The New York agency agreed to base its compensation on vehicle sales. And while pay for performance is gaining in popularity as a form of agency compensation, a strong and direct link to actual sales is rare.
Critics of such compensation plans contend agencies shouldn't be held responsible for turning customer traffic into sales.
Warwick will receive a commission for every car Driver's Mart sells. It also will receive fees based on the labor costs of servicing the account. Driver's Mart said the account will bill $75 million through the next three years.
Driver's Mart President-CEO Tom Eggleston termed the incentive portion of the compensation agreement "significant." But Warwick President Kevin O'Neill, whose name was recently added to the shop's door, downplayed the risk to the agency's bottom line.
"The opportunity to grow with Driver's Mart as they grow is truly an incentive," Mr. O'Neill said.
Warwick's presentation was "a bold, high-energy, strong link of our message, which is high volume, high service and good value," Mr. Eggleston said.
Mr. O'Neill said the agency's compensation proposal was not a factor in the pitch: "Compensation was a handout in our 4-hour presentation." But Driver's Mart was clear throughout its search about wanting to pay an agency based on "how many cars leave their showroom," he added.
100 STORES BY 2001
Grand Rapids, Mich.-based Driver's Mart plans to open 100 used-car stores around the nation by 2001.
The first store will open in Green Bay, Wis., in October; advertising will break just before that.
Several other companies have launched or are planning to launch similar chains. Auto marketers and their dealers have taken steps to defend against the upstarts, including the creation of used-car certification programs.
Warwick will add staff, Mr. O'Neill said, but doesn't plan to open any new offices.
The agency will have control over most elements of Driver's Mart's marketing, including public relations, collateral materials, interactive kiosks, sales promotions, infomercials and media placement.
Driver's Mart plans on most consumers beginning the shopping process electronically-either on the Internet or at kiosks in showrooms, shopping malls or airports.