Inside Information

Trends in Agency Compensation (See Figure 1)

David Beals

The 13th edition of the ANA's triennial Agency Compensation Survey continues to highlight two major trends:

1) The significant move away from commissions to fees as the primary method of agency compensation. Fees are now the dominant form of compensation regardless of the size or type of advertiser or the type of agency service. In fact, commissions were reported by only 10 percent of the survey respondents as the primary method of compensation.

2) The continued increase in the use of performance incentives. Although overall growth has slowed (up from 35 percent in 2000 to 38 percent in 2003), incentives are now employed by a majority of larger advertisers (those who spend over $100mm a year). And, those using performance incentives indicate, at very high levels, that they are working to positively affect agency performance, and that they will definitely continue to stay in place as a method of compensation. (See Figures 2 and 3)