Agency remuneration and compensation models are under pressure with a focus from procurement on marketing budgets. There are basically four types of agency remuneration being 1. Spend based (commissions) 2. Cost based (Head hours, overheads and profit multiples) 3. Output based (Pricing and fixed fee) 4. Outcome based (Performance payments and profit sharing). The last two are increasingly used together in a Value Based Compensation model which fixes the base fee for the agency's outputs and rewards the agency based on performance. This presentation provides an overview of the various advertising agency compensation models and provides guides and consideration to choose the right model for you.
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