Agency fees and commercial arrangements are essential to get right. But what is the right agency fee model? How much should be paid? And how do you manage and negotiate these fees effectively? While there is common practice in agency fee models, there is no best practice, with each fee model dependent on the discipline, services, volume, and more.
The objective of our agency fee advisory is to create fair, sustainable and mutually equitable models that are easy to manage, and which drive the desired outcomes.
We approach this challenging area from a number of angles, tailored in each project to fit specific need. You can explore them here:
Find more information on agency commercials arrangements here or explore more details and insights below.
The important differences between scope of work and schedule of work
Many years ago, we posted “The world’s worst advertising agency scope of work defined by a marketer” where we highlighted ...
Risk vs reward in value and performance based agency compensation
The resource (FTE) based remuneration model is low risk for both agencies and advertisers, which is possibly why it is ...
Agency remuneration benchmarking is more than just rates
Last year I was contacted by a major advertiser's global procurement team asking if I would tender to provide them ...
Have marketers forgotten the Golden Rule for agency performance?
In China they have the Golden Rule: The man with the gold makes the rules. This is an interesting principle ...
How many KPIs are optimal to drive agency performance?
The concept of performance-based remuneration or payment by results appears to be universally embraced. After all, according to the ANA ...
Why marketers should stop paying agencies for ideas
As more people are jumping on the bandwagon and declaring the current agency remuneration model broken, there are those who ...
How to step beyond simply cost benchmarking your advertising agency
A marketer called me the other day and asked "Can you benchmark agency fees?" I told them that we had ...
The danger of making token pitch payments to agencies
This week I was talking with Stephan Argent, President of Argedia Group and a colleague in the Marketing FIRST Forum ...
How to effectively negotiate remuneration with your agencies
2012 was frustrating on a number of occasions when it came to negotiating agency remuneration. The most popular project we ...
Top 5 client accounting demands that make agencies feel unvalued
A couple of weeks ago I wrote about agency accounting practices that leave clients frustrated and annoyed. You won’t be ...
The top 5 agency accounting practices that irritate clients
My mother always used to say that "trust is earned, not given". Which is just like money then - most ...
The dangers of misusing benchmarking
Yesterday I was talking with an agency CEO who is currently going through an audit with one of their clients ...
A step by step approach to calculating ad agency resource rates and head hour costs
With the increased application of AI in generativing content and automating workflows, and the corresponding call for the application of ...
What is included in your advertising agency overhead cost and what is not?
One area of agency remuneration that creates confusion for many marketers, procurement and even agencies is the calculation of the ...
Aligning marketing expectations to marketing budget when establishing the agency scope of work
A marketer recently provided their extensive scope of work to their preferred agency so the agency could provide a remuneration ...
Paying peanuts? – It is not the smartest advertising agency remuneration strategy
No one wants to be paying too much for their advertising. But likewise, there are downsides to paying too little. We ...
Top 10 tips for renegotiating your agency remuneration
Obviously there are now more ways of remunerating your agencies than ever before and we work with our clients to ...
Balancing risk and reward in value based advertising agency compensation
Last week in NYC I was speaking at the WFA COMPAG group about Value Based Compensation (VBC). During the discussion ...
Defining Value Based Agency Compensation
A few weeks ago in NYC I presented the results on a survey undertaken by the WFA on Value Based ...
How your agency compensation method can add value
I was recently participating in a discussion in the ANA Advertising Financial Conference LinkedIn Group when Bob Cauley from Beekman ...
Defining the scope of advertising agency services to determine agency fees
Traditionally, agency fees have been calculated and paid based on the cost of the inputs, the number of hours and ...
The importance of overhead in agency compensation
There are a number of variables involved in the most common head hour or cost based agency compensation models being: ...
Calculating Agency Compensation And Resource From The Scope Of Work
How many agency account managers, strategy planners, creative copywriters, art directors, production managers, producers and coders do you need to ...
Reasons why performance based agency fees or payment by results often fail
When assessing, reassessing or creating new agency contracts, many marketers ask about structuring some pay-for-performance terms as part of their ...
What is value based remuneration for advertising and media agencies?
Retainers are still the most common form of remuneration for advertising agencies in the major markets. These retainers are based ...
Best time to negotiate agency fees – during pitch or post pitch?
There is no right or wrong answer for this. Some people prefer to make their selection on quality and then ...
How to calculate the real value of your advertising agency retainer
The real value of your agency retainer is in the mix of resources, not just the level or resources. What ...
What is included in the overhead when calculating the agency retainer?
When discussing retainers there are some key parts to the calculation: Business expenses: all expenses found on the Profit and ...
The power of competitive pressure on advertising agency fees
We are all aware of the direction the world wide economy is heading. But in the past two months it ...
Rate cards versus retainers: evaluating the best model for advertising
With media commissions becoming virtually non-existent, the two main remuneration models for advertising service providers is either retainers or project ...
