Advertisers are changing the way they pay agencies as they seek more transparency and simplicity in their agency relationships, according to a compensation study from the Association of National Advertisers. As they push for more simplicity, some advertisers are increasingly skeptical about agency incentive plans, such as a bonus an agency can earn if it meets predetermined performance goals. Some advertisers find them to be “complicated” and “time-consuming” to manage, as well as “ineffective” at improving agency performance, according to the study. While 62% of respondents who use performance incentives reported that agency performance has improved, the number of respondents who claimed incentives negatively affected agency performance increased from 13% to 22%. “Nearly half of study respondents who were familiar with the report have begun to address agency rebate and bonus practices as a result.”Write to Alexandra Bruell at alexandra.bruell@wsj.com

Source: Wall Street Journal May 22, 2017 19:28 UTC