- The 15 per cent commission rule for advertising accounts is officially over according to a new report carried out by ISBA and the Advertising Research Consortium.
Not one of the top 116 blue-chip companies pays its advertising agency the traditional 15 per cent comission.
Some are paying a lower rate of commission but most have switched to a fee-based system or payment by results as pioneered by advertising giant Procter & Gamble. If translated into commissions, the average payment would be just 11.2 per cent.
The report said the soaring cost of television airtime has killed the commission status quo because advertisers could no longer afford to pay 15 per cent of the total media cost, so were forced to seek out new remuneration.
Companies which split the creative and media buying processes between two separate agencies end up paying a percentage point more - 9.4 per cent to the creative agency and 2.8 per cent to the media agency - than those opting for a single agency, according to the study.