Nico Coetzee of KPI Boutique on Performance Marketing and Agency Waste [POV]

Nico Coetzee is the co-founder and CEO of the recently launched KPI Boutique. The agency's model disregards the billable hour and retainers, and instead, payment is based on results. Previously, Coetzee served as the managing director of inVentive Health and the group director of performance marketing at POSSIBLE.

You recently launched KPI Boutique with Chad Childress. What led you to want to launch out on your own and create this specific type of agency?

I think if you look across my body of work you’ll see two things come up clearly: people and results. I want to work with great people, in an environment that helps and lets them thrive, and I want to do work that matters – for the client and for the agency. I don’t want to waste time or money. Those two things are at the heart of KPI Boutique.

Chad and I have both worked at agencies, large and small. We’ve both been part of the process – successes and failures – and come up frustrated at the amount of wasted time and energy involved in the traditional agency model. Everything from the costs of pitching business (and the agency attempts to “build that into the rate”), to the simple bloat of endless meetings, brainstorms, client and vendor calls — all of which are being charged to the client (making it harder for the client to see the value of the actual work and harder for the agency to actually make a profit charging a reasonable rate).

And the thing is, it eventually has a deleterious effect on the culture, on the people. We talk about what a fun industry it is to work in, “work hard, play hard” etc. But that model sucks people dry. We wanted to put culture first, but the best way to do that is not more parties or more social events; it’s to give people the opportunity to do truly great work that they’re proud of. Hire brilliant people and get out of their way.

We simply wanted to do great work, with great people, without all the smoke and mirrors. We still believe in the promise of digital, and we wanted to put that to the test in an environment where you could actually see the results, without confusing things with a bunch of added costs. When you do that, it not only brings results for the clients, but it actually creates a better culture, one people are personally proud of.

Think about the impact on an agency’s culture and creativity when utilization is never mentioned or used as a performance metric. Unlike most agencies, our performance reviews don’t include utilization; they are based solely on client performance. The simple shift of not filing out a timesheet empowers autonomy, creativity, efficiency, fun, and accountability for what actually matters: client success.

KPI Boutique is a pay-for-performance agency. What do you think is wrong with the current agency compensation models?

At the heart of it all is the problem of consolidation as a business model. When agencies are trying to be all things to all people they lose focus on what it means to truly excel at a few things. As we’ve strayed from that we’ve injected more bloat and waste into the process; and it’s all stuff that’s necessary in that environment. When you have that many people working on a project, you need huge project management budgets, huge client service teams, etc. But if you strip all that back to the true specialist skills that actually move the needle, that actually have a measurable, demonstrable effect on the client’s bottom line, then you can get rid of a lot of those costs. Sure, bigger is sometimes better, but not always. We’ve worked at some of the best agencies in the world, and participated in some truly amazing work, but it doesn’t translate nearly often enough to revenue for the client. And when you’re trying to achieve something very specific, target a specific business objective or client KPI, it’s much better to have a nimble, targeted team that’s unencumbered by the larger machine. That’s who we are. We set goals, set rates for success on those goals, and set out to achieve them. We remove everything from the equation that doesn’t point to that success.

How has a lack of accountability in the ad industry helped brands and procurement gain control of the agency-client relationship? Do you think pay-for-performance is the answer?

Certainly the more people you have working on a project, the easier it is to hide costs in the budget and deflect blame from any one malfunctioning element. But let’s be honest, all those “dedicated performance marketing” shops are not really “pay for performance.” It’s the same model, just with a different haircut. We believe the next evolution is what we’re calling “partner marketing.” When our goals are truly aligned with the client’s goals, we both have a stake in the outcome. We’re not trying to play around their goals because we set their goals. The field is level, the objectives are clear. If we make money for you, then we make money ourselves. It’s real skin in the game on our part, and we believe it’s a way to change the dynamic between agencies and brands.

Cutting it down to the bare necessities removes the smoke screens and increases accountability. Some people may be less comfortable with that. There’s comfort in the ability to endlessly move deadlines, or waver on whether the objective was achieved. But that’s not the way we want to work. We believe in our talent. We believe in our tools. And we believe we have the expertise to do kick-ass work that’s clear, concise, and effective. We don’t want that being muddied by unnecessary services or processes.

As for brands and procurement taking control: There was a time when the model made sense. When the tools for the creation of truly great marketing were only held by a few who had the organization large enough to afford them. It’s the same in so many industries today. Look at the music industry: 20 years ago it cost half a million dollars to start a studio, and a lifetime’s experience to know how to run it. Today some kid can spend a couple hundred bucks and be recording in his bedroom. What this does is remove the barriers to excellence. The cream will still rise to the top, but it also means the pool of mediocrity below is much larger. It no longer makes sense to have these huge organizations slowing the process down, when individual elements of it can be accomplished quickly and with finesse.

Look, we’re called KPI Boutique for a reason. We’re nimble, specialized experts. Green Berets. Let the traditional agencies continue to do what they do – we’re not worried about them. While they’re making team decisions based on who’s not billable that week or who’s down against their utilization targets for the month, we’re putting the best of the best on the business every time; hyper-specialized experts who know their stuff. We’re not for everyone, but for clients who understand the true promise and nature of digital, the habits of their emerging consumers, and how accurate measurement and analysis can truly change the game — those are our people, and we want to show them a better way.

Agencies tend to talk in terms of awareness, sentiment, and other metrics that are difficult — even impossible — to accurately measure. Why will focusing on leads, conversions, sales, signups, etc., help KPI Boutique to create stronger agency-client relationships?

Because ultimately those are the ones that matter. Awareness, engagement, sentiment: They’re all useful terms to describe consumer intent and interaction, but when it comes down to it the only way to truly gauge success is to measure it in finite ways. Sentiment is difficult to gauge. But clicks are not. Signups are not. Conversions are not. And all the sentiment in the world doesn’t matter if you’re not moving products off shelves or increasing account signups. The hazier metrics are fun to theorize about and discuss, but ultimately they don’t matter if you don’t perform. And if you can perform without wasting time talking about theoretical measures and assumed customer intent, then why waste the time?

And because we’re not wasteful, we can actually take more of the client’s money and drill that back into tactics that continue to work. You spend X dollars, we remove the fat, drive results, and then reallocate what might normally be spent on agency waste to ongoing tactics that continue to move the needle. It’s not just getting better results, it’s actually compounding success over time. Again, we’re not saying we can do everything better. We are saying we can do what we do better. Digital, performance, clear, concise metrics with direct tie to business objectives. For the people who want to play there, we’ll put our money where our mouth is on our ability to do it better than anyone else.

From your perspective, what do you think the goal of advertising is? How should it align with a brand’s internal departments?

Ultimately, the goal of advertising is to make the client’s business successful. Whatever that means for them – sales, accounts, etc. Most businesses have, at their heart, two or three very simple business objectives around which everything else rotates. Advertising, no matter how moving, or beautiful, or insightful, must target those objectives. Otherwise it’s art. And art is very important for society, but it’s not why we advertise. It has to work, period. And that is always measurable.

Obviously, then, the way it aligns with a brand’s internal structure depends on the brand and those objectives; the clearer the objective, the easier it is to align around it. It’s only when brands get lost in their own story that they lose sight of what they’re trying to achieve. We believe we can help brands pare back to what’s really important for them and then remove the obstacles to achieving it. It might sound overly simple, but we believe it actually is that simple. What do you want to do? How will we know when we’ve done it? Here’s a fee structure around those two things. Simple.

Not easy. But simple.

Connect with Coetzee on LinkedIn or follow @KPIBoutique.