6. The Dilemma
• We have moved from the age of commission to the
age of fee, time based schemes, to the era of ‘what
on earth are we going to do next?’
• Commission was predictable, and linked agency
fortunes to the success of a brand
– But had nothing to do with scope of work or agency costs
• Fees reflect scope of work and agency cost
– But are difficult to negotiate
– And do not relate to whether the marketing
communications are working
– Or marketplace success
– Some agencies like more risk/reward than others
7. The key questions
• Are we really moving away from time based
remuneration models
• Is there any further future in commission?
• How well is Payment by Results (PBR) working?
• Paying by value?
• Are there any new ideas?
38. Ten Step Process to Success
• Client provides agency with goals.
• Negotiation on extensive scope of work.
1. PREPARATION
• Agreement on tenure
2. TENURE
• Vital to establish the territory covering the
appointment
3. TERRITORY
• Agency prepares costs on agreed scope of work
• Prepares work plan based on people hours
4. FIRST SUBMISSION ON
AGENCY COSTS
• We feedback ranking only - and then agency makes
Second submission to form agreement5. SECOND SUBMISSION
39. Ten Step Process (6-10)
• Both sides agree level of agency remuneration…At
the point where cost provision and the cost of people
hours intersect
6. AGREEMENT
• Client confirms KPI’s to Agency. The two sides agree
PBR terms (which may involve ratcheting the profit
margin)
7.KPI’s
• At this point Client and Agency come to terms on
how much Client is going to pay the Agency
8. TERMS AGREED
• Client and Agency agree how performance is going
to be evaluated…and remuneration reviewed in a
year’s time.
9. PERFORMANCE
EVALUATION
• The final step: definitive discussions on exactly how
the agency is to be paid and on the form of contract
to be used
10. FINAL TERMS
