It’s no secret that media planning and buying agencies are reinventing themselves. Some are restructuring and entering specialist streams such as consulting, content creation and digital media. Others are rebundling their media and creative agency operations for better cross-media collaboration. The only constant: the 2-4% commission on ad spends that media specialists get. That is making some media agencies push for more equitable payment systems. They want to be seen by clients as facilitators of online and offline brand-consumer dialogue, rather than mere traders of ad space and time. They want to be paid for ideas.
So, will commissions and time-based fees become passé? Not immediately, though some media folks are talking about royalties or intellectual property rights (IPRs).
Normally, agencies are not paid for the intellectual property they create for their clients — including brand names, logos and campaign ideas — but there are a few instances of this happening globally, says Chandradeep Mitra, president, Mudra Max.
Production houses that create reality shows own IPRs, and earn royalties every time they license the property to a new geography or platform. The IPRs of the few AFPs (advertiser-funded programmes) that have been created here are owned by the client or channel. The media or creative agency gets paid a one-time fee.
“...Creative currently gets a large chunk of the fees paid by the client and media gets a pittance compared to the effort they put in,” says Meenakshi Madhvani, founder of media audit firm Spatial Access Media Solutions Pvt. Ltd.
Media buying agencies are also pushing for a share in profits from increased sales. I’ve heard of some media agencies getting paid a percentage of the extra revenues their ideas helped generate. GroupM’s MindShare India is adding new specialist streams such as consulting and some payments will be linked to the brand’s performance.
I see media specialists inventing a spectrum of hybrid payment models. Very few clients, however, will be brave or far-sighted enough to share ownership of brand ideas with their agencies. Still, overseas advertisers such as Adidas AG see this as the way forward.
Marion Arathoon is Mint’s advertising editor. Your comments are welcome at email@example.com