Who's left at 15%?

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The standard 15% commission might seem on its last legs, but it's never likely to disappear entirely, said David Beals, president-CEO of Jones Lundin Beals, the Chicago consulting firm that conducted the Association of National Advertisers recently released compensation survey.

In 2000, only 21% of advertisers overall paid commissions, and only 16% paid a fixed rate, most likely the 15% standard, he said. The remaining 6% paid a sliding rate that generally lessened depending on the amount of expenditure, Mr. Beals said.

"The people who tend to stick with commissions are doing so either from administrative simplicity or force of habit," said Mr. Beals. "It seems to be common mentality rather than package-goods or services companies of a particular size."

Ray Gillette, managing partner of Omnicom Group's DDB Worldwide, Chicago, said several clients he wouldn't identify are still paying 15% commissions and about a quarter of the agency's clients have some kind of commission-based deal.

The last big advertisers to pay media commissions of any sort seem to be package-goods titans Procter & Gamble Co. and Unilever, which have within the past two years ditched commissions or are in the process of doing so. Some more forward-thinking advertisers, such as General Foods Corp., since merged with Kraft and owned by Philip Morris Cos., have experimented with payment scales as far back as the late-1980s.

Though the company wouldn't comment on compensation aspects, General Mills' recent move to consolidate media and general agency assignments with Interpublic Group of Cos.' and Publicis Groupe shops also marked that advertiser's move away from commissions to a labor-plus-performance incentive package.

Unilever is in the process of finalizing details with its roster shops of a new global compensation package based on fees and performance incentives expected to take effect next year. Previously, Unilever had moved to an 11.5% to 13% sliding commission scale supplemented by performance incentives.

P&G, while abandoning media commissions altogether last year in favor of a system where agencies are paid entirely based on a brand's sales, had previously moved to commissions of 13% or lower in the late 1990s after re-assigning media planning and buying duties for TV and print to Bcom3 Group's MediaVest and Starcom units, respectively.

The auto industry, too, has largely moved away from commissions during the past decade. The country's largest advertiser, General Motors Corp., began moving from commissions to fees in 1994, replacing it with a fee-plus-incentive system. Ford Motor Co. started its labor and incentive-based system in January 1999. Omnicom Group's PentaMark Worldwide, Troy, Mich., the dedicated unit for DaimlerChrysler's Chrysler Group, likewise struck a deal that combines fees with performance bonuses.

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