ANA Survey Reveals Fees Remain Dominant in Agency Comp, Other Models Complement - Performance is Main Driver for Agency Compensation Adjustments
NEW YORK – August 19, 2013 – Fees remain the dominant form of compensation for advertising agencies, according to the Trends in Agency Compensation Survey released by the ANA and R3:JLB today. The survey reveals new insights about how marketers structure and manage compensation practices with their advertising agency partners.
While newer methods have gained a foothold, 81 percent of marketers who participated in the survey continue to employ some type of fee compensation throughout all agency types and services. Labor-based fees, rising from 49 percent in 2010 to 65 percent in 2013, are leading the compensation trend.
While the main types of compensation have not changed, the reasons for marketers to adjust their compensation approaches have. This year, almost 40 percent of marketers said the main reason for changing their compensation method is to improve agency performance. Cost-cutting is no longer the driver behind change, with a 13 percent decline from 2010 to 2013.
“This year’s survey highlighted a major shift in structuring and negotiating agency compensation,” said David Beals, President and CEO of R3:JLB. “Now more than ever, marketers are focusing on agency performance rather than cost-cutting, a practice which was popular during the economic downturn.”
Other key findings from the 2013 Trends in Agency Compensation Survey include:
- The use of performance incentives increased from 46 percent in 2010 to 61 percent in 2013, with larger advertisers implementing performance incentives significantly more
- Seventy-five percent of advertisers measure performance incentives by agency performance reviews; 71 percent by brand awareness; and 52 percent by sales goals
- Eighty-two percent of companies in 2013 use a procurement team to review agency compensation compared to only 56 percent in 2010
“The Trends in Agency Compensation Survey provides valuable information for marketers to critically analyze the current practices within their companies,” said Bob Liodice, President and CEO of the ANA. “With the industry constantly adapting to refreshed working environments, marketers can weigh and implement the survey findings to make informed and successful compensation decisions for their companies.”
The 2013 Trends in Agency Compensation Survey was fielded online during the first quarter. In total, 98 client-side marketers participated from organizations including Aflac, Ford, General Mills, Hershey’s, Merrill Lynch, Verizon and Visa, etc.
# # #
About the ANA
Founded in 1910, the Association of National Advertisers leads the marketing community by providing its members with insights, collaboration and advocacy. ANA's membership includes more than 525 companies with 10,000 brands that collectively spend more than $250 billion in marketing and advertising. The ANA strives to communicate marketing best practices, lead industry initiatives, influence industry practices, manage industry affairs, and advance, promote, and protect all advertisers and marketers. For more information, visit http://www.ana.net, follow us on Twitter or join us on Facebook.
CooperKatz & Company for the ANA
CooperKatz & Company for the ANA
R3:JLB is a global consulting firm that specializes in helping companies find, compensate and productively manage marketing communications agencies. Its core services include: Agency Search and Selection, Agency Compensation, Agency Performance Management. The newly formed company is the result of the merger of JLB and R3. R3:JLB has worked with eight of the top-20 global marketers. For more information, visit www.r3jlb.com.