Fees Favoured Over Commission By US Advertisers

07 May 2004

The trend for advertisers to abandon the old agency commission system for fees continues apace.

According to the Association of National Advertisers 74% of clients have switched to fees, while 8% use a system which combines fees and commission. A mere 10% remain faithful to the old system.

The survey of 112 major advertisers revealed 38% of respondents used performance incentives for their agencies, up from 35% in 2000. The Agencv Compensation Survey 2004 said 68% of clients felt the system improved agency performance. The figure was 58% four years ago.

"Advertisers are increasingly looking at performance across a number of key metrics, both hard and soft, which means they're looking much more closely at fine tuning their ROI. The change results in more appropriate agency compensation and effective marketing results," said ANA president, Bob Liodice.

Sixty-three percent of advertisers reported they evaluated their agencies on brand/ad awareness, compared with 50% in 2000.

There's also a growing tendency for advertisers to use media specialists unaffiliated to their creative agencies -- 43% as opposed to 41%.

Finally, half of all respondents said they usually conduct annual media audits. The majority use external specialists.

Data sourced from: The Association of National Advertisers (USA); additional content by WARC staff.