The ability to target a very small group, or even a single individual online is now possible with good use of social media DIY tools. The problem is that no agency who values its revenues will recommend that type of plan. This is because with the retainer model the client feels like he or she is overpaying the agency. With the commission model the agency doesn't make any money. An example:
A client wants to launch Product "X" to a very narrow, easily defined group of people. The agency knows that for $1 or less CPM they can get on one of the main social networks and define exactly this target. Total target - 500 people. Let's just be nice and say it'll take an average frequency of 50 to really get the response they need. 25,000 total impressions. $25 campaign.
On a retainer model where the client is paying the agency $10,000 monthly to handle their business, they're going to look at this and think they just paid a retainer that was 40x the media value. Ripoff!, says the client. Or, on the commission model, the agency sees they're going to make at best $5 and says no way. So what happens? The agency talks about the need to reach 50%+ of the population an average of 4x each and this will cost approximatley $150,000 using a combination of media tactics. Client approves the budget, remembers their retainer, and feels like they got a good value. So rather than $10,025, it cost them $160,000. But, the client thinks, that was only 7.5% of the media value - way to go me!
One way this could be solved if agency comp was actually less transparent with the client. Client says - we need to sell 200 of these widgets. Agency says - pay us $100 per widget sold and we'll get it done. Agency does their job and gets $20,000. Here is the core of the problem. What if the agency only spent $800 in media to get this done? Agency folks say, "Who cares? We delivered on client objective." Clients' stomachs turn - the agency made too much money here, they feel.
For social media's monetization to really take off we have to get away from the "percent of media" and "supported FTE" mentality. Clients say that what they really want is results. Will they really pay for them?