We have been trying to understand how agencies and their clients are managing their remuneration deals during these difficult times. The responses we have had from various members have shown that there has generally been a flexible and, for the most part, reasonable adaptation of existing terms. Here is our summary of how our sector is responding to the need for movement in this sensitive area.
The principal ask from clients is, of course, for some sort of reduction in the amounts to be paid to agencies this year, including:
At the same time, clients are not keen to acknowledge costs incurred as a result of their reduced activity e.g. strategy costs on long-planned campaigns now being unwound for which commission payments were anticipated.
Similarly, cancelled campaigns result in additional administration costs and they play havoc with pricing commitments given to a client when the media volumes are reducing. We are going to be asking ISBA to make sure clients are mindful of these points.
When contemplating concessions, agencies can at the same time be thinking of lengthening and deepening their relationships, and their commercial livelihoods.
If you would like help with any conversations on remuneration you are having with clients please email IPA Finance Director David Clasen.