Three-quarters of brands eye agency payment overhaul, WFA study finds

A report by the World Federation of Advertisers and MediaSense reveals that 75% of major global brands plan to change how they pay their advertising agencies within the next three years. 

The shift, the report claims, is driven by the desire for better alignment with business results, more accountability, and improved access to top talent.

The study, The Future of Media Remuneration, surveyed over 80 multinational companies managing more than $60 billion in annual ad spend. 

It highlights a clear move away from traditional time-based billing towards payment models focused on outcomes. 

Ryan Kangisser, chief strategy officer at MediaSense, explained: “The topic of remuneration is so intrinsically linked to the agency model, quality of talent, speed of automation and strength of partnership that it was important to dive deeper into this transformational topic. In highlighting the unprecedented desire for change, clients and their agencies are going to need to partner closely to create the right value exchange which recognises the need to make money, but also the need to drive business outcomes for their clients."

Brands are eager to reshape their payment structures in response to industry complexities, growing automation and advancements in AI. The report found that 58% of advertisers plan to increase their focus on results-driven pricing to promote a fair value exchange with their agencies. 

However, change won’t come without challenges. Many companies, 84% of them, noted a lack of clear data and metrics to evaluate agency outcomes as a major obstacle. Additionally, 87% believe agencies resist adopting models that would increase transparency around their profits.

This lack of openness remains a sticking point.

“Achieving mutual clarity on objectives and the value associated with hitting those targets will render the transparency debate irrelevant,” noted one person. But another said: “You can’t truly build relationships by saying, ‘Don’t worry what I’m making’.”

Only 15% of brands said their primary reason for shifting payment models is to cut costs. In fact, most brands, 61%, expect agency fees to rise over the next three years, especially for high-level strategic and technical expertise. Routine tasks automated by AI are expected to be cheaper, with 58% of brands anticipating cost reductions in such areas.

Tom Ashby, global lead, media services at WFA, stressed the urgency of this evolution: “The media landscape is evolving at an unprecedented rate, as new channels proliferate and AI reshapes the industry, bringing new complexities and even redefining the roles of advertisers, agencies and media owners. The agency business model and with it, the remuneration structure agreed with advertisers, must continue to adapt.

“Advertisers today face a pivotal choice: to push forward with more sophisticated, performance-driven remuneration models or to revert to more predictable, traditional approaches, managing and reducing one area of complexity. This survey shows a clear majority are looking to the former, reflecting an increasing desire to align agency performance with business outcomes, and which we believe can only be achieved with a collaborative, forward-looking approach by agencies and advertisers.”

As brands and agencies navigate this significant transition, the focus remains on finding a balance that ensures profitability while aligning agency efforts with client business goals. 

Kangisser added: “While advances in AI will push the topic of remuneration further into view, agencies must not lose sight of their strategic and technical talent who will become more critical in balancing the efficiencies of a more automated service model."