For ad agencies, it’s never been harder to get paid. They forced to do more with less, even as margins and fees are getting squeezed.
We asked attendees at the Digiday Agency Summit in Phoenix, Arizona, some of the new ways they are coming up with to combat the crunch. From embracing value-based compensation agreements to adding newer capabilities, here’s how agencies are getting paid.
Answers have been lightly edited for clarity.
Nichola Perrigo, vp, associate director, digital marketing at RPA
We’ve addressed this by becoming more open and more flexible with our compensation models, to fit the client business structure. Sometimes this means a baseline agreement for what’s in scope and then a better framework for out-of-scope work. Sometimes it’s baseline agreement and a performance bonus. And sometimes we’ll take an investment position on a project with the understanding that it will become equitable later — that kind of trust helps sustain relationships.
Michael Duda, managing partner, Bullish
As consumers, we seek cheaper options and look for more value where we can. And when that happens, corporations have to figure out how to protect margins and become more efficient. The agency compensation issue is a part of that. It’s not personal. The issue lies with the lack of an honest, straightforward discussion. Speaking about fees feels like talking about sex at the dinner table. And it shouldn’t. Agencies cannot be afraid to stand up for what they need, because if we don’t, why should the client? We need to focus on compensation models that focus on the desired business outcomes and real KPIs, not just the cost to make ads.
John Osborn, president and CEO, BBDO New York
If agencies are providing ideas and campaigns that are an economic driver of a client’s business, the agencies should be fairly compensated. There should be a proportional upside in terms of incentive that the agencies should attempt to achieve. In our own relationships with clients, no contract is exactly like another. We structure these relationships uniquely based on the client. The types of services that agencies are providing are much more diverse than ever before, not only in terms of content, but also the data and the context piece. That does lend itself to looking at more diverse compensation structures.
Marcus Collins, svp, social engagement, Doner
Not only are scopes either flat or decreasing, but clients want more with less. And that’s because the industry is being disrupted. A lot of people can now generate ideas and do our jobs, and do it more efficiently than we can. So as an agency, we’re looking at what other ways do we service the client outside of creating creative products. We’re rethinking the role Doner plays for our clients: We’re not just outsourced hands, we’re partners. We’ve developed a production house that not only provides social and digital content, but also does TV production in-house, which was typically outsourced earlier. We’ve also reimagined our hiring strategy, we look for much more hybrid talent today than we did before. We need people who can don multiple hats.
How gamers’ engagement with short-form video is changing
To better understand how modern gamers are engaging with short-form video, Digiday teamed up with Gamesight to pull key points from an exclusive report on gamers’ shifting video consumption preferences.
Inside SAG-AFTRA’s new deal with video platform Cameo
SAG-AFTRA and Cameo, the celebrity platform that connects talent and fans, have announced a new agreement that allows members to cover brand deals through Cameo for Business (C4B). Brands will be able to access more fan-favorite professional talent through SAG-AFTRA's health and pension plans.
Digiday+ Research: Extreme pessimism about the end of the cookie levels off among agencies
Agencies are still feeling out who they think the winners and losers will be as the end of the third-party cookie draws near, but they're doing so with notably less pessimism than they have in the past.
SponsoredHow agencies’ relationships with RMNs are continuing to evolve in 2023
Sponsored by Best Buy Ads As retail media networks proliferate, agencies are increasingly identifying RMNs as valuable opportunities for their brand clients as they seek quality audience data, meaningful reporting and insights, and authentic and engaging ad formats and creative. However, there are many options for them to work through as they select RMN partners. […]
Benjamin Moore is using OOH near big-box retailers to say their paint isn’t there, encouraging people shop local
The 140-year-old paint brand wants to make sure people know that it is only available at local retailers.
Jose Cuervo Tequila celebrates UFC’s 30th anniversary with Kevin Holland, Stephen “Wonderboy” Thompson ads
Mexico-based Jose Cuervo, is the first tequila brand to be a direct advertiser of the UFC with spots featuring UFC fighters Kevin Holland, a Cuervo ambassador, and Stephen "Wonderboy" Thompson.