Media commission system ‘absolutely ridiculous’
The media commission system has been branded as “absolutely ridiculous” by the boss of one of Australia’s largest agencies.
Mark Coad, CEO of OMD, told the Mumbrella Question Time that he can’t understand why the system still exists.
Agencies receive a rebate from media owners for placing advertising with them. At one time, this payment – variously refered to as a commission, agency bonus or agency discount – used to be retained by agencies but in most cases it is now returned to clients anyway.
Asked what he would choose to change about the industry, Coad said: “It doesn’t keep me awake at night but the media commission system is just absolutely ridiculous. I do not understand why it runs like that and we should rework that in some shape or form. Media shouldn’t pay it in the first place.”
One thing that commission does, as long as it is not automatically rebated in full to the client, is that it encourages media buyers to work harder to increase revenue.
If your client is on a fee only then there is no motivation to try and sell that little distress offer or proactive opportunity to the client. Every time the client requests some information the focus is on keeping them happy, rather than trying to encourage them to do something new and different.
If the media stopped paying commission to agencies then it would make ‘cold’ sales much harder for them as there would not be the mutually beneficial arrangement we have now.
Of course, in an ideal world you would just do what you believe is in the best of interests of the client.
Hat’s off to Mark, Finally someone has come out against the “emperor’s new clothes” attitude wish has existed since the deregulation.
The original commission was to a compensation to the agency for the insurance of payment of the account and supply of complete material or as it still states in some agreements “Camera ready artwork”. With the growth of Media buying house that rarely happens and most agencies will stretch payments way beyond the payment terms because even though the threat of losing the commission if not paid by the due date reality is they still get their commission and even if they didn’t it’s a cheap interest rate for using the media’s money to cash flow them.
The commission system if flawed regardless, why would a client want their agency getting a percentage based on their media spend. Now whilst most agencies go hard at the ball when negotiating rates for their client you have to wonder how many actually think “What do I care, the more the spend the better my percentage” Think about it in another industry, if you were to use a “Buyers advocate” in say a Real estate transaction the buyer would pay a flat fee or a percentage of the money saved on the transaction, they certainly wouldn’t agree to paying a percentage of however much you end up paying!
The commission should have gone when accreditation was abolished.
I don’t think you find many disagreeing with this. Now if media agencies could come out and claim unequivocally they make no commissions or kick-backs from media owners, that would be a bold step.
Suggest you start the ball rolling Chris. Everything squeaky clean at Mindshare while you were there?
Probably in line with your time at Opti Rushy.
So was that a yes or a no? I think your’e both dodgy