Obviously there are now more ways of remunerating your agencies than ever before and we work with our clients to assist in finding the best model to suit their needs. But there are some basic steps to take when you are about to enter into an agency remuneration review with your incumbent agencies which can make the process less complicated and protracted.
1. Create a 12-month job cost summary that identifies your advertising and media spend by brand and type. For a new brand or agency, use budget and costs from a similar brand activity as a base.
2. Ask the agency to supply a summary of the key personnel, their position, responsibilities and the current or projected percentage of time they will be assigned to your business.
3. The agency should provide you with a comprehensive schedule of fees, for their internal and external services, to be benchmarked against industry averages.
4. Review the past year’s advertising and media activity and identify projects that ran either over budget or over schedule.
5. Investigate projects with budget over-runs and see how the remuneration agreement could be structured to control these.
6. Review your marketing budget and plans for the coming 12 months noting any changes in level and type of advertising activity.
7. Review the agency human resources in the context of your marketing plan for the coming 12 months and make estimations regarding the level of service required.
8. Review your current contract removing superfluous clauses or adding any new clauses required to reflect your changing needs.
9. Review the various remuneration models available and shortlist those appropriate to your business to be discussed with your agency.
10. Contact TrinityP3 as we can provide you with industry benchmarks in regards to cost, resources and remuneration models so you can make a more informed decision on the remuneration solution to suit your current and future advertising needs.
What problems have you encountered in remuneration negotiations both from an advertiser and agency point of view?
Great list. I'd add to this by recording the results that came with each project and evaluate what worked and didn't work. These insights will be helpful not only to see if the current agency is delivering but for the next one to know with more accuracy what can be done to improve on these results.
In fairness, TrinityP3 probably have a million things to do to make effective agency agreements and this was only about the top 10. My suggestion is up there in the top 10 for me anyway.
Hi Anne, increasingly we are looking at linking agency remuneration and compensation with effectiveness, more so than simple performance. Improving performance means that the agency and client continue working together. Effectiveness improvements (both in efficiency improvement and outcome improvements) creates increased value for the client and we believe should be therefore in some part shared with agency as an incentive to achieve greater effectiveness and value. Thank you for you comments and contribution. Always great value to the discussion.