There’s a long history behind how agencies are compensated for their efforts, but that doesn’t mean that everybody is satisfied with agency compensation.
At one time, agencies were typically paid a commission. Clients didn’t like that. Today they’re generally paid by the hour, something that both agencies and clients alike find reason to complain about.
Last year, Unilver, one of the world’s largest advertisers and a bellweather for the ever-important CPG market, spent $8.6bn on ads, an 8% jump over the prior year.
And it invested heavily in digital, upping its digital ad spend a whopping 40%.
That would normally be reason for agency execs to cheer, but you like won’t hear any champagne bottles popping.
The reason? According to Unilever CFO Jean-Marc Huet, the company is working to reduce “the part of the advertising spend which is used to make films, pay agencies and the like.” And it isn’t where it wants to be yet.
Almost 90% of digital and design agencies believe their clients now expect more work for less money, according to a new survey.
The Design Industry Voices report, which interviewed 500 agency staff, found that 80% said client budgets have been reduced and more than two-thirds (70%) said clients expect more work in pitches for free.
The survey by Fairley & Associates, Gabriele Skelton and On Pointe Marketing is now in its fourth year and suggests that digital and design agencies are feeling the squeeze as a result of the economic downturn.
This is despite the fact that the Econsultancy and Experian Marketing Budgets 2012 Report showed increasing levels of investment across a range of digital channels and disciplines.