Category: Fee Models Performance

What is TrinityP3’s view on value-based models for agency fees and how would we evaluate them in a pitch process? Find out in detail here.

How do you create high-performance teams? Well if you look at what often passes as performance based compensation, you would think it is about taking money away from the agency before then setting an unreasonable and unrealistic performance metric, and then asking the agency to work at getting their money back. Talk about all stick and no carrot. Is it any wonder that so many marketers report that their agency performance remuneration efforts failed? Let’s be honest for a minute and admit that most of these performance models were really about reducing the agency fee and had very little to do with truly wanting to encourage performance. The technique would be applied usually as a way to get the agency to reduce their overall fee by 10% to 15% by placing it ‘at risk’ for an opportunity of earning back perhaps a maximum of 20%. 

For the past ten years we have been working with advertisers to move their agency compensation from the popular cost-based model to a value-based approach. One of the cornerstones of the value-based approach is performance or incentive-based agency compensation. In our experience the main obstacles to implementing a successful incentive or performance-based compensation are:

It is fairly common for Agency Relationship consultants to recommend that agency fees, and especially performance fees should be linked to the results of […]

The resource (FTE) based remuneration model is low risk for both agencies and advertisers, which is possibly why it is so popular. […]

The concept of performance-based remuneration or payment by results appears to be universally embraced. After all, according to the ANA Agency Compensation […]

Last week in NYC I was speaking at the WFA COMPAG group about Value Based Compensation (VBC). During the discussion I made […]

When assessing, reassessing or creating new agency contracts, many marketers ask about structuring some pay-for-performance terms as part of their agency agreement. […]