US Clients, Agencies Agree Compensation Guidelines

10 December 2002

Twelve months in the melting pot, an agreement has finally been struck by America’s major advertisers and their agencies on the quicksand issue of appointment and compensation principles.

A set of guidelines covering this bristly subject has been agreed by a joint taskforce of members from the Association of National Advertisers and the American Association of Advertising Agencies. Those around the negotiating table included representatives from General Motors, Procter & Gamble, Ogilvy & Mather and TBWA\ Chiat\Day.

According to Four A’s evp Bill Nicholson, himself a taskforce member, the outcome of a year’s labor equates to little more than old fashioned commonsense – a commodity “not widely practised” in the ongoing joust between hired and hirer, he observes.

The main recommendations of the Guidelines for Effective Advertiser/Agency Compensation Agreements cover:

The setting-out of a detailed scope of work;

Measurable, appropriate goals;

Periodic staffing and performance reviews;

“Simple and clear” agreements, signed before work starts.

Notable by their absence from the guidelines are key problem areas such as metering the efficacy of a service-oriented creative supplier. Observes agency review consultant Linda Fidelman: “Most accounts you can’t do on strictly business measurements, because it's more than advertising [that drives sales]. That's the quandary.”

Another consultant, Peggy Mitchell-King, sees the guidelines as helpful, especially to “less seasoned clients”. She adds: “The best clients have been operating this way for a while. So this is perhaps a codification of the reality of how the industry has changed.”

Data sourced from:; additional content by WARC staff