Thursday, August 22, 2013

Marketers Continue To Pay Agencies Based On The Wrong Time Sheet

The most recent report from the ANA indicates that fee-based compensation continues to rise, now representing 81% of all compensation agreements between marketers and agencies.

To be sure, a fee-based compensation system is better than a commission-based compensation system.

But, in my opinion, the fee that marketers pay their agencies is still based on the wrong time sheet. 

That’s because marketers are still paying their agencies based on time spent creating the advertising rather than the time the viewer spends watching the advertising.

Which is more valuable to the advertiser?  

Agency time-spent?  Or, viewer time-spent? 

The answer lies in which will lead to more product sold?

Paying for the time the agency spends working on the advertising is paying for effort.

Paying for the time the viewer spends watching the advertising is paying for outcome.

Both time sheets — the agency’s and the viewer’s — are available to the marketer.  But, marketers only pay for the former.

Remember the old line, you get what you pay for?

Nowhere is this truer than the advertising business.

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