Media agencies face new targets

30 September 2011
BRUSSELS: Many major advertisers are adapting their strategies when it comes to appointing, paying and monitoring media agencies, according to a study.

The World Federation of Advertisers, the industry body, surveyed 27 of its member companies, which are collectively responsible for annual media spend of $30bn.

It found the number of clients working with media networks on a regional level has increased from 23% in 2008 to 36% in 2011. During the same period, the amount of brand owners handing out global briefs in this area remained flat, also on 36%.

When discussing agency remuneration, 33% of the corporations represented utilise an element of payment-by-results for offline media buying, a figure reaching 25% for the online equivalent.

More specifically, 82% of organisations implementing such measures have made sales a core key performance indicator (KPI) in determining the recompense paid to agencies.

On average, meeting KPIs now makes up 20% of remuneration. Within this, 48% of firms leveraging this type of model pay between 10% and 20% of fees in such a way. Another 24% of companies pegged the share of fees dependent of these metrics at over 30%.

The study further reported that 13% of media agencies are assessed in terms of performance at least twice a year, up from zero in 2008.

Elsewhere, the number of advertisers carrying out these reviews on a biannual basis has grown to 57%, while their counterparts pursuing such activity once a year has fallen from 36% to 30%.

A 56% majority of featured enterprises are also using financial auditors to tackle the issue of "hidden media rebates", thus ensuring they get maximum value from their outlay.

Stephan Loerke, managing director of the World Federation of Advertisers, argued big brand owners often have the most "sophisticated" contracts with media agencies, and are displaying new priorities.

"[These are] transparency, which is driving more frequent performance audits and the use of specialist financial auditors, and the need to deliver real results, which is encouraging clients to give agencies a stake in improving sales."

While not statistically relevant, the findings drawn from the survey are indicative of the thoughts and actions of the large multinational marketers in the WFA's membership.

Data sourced from World Federation of Advertisers; additional content by Warc staff
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