Three-quarters of brands want to change their agency remuneration model, suggests new research from the World Federation of Advertisers (WFA) and global media advisors MediaSense.
Change is being driven by an ambition to deliver better alignment to business outcomes, greater accountability and improved access to talent, according to The Future of Media Remuneration* report.
What’s happening
Increased complexity, better equipped clients, and the speed of automation and AI are pushing remuneration models away from the traditional ‘time and materials’ approach.
The desire for change is not grounded in cost reduction, as only 15% pointed to this as a reason.
61% of brands expect agency fees to increase over the next three years as they pay more for strategic and technical talent.
For more commoditised or tech-enabled tasks, fees are expected to drop: where AI is deployed, 58% of brands expect to pay less.
Measurement and transparency limitations
84% of respondents highlighted the lack of data and measurement between the advertiser and agency to measure outcomes as a major barrier.
87% believe agencies are resistant to adopt models that require greater transparency in how they make money.
75% care about how their agencies make money, but only 28% believe they have transparency into how they do.
The big idea
The increasing use of AI is highlighting the limitations of the traditional remuneration model and prompting a rethink of how clients and agencies can best work together to create a value exchange which recognises the need for agencies to make money, but also the need to drive business outcomes for their clients.
*The Future of Media Remuneration is based on a survey of more than 80 multinational companies representing in excess of $60 billion in ad global spend. Additional interviews were held with senior agency leaders. The full report is available at MediaSense
