A best practice approach to creating collaborative media agency partnerships through performance based remuneration models.

The old adage says “what gets measured gets done”. At ID Comms we believe that “what gets paid for gets done first and done the best”. How you pay for your agency resource has a huge influence on the work they do and the quality of that work.

Pay an agency correctly, using a clear Scope of Work and the right payment model and they will operate like a finely tuned machine, driving value and performance for your business. Pay them incorrectly and you risk discovering that your agency resource becomes dysfunctional, evasive and potentially opaque.

Delivering the best value at the best price should be at the heart of any media agency remuneration model. It is important to establish a robust remuneration model early on in the relationship; one that is measurable and clearly linked to your business objectives, typically through your Scope of Work. Remuneration should reflect the collaborative partnership between you and your agency to improve effectiveness of existing investments and to generate new value by incentivising the right behaviours.

“ID Comms are industry thought leaders on media agency payment models”

Steve Lightfoot, WFA

 

Objectives of Media Agency Remuneration Model:

  • Secure the right agency resources, incentivise the right behaviours;
  • Create a transparent payment model that holds agency resources to account for performance and business delivery;
  • Link agency income to business performance;
  • Provide the right control levers for marketing and procurement leaders; and
  • Focus agency resources to deliver against priority areas of Scope of Work.

ID Comms will provide you with:

  • A bespoke best practice remuneration model based on your requirements and integrated with your media KPIs (success measures) and agency Scope of Work;
  • A briefing document to align key stakeholders internally and at the agency. This will detail the elements of the model, how these will be measured and how (if required) the agency service assessments will be conducted.

The questions that the Agency Remuneration Model process will address:

  • How do we keep the media agency focused on our success?
  • How do we secure the best talent at the right price?
  • Can an agency share the risk and reward based on our business performance?
  • Which agency payment model is right for our business?
  • How much of the remuneration should be a bonus?
  • How do Performance Related Incentive Models (PRIP) work?
  • What is the difference between PRIP and PRF?
  • Should we be paying a commission on media spend or a fixed fee?
  • What if our spend changes, do we still have to pay the agency?
  • Which levers will create the right agency behaviours?

A media agency remuneration model typically builds upon a clear set of media KPIs and a comprehensive media agency Scope of Work.

 

Further Reading:

Performance Related Payment Models – white paper by WFA