More than 67 percent of major U.S. advertisers use labor-based compensation agreements with their advertising agencies, up from 53 percent in 1997, according to New York City-based Association of National Advertisers’ 12th triennial “Trends in Agency Compensation” study.
Use of billing-based agreements (including fixed-rate commissions or sliding scale rates) declined to 21 percent in 2000, from 35 percent in 1997. The remaining 11 percent used such agreements as fixed fee or labor/billing combinations, about the same percentage as in 1997. “The domination of labor-based compensation agreements and the consistently growing interest in incentive compensation indicate increasing advertiser demands for improved accountability and value for their … dollars,” says David Beals, president of Chicago-based Jones Lundin Beals and co-author of the study.
More than three-fourths of advertisers said they’re generally satisfied with their current agreements, the same as in 1997. However, nearly half (49 percent) have changed their agreements in the last three years.
In other findings, incentive compensation provisions are being used by 35 percent of advertisers, up from 30 percent in 1997. The incentives are usually tied to sales goals (73 percent), agency performance reviews (58 percent), or brand/advertising awareness goals (50 percent).
The survey was fielded online and includes results from 136 respondents. For more information, see http://www.ana.net.
