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In this issue Sit with us ‘On the Couch’ to talk about everything to do with agency remuneration Advertising’s slow road to value-based pricing Is advertising agency compensation trapped in a cost-based model? How to develop a price-based remuneration model for your agencies Logo

Newsletter 28 September

Welcome to the 28 September 2016 edition of TrinityP3’s e-news

Sit with us ‘On the Couch’ to talk about everything to do with agency remuneration

“On the Couch @TrinityP3” is our fortnightly discussion on an issue important to the advertising, media and marketing industry. In this episode Darren Woolley is on the couch with Lyndon Brill, Senior Finance and Remuneration Consultant at TrinityP3. The two discuss changing approaches to agency remuneration, ways to use remuneration to achieve greater performance, transparency and accountability, and what the various debates around agency remuneration mean for marketers today and tomorrow.

Watch the video here.

Advertising’s slow road to value-based pricing

There is a lot of discussion about the need to find new ways to remunerate agencies. While moving from a cost-based model to a value-based model is the most logical, it is surprising how slowly this change is taking place. In 2009 when Coca-Cola Company announced they were adopting a value-based compensation model it looked like the start of a trend – but that never really eventuated. Here Jon Manning from Sans Prix explains the concept and implications of value based pricing.

Click here to read more.

Is advertising agency compensation trapped in a cost-based model?

The fact is that both agencies and advertisers are hesitant to move away from the cost recovery model. The agencies are hesitant because it guarantees their margins and advertisers are the same because they struggle with how to value the work that the agencies do on their behalf. Until something changes it appears that both will be trapped in a cost-based model, but in a business environment where there is still enormous pressure to reduce costs.

Click here to read more.

How to develop a price-based remuneration model for your agencies

Since 2007 we have been working and developing value based models for our clients. These models have been focused on calculating the value of the specific agency output to the advertiser’s needs. It was only through the development of our scope of work calculator that we were able accurately to calculate the resource levels and mix for agency remuneration. It was a small transition from this to being able then to calculate the value of these outputs for the advertiser. Click here to read more.

An example of how a value-based agency compensation / output / pricing model works

Many people are often unsure of how value-based remuneration actually works. The models we have developed define specific outputs required of the agency and calculate the value of those outputs with a price framed by the value they represent to the buyer. Here is an example of how this works in practical terms. Perhaps it is something – once you understand the model – that you would be interested in exploring for your own agencies. Click here to read more.

7 essential considerations when moving from agency retainer to project fees

There is definitely a global trend away from retainers as advertisers look for a more flexible and accountable agency remuneration model. While we recommend value-based, many are simply moving to project fees based on the traditional cost recovery model. But in moving from a retainer to a project fee there are some key considerations for both the advertiser and agency to ensure the process is successful. Too many times advertisers give up because the process becomes too hard or fails outright. Click here to read more.

How Value-Based Compensation can support Zero-Based Budgeting

The big trend amongst Global Consumer Goods advertisers is the application of Zero-Based Budgeting for their marketing. While ZBB has been around for decades, the application to marketing has some specific challenges. One is the return on investment for many advertisers and the other is specific cost estimation. This is where value-based remuneration can support the ZBB process by giving marketers greater foresight and certainty into the advertising agency costs. Click here to read more.

What’s Hot

Here are the most read, most shared and most commented on articles from the TrinityP3 blog in the past month:
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