How to incentivise
collaborative agency behaviour with performance based remuneration
There has been much industry talk
and discussion over the years on how to encourage agencies to work
collaboratively with each other. It is a topic that we have been discussing and
sharing with our clients for the past ten years. One of the key issues in
creating a collaborative working environment is implementing a remuneration
model that encourages collaboration rather than most models, which encourage
competition. Trust is an essential ingredient in collaborative relationships
and if agencies are set up to compete for a share of your marketing budget,
then this undermines trust. Read more on this here.
Free Ad Cost Checker Trial
Ad Cost Checker is an
advertising cost benchmarking calculator that
allows you statistically to benchmark
the hour rates and fees for creative, media, digital, social, design and
advertising production. To request a free trial of
Ad Cost Checker please
complete the detail below. A code for one
free Ad Cost Checker report will be
emailed to you.
performance based remuneration or payment by results often fail
Performance based remuneration or
payment by results (PBR) is a component of many agency remuneration deals, but
the fact is that in most cases both agency and client will tell you that it
does not work. The concept of providing a bonus payment for achieving results
or rewarding desired behaviour is very attractive and has great merit. The
problem is that it is rarely executed effectively enough to deliver the
strategic outcome. This is because of some fundamental mistakes people make in
implementing PBR. Read more on this here.
Choose the Right
Agency Fee Model
There are many different agency fee models. The
major ones are listed below (In no particular order). But what is the right
agency fee model for you? Be it for a media agency, creative agency, a digital
agency or more, the TrinityP3 Agency Fee Decision Tree will help you find the
How many KPIs are
optimal to drive agency performance?
The concept of performance
based remuneration or payment by results appears to me to be
universally embraced. After all, according to the latest ANA Agency
Compensation Trends Survey, 68% of marketers’ arrangements have a performance
or results based payment component. The problem is that it is often poorly
executed. But I have noticed another reason that this often fails, and it is
similar to point three (the calculation is way too complex or expensive) and
that is because there are too many metrics in the measure. Read more on this here.
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5 issues you need to overcome to make agency incentive payments work
For the past ten years we have been
working with advertisers to move their agency compensation from the popular
cost-based model to a value-based approach. One of the cornerstones of the value-based
approach is performance or incentive-based agency compensation. Along the way we have been
confronted with, and have managed to successfully overcome, almost all of the
obstacles in the way. For some advertisers and their agencies, it is incredibly
difficult to move to this mode of compensation. But for those advertisers who
have achieved this, the rewards have been innumerable. Read more on this here.
Most in Demand for this Month
The TrinityP3 team helped our customers on the following projects last month:
A leading sportswear manufacturer asked for a hand with a global creative agency search.
We supplied a 48 Hour production assessment for a top Australian milk company.
A Media Agency Pitch Process was required for a famous cruising company.
The TrinityP3 team finished a UM rem & performance review for one of the largest Australian supermarkets.
We helped a leading Australian university with agency negotiation and contract assessment.
An Australian listed public energy company had us assist with media agency remuneration & contract assessment.
And last but not least, we completed a media agency scoping and tender process for an Australian non-profit organization.