It is a truth universally acknowledged that an advertising agency in possession of a good client must be in want of a percentage.
ImaginaryFriend, a creative agency that until recently operated on the familiar model of billing for its time, has taken a 6 percent equity stake in Papi Ranch, a direct-to-consumer steak venture launched in October by David Einhorn, the restaurateur behind the Papi Steak establishments in Miami and Las Vegas. In exchange, the agency will serve as lead creative and strategic partner while accepting a reduced fee for its services.
The arrangement is the latest entry in what has become a small but persistent category of agency-client relationships: the bet-on-the-upside deal, in which shops trade predictable income for a share of whatever fortunes their work might help create. (Whether the fortunes materialize is, of course, the question that makes the arrangement interesting.)
Mr. Einhorn's new brand ships premium cuts directly to consumers, including, for those whose doorsteps can accommodate it, a 55-ounce Tomahawk steak presented in what the company calls a "beefcase" — a gold briefcase, marbled in its own way. The product extends what Mr. Einhorn has described as "foodtainment," a term that suggests dinner as spectacle, which is perhaps not far from what advertising has always promised restaurants anyway.
For ImaginaryFriend, the equity model represents a calculated wager that its creative contributions will be worth more than the hourly rate it might otherwise have charged. It is a structure that has appealed to agencies working with direct-to-consumer brands, where growth can be rapid and measurable, and where the line between marketing and product identity is often pleasantly blurred.
Whether 6 percent of a steak company proves more valuable than several hundred billable hours remains to be seen. But the beefcase, at least, makes for a memorable deliverable.
Original story published in adweek.com: "Why One Agency Traded Billable Hours for a Stake in a DTC Steak Brand"