Negotiating agency compensation

Negotiating agency compensation at time of

hire vs. renegotiating at time of agreement extension are two wholly different skills, but must follow the same rules

Rule 1:

Compensation negotiation, to be successful, must be a transparent and fair process if a client-agency relationship is to thrive

There are still a large number of sophisticated marketers and advertisers who are uncomfortable in the realm of agency compensation. Add to this the complications engendered by the rise of digital marketing which has added several new dimensions to the overall compensation discussion.

It is not totally untrue to assume that many clients feel they are overpaying, while many agencies feel like they are unmercifully squeezed.

TAMG/CCG has negotiated many compensation deals from a consulting, as well as agency and client prospective. We have also helped bring to to the surface and resolve issues on service and demands that all to often could and most likely would have led to derailment of an otherwise successful agency-client marriage.

Rule 2:

A successful fee arrangement most provide a fair profit margin to the agency.

Because without that fair profit margin, we know from years of observation from the agency, client, and advisor perspective, that both agency and client will suffer from poor performance, and the relationship will not stand the test of time.

Generally speaking our compensation practice falls into two silos:

Compensation considerations that are an integral part of every search we undertake. We believe in addressing compensation early in the process, on a broad scale level, and getting very specific with the final contenders based on an anticipated client driven, scope of work, and the reality of every day client demands for ancilary services based on in-house cababilities.

Revised compensation programs where there is an ongoing relationship, but where situations have changed or original client requirements of their agencies were not correctly transmitted or understood.

Unfortunately, both rules are all too often forgotten in the in the holy grail quest for bringing in a low cost provider. It can't be said often enough that you have to weigh the benefits of creative talent, development and intellectual property - hard to quantify, combining them with blended service costs which are more cut and dry, and then having both looked at in a realistic manner by both the client and agency in order to thrive with a productive and profitiable relationship.

Our goal is to create an agreement-for-services that is profitable to the client in that it delivers a fully responsive, creative, and cost effective agency (or agencies) and to the agency, a profitable client that doesn't lead to corners being cut.

In either case we are comfortable with and knowledgable in working with a broad variety of arrangements including incentive programs.