Fee Proposals: ‘Like It or Lump It’, Unilever Tells Agencies

26 April 2001

Final proposals for overhauling the way in which Unilever pays its global roster agencies have been presented to the shops concerned, reportedly as a fait accompli.

The ultimatum, portending Unilever’s switch from payment by commission to a fee base, was received by senior executives of its primary agency networks, Interpublic and WPP Group, last week. It ends nearly a year of unproductive negotiations between the parties.

The food and household products titan aims not only to encourage its roster shops to greater efficiencies, it is also adjusting the balance between creative work and media planning/buying – switching the remuneration emphasis in favour of the latter.

And, rubbing salt into an open wound, it seeks to reduce commission payments by redesignating the status of certain markets from ‘undeveloped’ to ‘developed’, notably Asia and Latin America.

The agencies are distinctly underwhelmed by Unilever’s ultimatum. "This matter isn't resolved," said one senior manager at a roster network. "Unilever is a significant contributor to agency profits and anything which impacts on that will not be palatable."

However, as one cynical industry observer noted: “ Unpalatable, yup; unacceptable, nope.”

News Source: CampaignLive (UK)