Most agencies and clients would likely agree the current fee-based models are not optimal for accurately measuring an agency's contribution or matching clients’ needs to deliver increasing efficiencies.

The fee-based model widely remains the status quo because most agencies and clients simply haven’t yet designed a better model. And by better model, I mean an answer that works equitably for both parties, in both the long and short term. 

The issue is compounded by a misalignment of perception and reality. On the one hand, there remains a widespread perception from clients and procurement teams that the fee model and corresponding monthly retainers enable agencies to overcharge and make excessive profits.  

But the reality for most agencies is very different, as Forrester’s analysis indicates. Instead of excessive profits, most are struggling just to keep the lights on and the talent in the building. 

This article is clearly indicative of an appetite in all markets for more progressive renumeration models. It’s evident the widely endorsed ‘next best’ approach is one that focuses on the value created by agencies, instead of just the costs incurred and charged back to clients.  

As the Communications Council in Australia continues to advocate, a renumeration model based on a ‘scope of value’ seems ideal for both clients and agencies moving forward.  But in order for that to become truly viable, there needs to be a genuine partnership from both sides to make the arrangement sustainable and equitable for all.