It is interesting that according to the ANA the most common agency compensation model is still the resource retainer approach. Even with an increased number of advertisers talking about moving away from it, it appears that the retainer model is holding its ground, most likely due it is convenience and ease of management. But there is an increasing number of different agency compensation models as well as a large number of hybrid models too.
There is a distinct market trend occurring in the way marketers and advertisers are compensating their agencies and suppliers. Along with the Agency of Record (AoR) we are seeing a trend away from retainers to project based fees. This is due to a often long held belief by many marketers that the retainer does not deliver value, while most agencies believe that marketers are getting more then their pound of flesh under these arrangements. But many companies are finding the process of transitioning from retainers to project fees a frustrating one that will often not deliver the increased value, lower cost or greater agility they expected. In our experience this is because they will often make some fundamental errors in the process, largely due to a lack of consideration as to how the current remuneration model works.
This is the first in the series of TrinityP3 Webinars. Today we’re talking about the latest trends in agency remuneration and each fortnight we’ll be covering different issues such as media transparency and accountability, roster management, digital integration and sustainability. The first thing is, what we’re going to discuss today is remuneration considerations. What is it that we should be looking for when we’re looking at developing a remuneration model for our agencies and our client relationships?