agency compensation

“As long as we get paid for doing only print ads and commercials, we’ll never get our people to think beyond the lines.” 

The first step towards improving advertising as a whole institution is to start within the agency.  According to an interview in “The First 50 Years of DDB,” Reinhard was in favor of an agency compensation system as far back as April 1990.  The only hitch was, at the time Reinhard promised “guaranteed results,” which was asking a lot of the creative department.  Looking back on it now, Reinhard regrets his decision to use the word “guaranteed,” and instead prefers to refer to it now as “results-based compensation,” or “success-based compensation,” as opposed to performance-based.  The system he proposes suggests agreeing on a precise, measurable objective, and then agreeing to allocate resources, time, and money to that objective. 

According to the interview, Reinhard stresses that in order for the system to work, the client must agree to let the agency get involved in everything.  That is, everything that goes into creating the desired result.  The client has to agree that [the agency] can influence the larger marketing elements-at least all the brand’s communications.  Reinhard points out that there are other factors that the client cannot control:  competitive activity, weather, acts of God. 

Reinhard confesses that the “guaranteed results” idea was inspired by the media explosion, because less and less of the marketing dollar was going to what the agency did.  It was instead going to direct marketing, sales and trade promotion, sponsorships, etc..  So Reinhard figured that the only way he was going to get account executives and creative people to think holistically about the process was financial compensation (in other words, that’s how they got paid).  As Reinhard says, “As long as we get paid for doing only print ads and commercials, we’ll never get our people to think beyond the lines.”