"We're a conservative, old-line company," acknowledged Wrigley Group VP Ron Cox, but, he added, "I just felt it was the right time to do this."
`A WORK IN PROGRESS'
Wrigley's incentive system-a first in the company's history-is "a work in progress," Mr. Cox said, and will be based on "both objective and subjective criteria" that he declined to identify.
The plan will include a guaranteed base compensation with opportunities to earn more depending on both what Wrigley spends and agency performance. He would not say what commission Wrigley now has in place, but it's known to be less than 15%.
Wrigley's account at BBDO, Chicago, is estimated to be more than $130 million. For now, the plan is believed to apply only to the U.S.
Wrigley is handled by a number of agencies overseas, said Mr. Cox, who noted that while agency consolidation is appealing in terms of cost savings, it has not yet been proved that it actually works.
In remarks to the American Association of Advertising Agencies annual meeting last week, Mr. Cox said there are three things he's willing to pay well for from an agency: bombastic creative, superior marketing counsel and strategic research.
In an interview, he stressed Wrigley wouldn't cheat the agency with its new payment system.
"We want to do a fair job of playing God," he joked.
FAIR PROFIT FOR AGENCIES
Then he added, "We've always believed our agency should make a fair profit. They should have it since we always demand access to key people . . . If your agency's not making a reasonable profit, [the client] will pay for it one way or the other."
Mr. Cox, who is also current chairman of the Association of National Advertisers, said he believed the issue of incentive compensation would continue to catch fire with other major marketers.
"The key issue is how does the agency fit into the price value relationship in a time when [marketers] are downsizing, rightsizing and [their] primary thrust is the price/value equation," he said. "That approach will now more often be addressed in terms of the agency compensation arrangement."