TBMC's Client: Wirz Group's Business Restructure

By Christian Beck

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The advertising agency Wirz is serious: The announcement to replace the classic hourly billing model with flat rates has become a concrete system. In the interview, the co-CEOs Petra Dreyfus and Livio Dainese explain why they dare this radical step and how they want to create more space for creativity.

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Successful advertisers are daring to make a fresh start. They invented Migros' Non-beer and engaged Roger Federer, now the Wirz agency is restructuring its business.

Florence Vuichard

The advertising industry loves glitter. It showers itself with awards and regularly celebrates itself. But away from the red carpets, the situation is much less glamorous. Revenues are collapsing, margins are melting, profits are dwindling. Helplessness is growing, but no one wants to talk about it - or almost no one.

An exception is the Wirz Group, the last large owner-managed agency in the country, which also causes a stir internationally with spots for Switzerland Tourism featuring Roger Federer, Robert De Niro, Trevor Noah, and Anne Hathaway. 'We are forced to change our business model,' says Wirz co-CEO Petra Dreyfus. 'And that means now, while things are still going well for us.'

This time, the house doesn't need renovation but a complete rebuild, adds her co-CEO Livio Dainese in an interview with 'Switzerland on the Weekend' in the agency's premises in the Zurich district of Wiedikon. Fine retouching is no longer enough, nor are savings programs. 'We've been optimizing ourselves to death for a long time.'

Same amount of money, more channels

It is the creativity that defines Wirz, says Dainese. Unfortunately, creativity is often equated with creation, ultimately with 'funny commercials' or a new, rejuvenated brand appearance. This way, the power of creativity is undervalued. 'We must now find a way to capitalize on this added value.'

There are several reasons for the industry's plight, most of which are ultimately a result of digitization. While global advertising budgets have remained unchanged, the same money now has to be spread across numerous additional channels. In other words, advertisers used to be able to design a spot and a few poster and ad subjects with the given budget, which were then aired over longer periods.

Now, in addition to traditional advertising media, formats suitable for YouTube, TikTok, and Instagram are also needed, which must also be replaced repeatedly. Dainese and Dreyfus refer, for example, to the Migros Christmas campaign with the elf Finn, which was created by Wirz: 'In addition to the TV and cinema spot, we delivered no less than 80 types of moving images.'

This change is also reflected in the figures of the industry, as shown by the Swiss Advertising Statistics Foundation: Of the approximately 4.2 billion Swiss francs spent on advertising in 2023, about the same amount now flows into the online world as into print products. The revenues of the global tech platforms are not included here. According to estimates by the Swiss Advertising Statistics Foundation, an additional 1.83 to 2.24 billion Swiss francs spent on advertising flow abroad, to YouTube, Google, Facebook, and Co. For local advertising agencies, this means: There is - at best - the same amount of money left, with significantly more work: The calculation no longer adds up.

Another problem is the billing method. Once, advertising agencies could pocket a flat rate of 17 percent of the advertising budget, i.e., the money that Wirz customers spent on airing spots, posters, and ads. Then the rate was reduced to 10 percent.

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Rejection of the Hourly Billing

But the time of flat-rate arrangements is over. Nowadays, agencies have to submit detailed hourly billing to clients. This leads to more bureaucracy, says Dreyfus. 'And above all, it means that our work and the added value we can bring as a creative agency are no longer properly remunerated.'

Take the Oui-Non campaign for the much-discussed alcohol vote of Migros. Migros approached Wirz because it wanted to calm tempers with a classic advertising campaign. What Migros got was a new product, a non-alcoholic beer, which it still generates sales with today - but Wirz does not earn a penny from it. 'Although the launch of the beer was our idea,' adds Dainese. Worse still: 'For Wirz, the Non-beer is not a commercial success - purely commercially speaking.'

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Commercial Success, but no profit

In the future, Wirz does not want to deal with the hourly billing. 'We have now taken a new path, one that allows us to monetize our performance,' says Petra Dreyfus. 'We are now selling creative solutions to our clients' problems.' And that might include ads, posters, or spots. But also new products - such as the aforementioned Migros Non-beer or Deutsche Telekom's new 'Gönn' mobile subscription.

The stories are similar: Like Migros, Deutsche Telekom initially wanted a traditional advertising campaign - with the goal of attracting young customers. 'So we first tried to find out what young people actually wanted,' says Dainese. 'And we realized that Deutsche Telekom did not even have a product in its range that young people wanted.' Thus, the new mobile subscription was created, promising young people up to the age of 28 'an exclusive deal for special moments' every month, such as a free pizza.

And here too, despite commercial success, the Wirz agency ultimately did not make any money. The mobile subscription was also what ultimately convinced the advertisers to break with the old hourly billing model. Wirz now charges flat rates again - not as a percentage of the advertising budget, but for the package the client wants. 'Because what keeps our clients awake at night are much bigger and more important questions than what the next campaign will look like,' says Dainese. They are looking for new ways to achieve 'more growth and more value creation.' Here, creativity is one of the most promising approaches.

In England, there are already a few agencies that proceed in this way. 'In the German-speaking world, we are the first to do this,' emphasizes Livio Dainese. During a transition period, however, both billing systems will probably still exist in parallel, adds Dreyfus.

The step is a break with industry practice, but the initial reactions from the client side are positive. Many are dissatisfied with the current system.

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