Itemization of Proposal Expenses: Important or Not?
June 11, 2017
Throughout Saturday, there was a very heated Reddit debate regarding whether Dash Force News should reveal the salaries of their team. We didn't feel it was necessarily fair to press the Dash Force team about their salaries in such a public forum, but nevertheless, there was a surprising level of energy from a variety of MNOs regarding this issue. After the debate had settled down, we received private messages, e-mails, and several long phone calls from MNOs who wished to discuss their views on the issue. Overall, their main concerns weren't whether the Dash Force's salaries specifically were too high for the value they're providing, but whether or not there should be an expectation of itemization in the treasury fund proposals.
Our view is that it's not cut and dried. Too much itemization can cause rigidity in a proposal owners implementation plans. However, too little itemization can lead to waste. After all, the MNOs are shareholders and their voting responsibilities lie not in alliances and friendships, but in getting the best value for Dash's benefit. Waste is bad and damages Dash's ability to compete.
Our general thought is that itemization is different when it comes to R&D vs. marketing. Marketing is mathematics, and value can be calculated very scientifically. Metrics such as page views, clicks, new users, new downloads, and the trackable scale of a contest or promotion can all be calculated and assigned numerical values. From that set of data alone, we can determine value. Marketing is less human and more robotic in a lot of ways. Give me a list of marketing accomplishments along with a cup of coffee and I can determine the value of a marketing campaign with precision. (That same mathematics is used in the proposal stage, but we'll save that for a different post.)
In marketing, there are agency fees
and there are deployed ad costs
Take two basic examples:
A) John Doe Marketing Company charges $10,000 for the production and distribution of a video.
B) Mr. Bean Marketing Company charges $10,000 for the production and distribution of a video with itemization showing that $8,000 is deployed directly to paid YouTube ads for distribution with $2,000 to agency fees (otherwise known as salaries).
On the surface, both proposals are offering the same thing. Once we see the itemization though, as long as video quality is comparable, it's clear that option B is a way better value. Since option A didn't mention deployed ad costs at all, a reasonable employer can assume that the entirety of the $10,000 went to fees (salaries) and that $0 was reserved for distribution. When this happens, we get videos with few to no views. Without views, no new users come in and the video is effectively worthless as a marketing tactic and results in a loss.
When it comes to itemization with R&D or business development expenses, the story changes a little. The general goal of these departments is to hire the best, most professional, hardworking, experienced people possible, manage them well, and pay them market rates for their talents. Less itemization is required to make an accurate judgement from the outside. It's a spectrum, though, and from the energy in Saturday's Reddit post and in our phone calls, it's possible MNOs do, indeed, want more itemization from Dev Core proposals as well.
(Saturday's full reddit thread can be found here: https://www.reddit.com/r/dashpay/comments/6gfnjq/dash_force_news_salaries_of_joel_and_marc/