Clients move in favour of payment by results

Britain’s advertisers are breaking away from the commission system - by which agencies have been rewarded for decades - in favour of new incentives.

Britain’s advertisers are breaking away from the commission system

- by which agencies have been rewarded for decades - in favour of new

incentives.



A study by the Incorporated Society of British Advertisers reveals that

one in five clients is swinging towards payment by results, while just

four out of every 100 are paying the standard full commission of 15 per

cent.



But the report also reveals a lingering legacy of mistrust, with a third

of clients professing scepticism at agency claims about

transparency.



However, it also highlights an alarming level of ignorance among

clients, with half of them admitting they do not know what percentage of

their agency’s profits are derived from their account.



Debbie Morrison, ISBA’s director of membership services, said: ’The fact

is that clients have very little knowledge about agencies. Maybe they

don’t ask the right questions and probably never needed to when the

commission system ruled.’



The conclusions come in what ISBA claims is the most comprehensive study

it has carried out into agency remuneration methods. They are the result

of replies by 122 major advertisers to a questionnaire mailed by the

advertising research consortium at Plymouth University’s business

school.



However, the report uncovers no evidence of widespread sharp practice by

agencies. Most advertisers claim they are satisfied with their agencies’

remuneration packages, while those who have put their agencies under the

financial microscope claim to be even more content.



But clear indications are emerging of restlessness among clients, with

half admitting to having made significant changes to their agency

remuneration agreements in the past two years.



Topics