Peet’s and Razorfish E-commerce Pay for Performance

Peet’s Coffee & Tea is in the news again this week with a new pay for performance e-commerce deal with Razorfish. Peet’s has been on the hunt for a digital Agency of Record to help grow their online presence and has entered into an innovative agreement with the New York-based digital design and strategy leader Razorfish. Instead of being paid for the number of Razorfish staff members working with Peet’s and tacking on performance bonuses, Peet’s will compensate solely through a percentage of profits earned on the e-commerce traffic. It has been established as a six month deal, but Peet’s indicated that they are hoping this will end up being a long and successful partnership that will continue after this six month trial period. When Jon Weinberg, Peet’s VP of strategy and e-commerce spoke to AdAge he said, “We were looking for something that got a company really tied to the results of the business so they had equal skin in the game.”

Razorfish will be reshaping the Peet’s entire e-commerce strategy and will handle the planning for digital ad buys. It’s clear that Razorfish is seeing big potential for growth with taking on this somewhat risky project. Razorfish CEO Pete Stein expressed full confidence in an interview with AdAge. “We built out a business model where we defined exactly what our expenses would be and, based on our analysis of where the program was today and what they were willing to commit in terms of media spend, where we thought we could find an upside. There's definitely some upfront investment for us, but we're super confident.” They are projecting that the program can break even in six months and that the e-commerce side of the business can double in the short term. Razorfish was founded in 1994 in New York. It was acquired by Publicis Groupe in 2009. Source: Advertising Age