Advertisers turn to performance-based remuneration for ad agencies

"'100% of payment based on incremental sales generated'"

"The move to performance-based remuneration is a recognition that where agencies and advertisers are aligned in the same way, the outputs are more likely to be better for both," she said."

Eight in 10 marketers plan to increase use of performance-based remuneration contracts with ad agencies. Use of output-based fees as the main contract has risen to 28% from 20% in 2011, while 15% now combine performance with labour-based payment, up from 9% in 2011. Some marketers have moved to fully tying payment to incremental sales. For 80% of respondents, less than 20% of total remuneration is currently linked to performance. Creative agencies have reduced FTE-based models by 20% and increased fixed/output-based models by 14% since 2011. Media remuneration shows higher satisfaction and growing performance fees.

Read at The Drum