Cossette forms pay-by-results deal with L’Oréal

Digital agency win covers web, content and consumer relationship management

Cossette Canada has been named digital agency of record for L’Oréal Paris Canada in a deal that will be based on an incentive-based evaluation and remuneration system that links to mutually agreed performance standards.

While the beauty products firm is already working with Marketel McCann Erickson as its creative ad agency and MEC Canada for media placement, Montreal-based Cossette will be taking on web platform optimization, content development and consumer relationship management.

L’Oréal Canada CMO Stéphane Bérubé wouldn’t specify exactly how Cossette’s work would be measured, but said it would depend in part on the scope of work and how things change over time.

“If you look at the KPIs we were tracking in digital one year ago and those measured today there’s been quite an evolution,” he said, adding that the ability to measure more granularly in digital work is a lot different than in other areas of advertising and marketing.

“I would say that this time we’re pushing the envelope,” Cossette Canada president and CEO Mélanie Dunn told Marketing. “When it comes to managing the customer journey, there are a lot of KPIs we can agree on [but] what works for today might not work for tomorrow. You have to have an evolving set of KPIs. We are not afraid at all of that model.”

The notion of payment by results (PBR) has existed for a long time, but may be getting more consideration as major advertisers put their agencies under review. Way back in 2001, for example, the ICA (then known as the Institute of Canadian Advertising Agencies) released a best practices report that suggested it’s a model that leads to “goal congruence,” along with better performance at both the agency and client level.

“The philosophy behind payment by results is similar to Management by Objectives (MBO) used by companies to focus employee performance by providing incremental payments based upon company and personal performance measures,” the report said. “In this, performance-based remuneration for agencies can put them on ‘common ground’ with client managers who are also being rewarded for delivery of results.”

The agency compensation model isn’t the only way L’Oréal Canada is changing its marketing practices. Last fall the company also joined the ranks of Red Bull and Marriott by opening up The Content Factory, an in-house studio in Montreal making video, social and other tools to tell stories for its 35 brands. That doesn’t mean the company will do everything on its own, though.

“Our intention there is not to remove any work from the agency, but be able to be much more agile,” Bérubé said. “My core business is always to create beauty.”

The digital team at Cossette is already pretty strong and flexible, Dunn said, though she expects the work with L’Oréal Canada will mean leveraging talent from all of its offices in Canada. “We do want to make sure we have a national approach, but in some cases a grassroots approach as well,” she said.

Besides the traditional digital work for the web, Bérubé said the company was also increasing its emphasis on content for mobile devices and even exploring emerging technologies such as virtual reality.

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