Paying for Advertising, a report jointly published this week by ISBA (the Incorporated Society of British Advertisers) and the Advertising Research Consortium, reveals that specialist media agencies now account for 77% per cent of the ad-buying market. Their collective share has soared from 45% in 1997 and 68% in 2000.
In keeping with this trend, the market share of full service agencies has declined to just six per cent of media spend. Back in 1997, such shops enjoyed one third of the market, falling to 14% in 2000.
Says the report’s author Jonathan Lee: “Advertisers continue to search for value from their agencies. Nowadays that’s as much a matter of specialist procurement, choosing where to resource services and the design of remuneration agreements as it is of negotiating the headline commission or fee rate.”
Payment by results contracts have proliferated across the creative agency spectrum, and now account in part or whole for forty per cent of all agency/client relationships. This compares with 28% in 1997 and 36% in 2000.
A similar bias is also evident in agreements with media shops, rising from 28% in 1997 via 36% in 2000 to 46% today.
Direct marketing work, by definition the most apposite for PBR deals (along with internet advertising), is projected to grow by 2006 to a level seven times that of ‘cost-per-thousand’-based campaigns.
Much online advertising is already remunerated via PBR, flagship users of this payment method including Comet, Ebay, Interflora and Tesco.
Data sourced from: mad.co.uk; additional content by WARC staff