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Industry bodies join forces to update best practice guide towards agency payment

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By The Drum Team, Editorial

January 26, 2012 | 2 min read

A joint-industry best practice guide has been published on the payment of agencies, following collaboration between industry bodies, the IPA, ISBA, MAA and PRCA.

The guide updated the original 2005 edition and aims to take into account hybrid agency remuneration models, while acknowledging that the need for more flexibility between clients and agencies in providing effective marketing campaigns on slimmer budgets.

Included within the guide is a ten-point checklist of the qualities shred by best practice remuneration agreements, the principle payment systems, a summary of the importance of researching the work and internal agency costing before the work begins.

Colin Fleming, chairman of the IPA Finance Policy Group and chief operating officer, for AMV BBDO, commented: “The number of remuneration models utilised by clients and agencies has increased since the Agency Remuneration guide was first published. Indeed many of the models currently utilised are a hybrid of multiple models. Previously most models had a commission component. But Payment By Result (PBR) is now the most common thread between models. It is important that PBR truly rewards top results. The introduction of PBR to agency remuneration should therefore contribute a risk/reward component to the model, rather than just adding risk only. In reiterating some guiding principles and outlining some of the new models this update to the guide will act as a useful tool for those about to discuss agency remuneration.”

The free-to-download guide has been made available through the IPA website.

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