Not only has the 15% commission gone by the wayside--75% of advertisers reported their agency compensation rate is below that--but billing-based compensation itself has lost ground. The survey found billings-based compensation, which 61% of respondents used in 1994, is now used by only 35% of ANA members responding.
About 12% of advertisers responding said they pay agencies by a labor/billing combination agreement, a trebling from 4% in 1994. Incentive compensation is also on the rise. Fully 30% of advertisers have implemented such a payment system, up 11 points from 1994.
Although the 15% commission is all but dead and buried, the majority of advertisers said they nonetheless calculate how much their agencies would have earned under the old system. "It is interesting to note that while only 9% of respondents still use the old standard 15% commission, nearly two-thirds of them reference it as a benchmark to evaluate their current agency compensation agreements," said ANA President-CEO John Sarsen.
Copyright June 1998, Crain Communications Inc.