I have written about the Trailblazer advertising agency Anomaly in the past. It is one of the few advertising agencies in the world that does not price by the hour, nor does it keep timesheets.
They are incredibly innovative, and service flagship customers, from Coke to Virgin America. Carl Johnson, one of the co-founders of Anomaly, wanted the agency to be different, so he dumped timesheets and looked for more creative ways to be compensated. From creating their own intellectual property, to taking an equity stake in its customer’s business, Anomaly has left hourly billing far behind.
Unlike hourly billing, Anomaly aligns its interest with that of the customer, in both word and deed. It puts its money where its mouth is, which most agencies are reluctant to do, especially under hourly billing. Aliph CEO Hosain Rahman explains the logic of this type of creative compensation:
You can pay millions to big agencies and get total crap. Agencies have no incentive to produce amazing results, so they’ll extend the project as long as possible because it’s all billable hours. But Anomaly has an incentive to do great work. They have the same skin in the game that we do.
Tom Carroll, TBWA President, had this to say with respect to how far in front Anomaly is in the industry:
Everyone talks about change, but no one comes close to what Anomaly is doing. If he’s right, then everyone will move toward it.”
I think Anomaly is right, and we wish them continued success. It has proved several hypotheses: You can run an ad agency without pricing by the hour; without using timesheets; owning your own intellectual property; and creating customized compensation agreements based upon the subjective theory of value.
Anomaly’s success, like so many other Professional Knowledge Firms that have eliminated timesheets, prove something else. They prove that the best pricers in the professions are those without timesheets, and I believe this is a causal relationship. Getting rid of timesheets is not the end, it’s the means to becoming better pricers. Not having timesheets forces firms to think about results and value, not inputs and costs.
The only question is: When will the rest of the industry figure out that what Anomaly is doing is the right thing to do, not only for themselves, but the customers they are privileged to serve?
Read Business 2.0 article, “Madison Avenue’s do-it-all startup,” from the January/February 2007 edition.