Over Two Thirds of Agencies Now Results-Remunerated, Says ANA

09 May 2001

Billings-based agency payments are now in terminal decline, according to figures released yesterday by the New York-based Association of National Advertisers.

Data collected from 136 corporate respondents during the period December 2000-January 2001 indicates that over two thirds now operate agency agreements with payment based on performance or incentives. A similar study carried out in 1997 showed only 53% of major clients using this method.

Says ANA president and chief executive John J Sarsen Jnr: “Advertisers are asking their agencies to act differently, to proactively identify a broad cross section of solutions for profitable brand growth. Agencies are becoming consumer driven and not traditional-media driven.”

Co-author of the study, David Beals, president and chief executive of Chicago review consultancy Jones Lundin Beals, confirmed the supremacy of the trend: “The fifteen percent - the standard for a century - has largely been supplanted.”

“The interest in non-traditional media and marketing methods,” Beals continued, “is absolutely the trend [behind the shift from the billings method], in part because less traditional media - website design, event marketing, direct response, public relations - are harder to compensate on a commission basis.”

The latest survey indicates that only 21 % of respondents employed billings-based agreements last year, compared with 35% in 1997/8 - “a pretty dramatic shift over a short period,” Beals opined.

News source: New York Times