The future is now

Tim Williams and Ronald J. Baker

This article argues that the predominant cost-based model of client agency relationships is wrong, because it misaligns the economic incentives on each side, and payments do not depend on value created.

The future is now

Tim Williams and Ronald J. Baker

The cost-based compensation model that is predominant in client-agency relationships is being challenged for one simple reason: it misaligns the economic incentives on each side. The client pays whether the agency adds value or not and the agency is paid a fixed amount regardless of the value it creates. Even more disconcerting is that the existing model focuses entirely on the wrong drivers - efforts, activities, and costs - rather than outputs, results, and value. If you examine the metrics clients use to evaluate agencies -...

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