Three in Four Advertisers Plan to Overhaul How They Pay Their Agencies
Updated: 14 hours ago
A new WFA and MediaSense study finds three in four advertisers expect to change how they pay their agencies within three years, accelerating the shift from time-based fees toward outcome- and performance-based models.
The end of the timesheet era
The billable hour has been the backbone of agency pricing for decades. New research from the World Federation of Advertisers (WFA) and consultancy MediaSense suggests its grip is finally loosening: 75% of advertisers expect to change their remuneration model within the next three years.
Most brands today run a hybrid of commission, labour-based fees and outcome or performance elements. The direction of travel, however, is unmistakable — clients increasingly want to pay for the value an agency creates, not the number of hours it logs.
Why the model is breaking
Two forces are colliding. Generative AI is compressing the hours needed to produce creative and media work, which makes hour-counting look ever more arbitrary. At the same time, procurement teams want a clearer line between spend and business results.
If a campaign can be built in a fraction of the time, paying by the hour effectively penalises the most efficient agencies. Outcome-based deals — tied to sales, brand lift or agreed KPIs — try to fix that misalignment, though they raise hard questions about attribution and shared risk.
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This is less a pricing tweak than a redefinition of what an agency is for. When time is no longer the unit of value, agencies must be able to prove the commercial impact of their thinking — and that favours partners with strong measurement, data and strategy muscle over those selling capacity.
The risk is that 'performance' gets defined too narrowly around short-term, trackable metrics, starving the brand-building work that compounds over years. The smartest contracts we expect to see will blend a fair base fee with upside for genuine outcomes.
Quick FAQ
What did the WFA remuneration study find?
The WFA and MediaSense research found that 75% of advertisers expect to change their agency remuneration model within three years, moving away from purely time-based fees toward outcome and performance models.
What is outcome-based agency remuneration?
It ties part of an agency's fee to agreed results — such as sales, leads, brand lift or specific KPIs — rather than the hours worked, so the agency is rewarded for the value it creates.
Should small businesses pay agencies by the hour?
For SMEs, a blended model often works best: a clear scope-based retainer for reliability, plus a modest performance bonus tied to one or two metrics that genuinely matter to the business.
Paying agencies for hours made sense when time equalled effort. In an AI-accelerated market, that link has snapped. The brands that win will reward outcomes and ideas, not timesheets — but they must protect long-term brand building, or 'performance' quietly becomes a race to the cheapest short-term click. — Daniel Nikolla, Founder of Merx Marketing
Key takeaway: value, not volume, is fast becoming the currency of the brand-agency relationship.
How does your business pay its agencies — and would an outcome-based model make you brave or nervous?
If you would like to know more about this topic, please contact us on danieln@merxmarketing.co.uk
Sources: WFA, MediaSense, The Media Leader and Marketing Week.
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Written by Daniel Nikolla, Founder of Merx Marketing Ltd and Marketing Minute
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