biggest problem is that most agencies just haven’t tried yet.

L+C: Do you have a point of view about whether agencies should try to protect their IP in a new business pitch? Should the agency take a stand on the issue at this stage?

TW: Agencies absolutely should proactively protect their IP in pitches. In the U.S., the 4As provides excellent guidelines for this, recommending that agencies require prospective clients to agree in writing to something like the following:

“Marketer acknowledges that any all ideas concepts, strategies, and materials that Agency presents to Marketer are being presented for the sole purpose of allowing Marketer to engage Agency’s services. Marketer acknowledges that these materials are Agency’s property regardless of any payment made by Marketer to Agency in connection with Agency’s participation in this review.”

L+C: In that case, what’s the best way they can approach that with the prospect, without jeopardizing the opportunity?

TW: In my experience, taking steps to protect your IP actually I’ve increases the agency’s credibility and attractiveness to clients. Good clients respect agencies that have the self-confidence to protect their work.

If a marketer won’t agree to these terms, that’s a pretty good indication to the agency that this is a client they shouldn’t work with anyway.

In the end, agencies don’t really have a compensation problem; they mostly have a self-confidence problem. It’s no coincidence that the agencies that value their work the most have the strongest win rations in new business.

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I’m very appreciative to Tim for sharing his time and insight on agency IP. For more of Tim’s great content, and to learn more about Ignition Consulting Group’s work with marketing agencies, check out http://www.ignitiongroup.com.