Trends in Agency Compensation, 18th Edition
For more than 50 years, the ANA has fielded this unique and comprehensive agency compensation survey among client-side marketer members. The survey distributed for this 18th edition was streamlined versus previous surveys to focus on compensation methodology by agency type and to update industry practices around performance incentive compensation.
According to the results of the ANA's Trends in Agency Compensation survey, fees, particularly labor-based fees, are the most dominant method of compensation today. Fees are becoming so prevalent that they are, in fact, increasing in popularity over newer methods of compensation, such as value-based compensation and sales commission-based methodologies.
Key Findings of the ANA's 2022 Agency Compensation Research
- Fee-Based Compensation: Although labor-based fees remain the most dominant method overall, it is interesting to note the significantly increased use of fixed or output-based fees vs. labor-based fees among the largest advertisers.
- Performance Incentives: The use of performance incentives as a complement to fees are being increasingly questioned with most respondents stating that they "don't know" whether performance compensation is improving their agency's performance.
- Agency Performance Evaluation: Agency performance reviews continue to be the most used incentive criterion for advertisers. Brand awareness and sales goals are the next most used metrics, which indicates that, despite all the available performance data, marketers still struggle to attribute more specific results to an individual agency partner, consistent with the continued challenges with attribution along the consumer path to purchase.
- Compensation Model Satisfaction: Despite the great majority of respondents saying they are either "very satisfied" or "somewhat satisfied" with their current compensation approach, a significant percentage of respondents are planning to change their agency compensation agreements. This contradiction could simply be due to changing business conditions and/or agency resource needs, or it may mean that "somewhat satisfied" may actually mean "not satisfied enough."
With marketers returning to the tried-and-true method of fee-based compensation, expressing a lack of confidence in performance incentives, and saying they plan to change their agency compensation, one can imagine that the opportunity for innovation in new methods of agency compensation remains.
Source
"Trends in Agency Compensation, 18th Edition." ANA, 2022.