Introduction
Enterprises, large and small, are all taking a hard look at the marketing agency agreements under which they are currently working. The days of 15 percent media commissions are long gone; the “Mad Men” era is in the rear view mirror.
A variety of agency compensation models are being used today, ranging from fees to licensing of IP products that the agency produces on the client's behalf, and several options in between. There is no magic formula, as each situation will dictate what is best for the client.
The advertiser needs to acknowledge that the agency is in business to generate profits, and should be compensated fairly. Don't overpay, but don't squeeze to the point that the agency will not commit the resources necessary to create great work on your behalf. The idea is to determine just what is “fair” and create a win-win situation for both the agency and the advertiser.