Hasta La Creative!

Marketers seem increasingly eager to link their agencies’ pay to performance, with arrangements like Razorfish’s profit-sharing deal with Peets’ Coffee & Tea held up as a possible future for agency compensation. But the tactic isn’t as common, or as popular, as everyone thinks, a new report by the 4A’s suggests.

Only 39% of agencies answering a survey by the group, 66 out of 168, reported having any incentive-compensation arrangements with clients last year. And for the two-thirds of agencies that did tout incentive-compensation arrangements, the impact on overall agency gross income a total comprised of commissions, fees and incentives — was less than 2%. About a third of the programs affected income by less than 1%.

“We had record levels of marketers making profits, and agencies were virtually able to make none of them,” said Tom Finneran, exec VP of agency management services for the 4As. “There’s been a lot of debate and interest in this topic but the truth of the matter is we haven’t cracked the code on how to do it. It’s disappointing to everyone that so-called value-based compensation has not gained greater traction. Everyone would like to get to value-based. Nobody quite knows how to implement it.”

Continue reading at AdAge.com