A 'value based' compensation system for advertising agencies involves which of the following?
A) Paying only for billable hours spent on creating advertising for the client
B) Paying a set % of the total value of the media spend on the advertising
C) Paying performance related fees for advertising that adds to the clients profits in measurable terms
D) Paying a set % of the total brand revenue earned by the brand in that year.

Question

Quizplus · Accepted Answer

A value-based compensation system for advertising agencies involves paying performance-related fees for advertising that adds to the client's profits in measurable terms. This type of compensation structure incentivizes the agency to create effective and profitable advertising for their clients, rather than just focusing on billable hours or media spend. It aligns the agency's interests with the client's business goals, ultimately leading to a more successful partnership. Paying a set percentage of the total brand revenue earned by the brand in that year would be difficult to measure and could be influenced by factors beyond the agency's control.

A 'Value Based' Compensation System for Advertising Agencies Involves Which