There's a long history behind how agencies are compensated for their efforts, but that doesn't mean that everybody is satisfied with agency compensation.
At one time, agencies were typically paid a commission. Clients didn't like that. Today they're generally paid by the hour, something that both agencies and clients alike find reason to complain about.
Last year, Unilver, one of the world's largest advertisers and a bellweather for the ever-important CPG market, spent $8.6bn on ads, an 8% jump over the prior year.
And it invested heavily in digital, upping its digital ad spend a whopping 40%.
That would normally be reason for agency execs to cheer, but you like won't hear any champagne bottles popping.
The reason? According to Unilever CFO Jean-Marc Huet, the company is working to reduce "the part of the advertising spend which is used to make films, pay agencies and the like." And it isn't where it wants to be yet.
It was the best of times, it was the worst of times. That may very well describe 2012 for media companies.
As detailed in Econsultancy's 2012 Media Growth Trends report companies are optimistic about what they can accomplish this year, but they also face numerous challenges - the least of which is the prospect of deeper economic pain in Europe.
When it comes to how agencies are compensated, digital shops haven't always been treated like traditional shops. Retainers and performance incentives? Maybe, but project fees have been far more common.
That may be changing according to a study conducted by the Association of National Advertisers (ANA), which found that the number of digital agencies being compensated with a combination of project fees and retainers jumped to two-thirds last year, up from just 37% in 2009.
Also on the increase: performance bonuses. Nearly quarter of those
surveyed changed these last year, and nearly 30% plan to do this year.
After being bought by AOL for $315m, it's safe to call The Huffington Post one of the most successful new media ventures to date.
The HuffPo's rapid rise and nine-figure acquisition is all the more
incredible because of the fact that much of the HuffPo's content is
created by unpaid contributors.
Lured by the promise of being able to
write for a massive audience, experienced and often-recognizable
individuals helped Arianna Huffington build the HuffPo into what it is
Mark Jackson at Search Engine Watch published a post yesterday about an interesting concept: performance-based compensation for SEO.
In it, Jackson describes a panel discussion at the Search Engine Strategies conference that took place in Silicon Valley last week. The panel, "Performance Pricing Models: What Every CMO Must Know", broached the subject of performance-based pay for SEOs.
Assume for a moment that you're an artist. You get a call one day from somebody at Google. Good news: Google wants you to create a skin for its Chrome browser.
You ask, "What's the fee?" The response: "There's no money but you'll get lots of exposure". Deal or no deal?