CHICAGO – Arian, Lowe, Travis & Gusick has a taker for a new compensation option designed to reward the agency for the value of its ideas.
Under the arrangement, the agency would work for a lower than normal fee but will receive a 1% to 1.5% commission on all work utilizing the agency’s creative thinking. In other words, if ALT&G creates a tagline for a TV campaign, the agency would receive the commission not only on the TV buy but also on all other media – direct marketing, promotions, etc. – in which its creative idea is used. The commission is applied to total expenditures – not just media buying – for what the agency’s creative is used.
Agency president Daryl Travis last week said one client has agreed to work under the option. He declined to identify the client other than to say it is recently added business.
‘Agencies want to work on an incentive basis, but most don’t make sense,’ said Travis. ‘If you tie compensation to sales or marketshare increases, there are a thousand things you have no control over that are going to have an influence. That’s the problem with the incentive approach DDB Needham tried. And the 15% media commission basis is a dinosaur; it’s dead.
‘It’s more equitable to make money based on the value of the ideas we create. The client doesn’t have much to lose, and we’re compensated for how the creative we develop is used.’
ALT&G’s plan is one of several alternate compensation plans agencies have been floating to clients. Chiat/Day evp-cfo Simon Bax recently told a 4A’s seminar it has some sort of fixed-fee-with-incentive deal with a third of its clients. He also said the agency is seeking three-year contracts, cancellable only for breach of contract grounds, with new clients.
Travis said ALT&G’s incentive option is more in line with the true services agencies are supplying clients.
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