Agency Remuneration - a best practice guide - Factor 3

Agency Remuneration – a best practice guide

The IPA has recently launched an updated version of their excellent ‘Agency Remuneration’ guide. The publication outlines, backed by industry research, the various remuneration models being used by agencies and their clients, the popularity of each and their individual pros and cons. It’s written dispassionately taking on board the interests of agencies and clients alike. It has been developed, and is fully endorsed, by the IPA (Institute of Practitioners in Advertising), ISBA (Incorporated Society of British Advertisers), MAA (Marketing Agencies Association) and PRCA (Public Relations Consultants Association), so has a broad application across marketing communications.

The front cover of the IPA's Agency Remuneration best practice guide

The guide includes a ten-point checklist of qualities shared by best practice remuneration agreements (there is detail and explanation provided for each):

  1. Simple to understand and easy to administer
  2. Fair to both client and agency
  3. Aligning client and agency interests and priorities
  4. Finalised before agency resources are committed
  5. Recorded in a ratified client-agency contract
  6. Flexible enough to accommodate possible changes in the future
  7. Involving senior management stewardship, with principles clearly communicated to the teams from both parties
  8. Capable of standing the test of time and being understood by any manager from the client or agency organisation
  9. Based on agreed and understood terms and definitions
  10. Specified tracking and review dates

Interestingly, the guide also reveals that retainer fees of various types now account for 90% (Paying For Advertising 2010) of all creative agency agreements and the rest are largely hybrid agreements including an element of commission.

It’s an excellent read and is a vital tool to enable agencies and clients to positively manage their financial relationship to the satisfaction of both parties, so that agencies can get on with creating great marketing communications and clients can get on with reaping the commercial benefits. After all, a happy relationship is a positive and productive one.

There are five other joint industry guides available, all designed to help clients get more from their communications agencies:
Briefing an Agency
Finding an Agency
Evaluation
Judging Creative Work
The Communication Strategy

You can find more details or download these guides on the IPA website.

 

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