Sunday, May 17, 2009

Coke is pro "pay for performance" for ad agency compensation

If Coke gets its way, ad agencies will be rewarded with as much as a 30% profit margin if they perform according to plan -- but only recouped costs if they don't. Sarah Armstrong, Coke's director of worldwide media and communications said "We want our agencies to earn their profitability, but it's not guaranteed." According to Jeremy Mullman and Natalie Zmuda in Ad Age, Coke spends some $3 billion a year on global advertising. If Coke succeeds, it will join Proctor & Gamble in shifting ad agency compensation to this value-based model.

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