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General Mills flips its agency pay model

News, 21 November 2016

NEW YORK: General Mills, the food group, has shifted its remuneration policy for creative agencies to reflect the importance of breakthrough thinking, rather than simply making time-based payments.

Michael Fanuele, Chief Creative Officer at General Mills, discussed this subject at the Talent@2030 Conference recently held by the 4A's (American Association of Advertising Agencies) in New York.

"The shift is paying for deliverables of the highest order," he said. (For more details, read Warc's exclusive report: General Mills gives agencies new incentives.)

More specifically, he reported there are "three streams of compensation" for the shops responsible for delivering its creative work.

The first is a "thinking fee" based purely on ideation. "We give a thinking fee to an agency simply for thinking on our behalf: For taking our brief, for getting their minds and their souls, and working on the problem," Fanuele said.

Building on this theme, the second such payment stream involves "making things" that are utilised by a brand owned by General Mills.

"If we buy your idea, this is compensation for your idea," he added in describing the second component of its resource-allocation plan.

Extending on these two areas, the company has introduced "incentives" that reward its shops for the campaigns they develop which then yield powerful returns.

"The third [element] is a really robust incentive – the most robust in the industry. If the work works, if gold is raining on us, we want to splash you with some of it," Fanuele said.

And the early indicators suggest that General Mills is headed in the right direction when it comes to getting "to something great".

"I've got to tell you: It has been remarkable how agencies, as a result of that [new remuneration model], show up differently," he said.

"Before this happened … I think something like 60% of our fees were going to non-creative people. Since we implemented this, it's flipped: 60% of our fees go to creative people."

Data sourced from Warc