A couple of weeks ago we ran a post that sparked the ire of a few folks in Agency Land. It concerned WPP’s decision to drop out of the McDonald’s creative review and, more specifically, the alleged reasons for that decision.
According to multiple sources, the client not only set a 60-day June 30 deadline for the pitch but also told potential agency partners that they would not be allowed to make a profit on base compensation and could only do so via unspecified performance pay incentives.
We managed to get a few industry veterans to speak to us about this matter both on and off the record for a follow-up story. First, a source who has worked with fast-food clients in the past called the (alleged) deal “unheard of,” adding, “I don’t know of any business that operates that way.”
360i executive chairman Bryan Wiener told us:
“Clients have always had the power. And performance-based compensation is not a new topic either, but it’s very hard to find ways to make it work so that all parties are aligned.”
“Anytime things like this happen, we have to step back and say, wait a minute. Where are we going with the structure of this relationship,” said mcgarrybowen global CMO Brandon Cooke.
Industry advocates had a similar take. 4A’s evp, head of agency management services Tom Finneran said, “If the situation is accurate, then there is no incentive at all. All the performance pay would be to get you back to some degree of profitability, but an ad agency is a for-profit business.”
Finneran got a bit more specific regarding 4A’s official policy:
“It has been 4A’s recommendation over the last several years that agencies and clients should not even begin to discuss performance compensation until the two parties have established a robust relationship. Otherwise, there’s tension on both sides.”
He also said that the structure obviously favors the incumbent, and another source compared the arrangement to a game of poker:
“With risk there has to be reward. The two incumbent holding companies know what the business looks like, while WPP has no idea. That’s when you fold in poker.”
According to Finneran, quite a few people have been thinking the same thing: “There has been some discussion that not all business is worth having.”
For the record, McDonald’s has not responded to our requests for comment or clarification.