Three in four advertisers plan to change how they pay agencies

The World Federation of Advertisers and the consultancy MediaSense published their Future of Media Agency Remuneration study on 25 September. Three quarters of the advertisers in it say they will change the way they pay their media agency within three years. The sample covers more than 80 multinational companies. Together they spend over 60 billion dollars on advertising each year.

Only 28 percent of advertisers say they know how agencies earn

Just over a quarter of the marketers surveyed say they understand how their agency makes money. At the same time 87 percent think agencies push back on models built around transparency. That gap has a practical cost. Some 84 percent name missing data and measurement as the reason they cannot move to fees tied to results. Poland’s agency body has tried to close part of the same gap with seven written standards for client and agency work.

Output-based fees are used by 9 percent and wanted by 56 percent

Fees paid for a defined output are in use at 9 percent of the advertisers in the study. Another 56 percent expect to use them within three years. Outcome-based fees are the other model on the way up, named by 58 percent. Hours and commission on spend are still the most common today, at 63 and 65 percent. Large reviews keep testing those numbers, as when Coca-Cola put its North American media into review.

Advertisers will pay more for data science, not for hours

Paying more is not off the table. Six in ten expect their agency bill to rise over the next three years. They point to named skills: 65 percent would pay more for strategy and planning, 65 percent for data science and engineering, 64 percent for measurement and attribution, and 54 percent for generative AI work. Better alignment with business results is the main reason for change, named by 74 percent. Only 15 percent change the model mainly to cut costs. Holding groups still report growth in won business, as Omnicom Media’s first-half billings showed.

Open your current agency contract and find the line that says what the fee is calculated from: hours, a commission on media spend, a list of deliverables, or a business result. If it still says hours, this study puts you in a shrinking group. The harder question follows straight after: which single measure would both sides sign off on, because that is where 84 percent of advertisers say the conversation stops.