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In this issue Read why performance based remuneration or payment by results often fails Today, agency compensation is now more about performance than cost Discover why performance based agency remuneration should be profit sharing Find out how many KPIs are optimal to drive agency performance Risk vs. reward – its role in value and performance-based agency remuneration Logo

Newsletter 22 March 2017

Welcome to the 22 March edition of TrinityP3’s e-news


Read why performance based remuneration or payment by results often fails

The concept for marketers to pay for performance or results is a logical one. Even desirable. But many marketers who have tried a performance based remuneration approach with their agencies have found it a failure to both implement and manage. There are some key factors as to why this is so and what to do to avoid this failure.

You can read more about this topic here.

   

Today, agency remuneration is now more about performance than cost

The ANA Annual Agency Remuneration Survey was presented at the Advertising Financial Management Conference a couple of years ago, and one of the insights we took from the results was the shift from the retainer and the increased interest in paying for results. It was a significant shift from cost to looking at how to encourage performance and value. You can read more about this topic here.    

Discover why performance based agency remuneration should be profit sharing

One of the biggest challenges for many advertisers and their agencies is how to define performance. Obviously, paying agencies for their contribution to generating revenue and profit is ideal, but many advertisers who are either unable to measure the value generated or to apportion the agency’s contribution will look for other ways of measuring performance, such as relationship performance or service delivery performance. You can read more about this topic here.    

Find out how many KPIs are optimal to drive agency performance

Performance based remuneration requires the setting of performance metrics. But how many metrics or key performance indicators should be set for the agency? Too many and it becomes potentially too confusing and diluted, too few and you need to be absolutely certain you are rewarding the right one. Many default to having too many only to find the process gets bogged in complex measurement and calculations. You can read more about this topic here.    

Risk vs. reward – its role in value and performance-based agency remuneration

When discussions arise between advertisers and their agencies on performance or results based remuneration, one of the first barriers is having the agency agree to place their fee at risk based on performance. The agency sees this process as a risk where the reward is too small to compensate them for that risk. It is true that many have tried to use this approach as simply a way of reducing fees and not to reward results.

You can read more about this topic here.

   

How to incentivise collaborative agency behaviour with performance based remuneration

One of the challenges for advertisers is trying to find ways of getting their roster of agencies to work collaboratively together. One way of getting groups to work together is to provide them with a common objective and reward them for delivering the results. This means implementing a performance based remuneration model across your roster, where all the agencies work to the same goal.

You can read more about this topic here.

   

Listen to Managing Marketing: Putting the value back into agency remuneration

The majority of agencies use a cost recovery-centric business model, and not a value-based model. Mike Duda, Managing Partner of Bullish, explores the role of agencies in creating business value for their clients. He discusses the role of performance based models and incentives and the need for agencies to transform their compensation models to thrive.

You can read and listen to more about this topic here.

   

Watch ‘On The Couch’ with Michael Farmer – Madison Avenue Manslaughter

In this episode of On the Couch, Darren Woolley is joined by bestselling industry author, Michael Farmer. They discuss the bestselling book Madison Avenue Manslaughter and the industry’s reaction to it; what we can expect from his recently released second edition and why; how consulting firms are impacting on the advertising agencies; and what advice he would give to advertisers looking to review their agency remuneration. You can watch this interview here.    

What’s Hot

Here are the most read, most shared and most commented on articles from the TrinityP3 blog in the past month:
  1. The negative impact of overworked agency staff on agency remuneration 
  2. What are we to make of the holding companies in 2017? 
  3. How TrinityP3 achieved 200,000 website visitors (and how you can too) 
  4. Time for marketers to follow P&G’s lead and apply the Golden Rule 
  5. The importance of financial analysis in determining marketing priorities 
  6. Marketing transformation: a cautionary tale of two marketers and two very different outcomes 
  7. The impact of Autonomous Vehicles on marketers and the environment
  8. The real problem with data is marketers don’t know how (or when) to use it 
  9. Managing Marketing: The media industry, women in media, and the state of the media 
  10. How does TrinityP3 rate as Management Consultants against these 7 critical qualities? 
    
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