For global brands, the question is no longer simply how many hours an agency works, but what those hours deliver. New WFA and Agency Mania Solutions research shows advertisers are increasingly redesigning agency pay around performance, outputs and the value created.

Indeed, the research showed that the shift is becoming increasingly clear, as traditional labour based remuneration continues to lose ground across the global advertising industry.

According to the research, only 17 percent of multinational companies now use labour based remuneration as their standard payment model, down sharply from 54 percent in 2011 and 33 percent in 2022.

However, the finding revealed that, instead, brands are turning to fixed fee, output based and performance linked arrangements. In other hand, fixed fee and output based models have climbed to 35 percent, while labour plus performance models have more than doubled to 23 percent.

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Looking further ahead, performance based fees are expected to record the strongest growth, with 58 percent of respondents planning to increase their use. Value based models follow at 43 percent, while 36 percent expect to expand fixed fee or output based approaches.

Similarly, It showed that AI is also adding momentum to the transformation.This  it noted, is that, as artificial intelligence enables agencies to produce more work in less time, brands are being forced to reconsider payment systems built around hours and manpower.

However, the transition is still developing, with only 20 percent of respondents saying they have already changed their commercial models in response to AI, while 61 percent intend to make changes.

Consequently, the findings are based on responses from 69 multinational companies across six industries, representing a combined global marketing spend of 147 billion dollars. About 71 percent of respondents work in global marketing procurement.

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Aside this, even with the growing interest in performance linked remuneration, such models still account for a relatively small portion of agency fees.

Across most disciplines, between 64 and 80 percent of respondents said performance based payments represent less than 20 percent of their total agency compensation.

Media, however, is emerging as a stronger testing ground for performance based remuneration, largely because results can be measured more directly.

Labour plus performance models account for 41 percent of media planning arrangements, 34 percent of media buying and 30 percent of paid social engagements.

So regionally, the research also reveals different approaches to agency remuneration.Asia Pacific records the highest use of fixed fee or output based models at 44 percent, compared with 32 percent in Europe and 29 percent in the United States and Canada.

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By contrast, labour based remuneration remains the most common model in the US and Canada, accounting for 38 percent. Beyond payment structures, the research points to another notable development: agency relationships are lasting longer.

Average agency tenure has increased across creative, production, media and paid social since 2018. Paid social recorded the most significant rise, with average relationships extending from two years to 4.3 years.Yet longer partnerships do not necessarily mean easier relationships.

Some 36 percent of respondents said managing agency relationships has become more difficult, compared with just 12 percent who said it has become easier.

The report links this pressure to growing numbers of stakeholders, wider scopes of work, faster delivery timelines and rising expectations around data, technology, integration and transparency.

Interestingly, the research suggests that money alone does not determine agency performance.Great briefing ranked as the strongest  contributor, followed by respect and trust, as well as high quality feedback.

Again, financial incentives scored considerably lower, indicating that stronger collaboration and communication remain important components of agency effectiveness.

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At the same time, transparency continues to present a challenge. Although 89 percent of brands said their agencies provide value for money, only 45 percent said they have sufficient visibility into agency costing and profitability.

Global contracting is also becoming more widespread, particularly within media. Sixty seven percent of respondents use global contracts for media planning, while 61 percent apply them to media buying.

So, for integrated creative and creative agency of record relationships, adoption ranges between 49 and 52 percent. With these changes gathering pace, agency remuneration is increasingly moving beyond the traditional calculation of time and manpower.

Instead, advertisers are placing greater attention on clearly defined outputs, measurable performance, transparency and the broader value agencies bring to their businesses.

As AI continues to reshape how creative and marketing work is produced, the latest findings signal a fundamental change in the client agency conversation: from paying for time spent to rewarding the value and results that work delivers.

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