Advertiser and agency relationships are adapting to new economic and social realities as digital costs mount, according to the World Federation of Advertisers.
Why it matters
Client-agency relationships are fundamental to the way marketing works. But new compensation metrics and methods, based on performance rather than input, are growing – and it’s changing the form and function of these relationships.
Discussions about remuneration appear to have less impact on the relationship than they did in the last edition of this report released in 2018, which should be taken as a positive.
“Considering the significant financial disruptions we have seen both during and post-pandemic, it’s reassuring to see that this report shows that, in the main, there continues to be a balanced approach to remuneration,” says Stuart Pocock, co-founder of The Observatory International, research partners on the report.
Value for money
Based on the views of 200 senior executives across 84 countries, the WFA’s Global Agency Remuneration Trends shows a growth in the proportion of clients reporting good value from their creative agencies, with media agencies’ value for money (but not performance) regarded slightly more sceptically.
Digital costs are growing
More than four in 10 clients report serious increases in the cost of digital and CRM services. Anecdotal reports suggest “these can be as much as 50% for digital and as high as 20-30% across Europe and the UK, for particular areas of technology specialism”, the WFA explains.
This echoes broader media inflation trends, as paid social CPMs became more difficult to measure, and the growth of retail media has pushed up costs on major digital retail advertising platforms like Amazon.
Diversity, sustainability, and talent
Societal commitments and values are helping to differentiate agencies in the eyes of clients. However, the report notes that across parts of the western world, these aspects are increasingly expected rather than valued. On a global scale: