The always capricious dynamic between advertisers and agencies is going through its latest set of twists and turns as both groups experience irreversible changes to their respective businesses caused by the coronavirus crisis.
And any slither of hope that the worst disruptions are over has well and truly evaporated over the last week.
In short order, the U.K. announced it’s in the midst of the deepest recession of any major global economy, the Federal Reserve Bank has admitted that U.S. economic growth will be muted until the virus is contained while global unemployment fears are at a high. As businesses brace themselves against these economic headwinds, marketers’ performance — and subsequently, their agencies’ performance — are coming under even more scrutiny than they were in the first half of the year.
Increasingly, however, marketers seem prepared to make working under those conditions worthwhile for agencies. With more of their money being spent online since the start of the crisis, those marketers are looking at more performance-based metrics and have concluded that it’s more cost-effective to pay them a commission when those targets are hit.
In other words, more marketers are coming around to the idea of paying agencies more to save money on their media budgets. Usually, media agencies are paid by a set of billable hours worked by agency execs on an account.
Matthew Semple, media management practice lead said:
If you’re using a commission remuneration model then that puts a lot emphasis on the agency, and we’re seeing a lot of work done here as advertisers place more emphasis on performance channels.
To read the article in full in Digiday, click here.
First featured 20/08/2020