01 September 1999

IN A MOVE that could presage a revolution in agency remuneration, Procter & Gamble and its four global advertising shops have abandoned the traditional commission arrangement. The new formula links payments to the sales increases achieved by each of the four agencies - D’Arcy, Grey Advertising, Leo Burnett and Saatchi & Saatchi. Also participating in the scheme are US shop Jordan McGrath Case & Partners and Dentsu, respectively responsible for P&G brands in North America and Asia.

As from next July P&G, the world’s largest advertiser with an annual global ad budget of $3.6bn (£2.2bn), will pay the agencies a flat percentage of global revenues for the brands they handle, rather than commission on media spend. P&G declined to state the level of these fees, saying only that they will equate to the level of commission earned by each shop at the date of the change. According to Bob Wehling, P&G’s global marketing officer, the new deal will align the agencies’ interests more closely with those of the com-pany. Fees will be linked to the fortunes of the brands they handle, he said: 'Our over-arching objective is to increase top line sales growth.'