Adweek ADSPEND Survey: Compensation

Advertisers continue to move toward fees as a means of compensating agencies. Labor-based fees have become more prevalent during the past 18 months, with 46 percent of respondents using them in September 2002, up from 30 percent in April 2001. The use of project fees increased the least during that period, to 38 percent from 34 percent.

More than two-thirds of advertisers appear to be satisfied with their current compensation methods: 68 percent of respondents said they were not considering a switch. That is essentially unchanged from April 2001. Among those advertisers in the latest study who said they were considering a change, labor-based fees were the most attractive option (cited by 24 percent), followed by hourly fees and fixed annual fees (19 percent each).

Ninety-six percent of respondents said they have formal compensation contracts with their agencies. The only categories without a 100 percent response rate to this question were pharmaceutical (89 percent) and packaged goods (78 percent). Moreover, nearly 80 percent said they have formal agency-assessment or evaluation programs.

In addition, 59 percent of respondents said they have pay-for-performance or incentive compensation plans with their agencies. This is up from 41 percent in the April 2001 survey. These are most common among clients in automotive (91 percent usage), pharmaceutical (78 percent), retail (75 percent) and food & beverage (63 percent). By contrast, no telecommunications respondents said they use such plans.

Twenty-seven percent of respondents said compensation is the top issue they face in the marketing arena, down slightly from 31 percent in April 2001.