Big brands pay agencies by the hour less often. The share fell from 54% to 19%

Only 19% of agency deals at large advertisers are now paid by the hour, according to a study the World Federation of Advertisers (WFA) published on 29 September. In 2011 the figure was 54%. The WFA ran the survey with Agency Mania Solutions, a firm that advises on agency contracts.

The report is called How Brands Define, Scope and Reward Agency Work. It covers 69 multinational companies in six sectors. Together they spend $147bn a year on marketing. Most answers, 71%, came from people in global marketing procurement.

Fixed fees for agreed work now cover a third of agency deals

Fixed fees tied to agreed outputs now cover 33% of deals, up from 20% in 2011. Hourly pay with a performance bonus on top rose from 9% to 21%. Laura Forcetti, a director at the WFA, said clients “ultimately care about the quality, impact and performance of the work”.

63% of WFA members plan to tie more agency pay to results

Looking ahead, 63% of the companies expect to use more performance-based fees. 46% expect more value-based models, where pay depends on what the work achieved for the business. 36% expect to use more fixed fees. Meanwhile 42% plan to use less of the hourly-plus-bonus model.

AI is part of the reason, but few have acted yet. Only 20% have changed their agency contracts because of AI so far. 61% say they intend to. An earlier WFA study with MediaSense found that three in four advertisers wanted to change how they pay agencies.

Advertisers rate a good brief above money as a way to motivate agencies

The companies also scored what makes agencies do better work, on a scale of one to six. A good brief came first at 5.6. Respect and trust scored 5.2 and useful feedback 5.1. Financial incentives came last, at 3.9.

Big media contracts are still being handed out. DoorDash, for example, gave WPP Media one global media contract starting in early 2027.

For anyone renewing an agency contract this quarter, the first clause to read is the fee basis. If it still counts staff hours, it belongs to a model that has shrunk from 54% to 19% of deals at large advertisers since 2011.