Is pay for performance the new black for agencies?
CMO.com seems to think so. The site recently featured Leapfrog Online CEO Dave Husain’s article on evolving agency compensation models and the future of digital marketing.
As the pay-for-performance model increasingly becomes an industry standard, one can almost hear the collective moans of despair from traditional agencies rooted in soft metrics.
Truly aligning the goals of clients with the goals of agencies is key to a mutually beneficial relationship. Using bonuses and small slices of an agency’s overall fees and calling it “risk sharing” isn’t true alignment. A legitimate win-win between agency and client requires adaptation and being comfortable tying compensation to the client’s bottom line.
If an agency can prove its worth by improving client revenue, the pay-for-performance model isn’t something to be afraid of—it’s a progressive method that should be embraced as the model of the future.
This change in strategy and mindset is inevitable, and smart agencies are already embracing performance models. Closing the loop between marketing and sales should always be the goal, and agencies that build brand revenue will also build true, enduring CMO partnerships.
How is the shift in agency compensation models affecting your digital solution?