Adweek Media Survey

How do you currently compensate the various types of agencies you utilize?
Note: Respondents can have more than one answer.

Commision on Media: 39%
Fixed Annual Fee: 35%
Project Fee: 34%
Labor-Based Fee: 30%
Monthly Retainer: 26%
Commission on Production: 21%
Hourly Fee: 19%
Other Methods: 8%
No Answer: 7%

By Category

Commission on Media: 50%
Labor-Based Fee: 43%
Fixed Annual Fee: 29%

Fixed Annual Fee: 48%
Commission on Media: 35%
Project Fee: 30%

Project Fee: 64%
Hourly Fee: 55%
Commission on Media: 36%
Monthly Retainer: 36%
Labor-Based Fee: 36%

Commission on Media: 60%
Hourly Fee: 60%
Project Fee: 60%
Labor-Based Fee: 60%

Commission on Media: 50%
Monthly Retainer: 50%
Commission on Production: 25%
Project Fee: 25%
Fixed Annual Fee: 25%

Project Fee: 57%
Commission on Media: 43%
Commission on Production: 29%
Fixed Annual Fee: 29%
Monthly Retainer: 29%
Labor-Based Fee: 29%

Monthly Retainer: 46%
Commission on Media: 39%
Fixed Annual Fee: 39%

Fixed Annual Fee: 44%
Commission on Media: 30%
Commission on Production: 26%
Labor-Based Fee: 26%

Compensation is one of the most-talked about subjects among both advertisers and agencies today, with the Association of National Advertisers and others fielding surveys and conducting seminars on the topic. The AdweekMorgan Anderson Consulting Media Survey also asked respondents about how they compensate the various types of agencies they use for marketing communications services.

Although media commissions remains a standard method of paying shops for services rendered and still is the most frequently cited method, the trend towards other means of compensation is evident from the client survey results. The survey found that 95 percent of all respondents, in fact, also use some form of fixed-fee payment in their compensation mix. (Respondents were given the opportunity to offer more than one answer to this question.)

Overall, the three most utilized methods of agency compensation are “commission on media” (39 percent); “fixed annual fee” (35 percent) and project fee (34 percent). However, there are significant differences in how companies pay their agencies across industries, with the breakdown by categories revealing considerable variations.

The most commission-dependent categories are Consumer Durables/Utilities (60 percent indicating payment of this type), Computers/Technology (50 percent) and Entertainment/Publishing/Retail (also 50 percent), all well above the total respondent level of39 percent.

Fixed annual fees are popular in the Food & Beverage/Packaged Goods (48 percent) and Automotive (44 percent) categories.

Project fees are common in the Pharmaceutical (64 percent), Consumer Durables/Utilities (60 percent) and Financial Services (57 percent) categories. Labor-based fees are frequently used in the Consumer Durables/Utilities (60 percent) and Computers/Technology (43 percent) categories. And monthly retainers show up often in the Entertainment/Publishing/Retail and Telecommunications industries, with those categories recording 50 percent and 46 percent, respectively.

The Morgan Anderson perspective: “In our experience, an annual fixed fee based on full transparency from the agency to the client is the way to go.”