Below the belt: On the record

The world of online ad sales is about to break free from commission-based remuneration. Instead, an increasing number of clients and media houses are looking at the potential of flat-fee-based payment schemes.

The move is an indication of the maturity of this market and the growing perception of internet advertising companies as key partners within their clients' businesses.

For clients it means greater month-to month control over their bottom line, and in turn the sales houses can enjoy predictable revenue. But will this initiative suit everyone? For many fast-growing sites, where advertising volume changes on a daily basis, it may still be too early to establish a flat fee that serves both parties. And what would be the longer-term impact on sales performance if the traditional commission 'carrot' is removed?

Commission-based remuneration is based on hitting fixed sales targets. But in doing so, are clients imposing a psychological ceiling on what can be achieved? The question isn't, 'can we move to a fee-based system?', but 'how do we incentivise sales people to go beyond budgeted revenue?'.

One way is through a hybrid scheme that's underpinned by clear objectives and targets. The flat fee is payable on achieving specific goals, but also includes additional incentives to ensure that sales houses keep driving forward. Tight controls, such as a single profit and loss, quarterly forecasting, quality management control and key performance indicators, are essential for ongoing measurement.

If the shift towards flat fee payment continues, we'll see a real change in contractual agreements. Once media houses are being charged with taking the brand to another level, partnership type contracts of up to five years will become the norm. In the long term that serves to stabilise the market and deliver best value to clients.

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Samsung pities the iPhone 'wall huggers'
Smirnoff campaign aims to make Formula One less elitist
Apple wins EU battle to register store layout as trademark
Marketing directors need to step outside 'marketing box' to earn seat on the board
Hottest virals: Burger King’s emotional gay pride Whopper ad, plus Apple and Guinness
Developer creates software enabling Google Glass mind-control
Kick-ass girl beats up shopping centre staff in music video
Top 10 ads of the week: Aldi's World Cup cider ad scores with consumers
Sony relives Germany's 7-1 victory against Brazil in Subbuteo Vine
Burberry credits 9% revenue hike on strong online sales and 'more targeted marketing'
Ritz returns to UK TV screens after 30-year hiatus
Mars creates chief health and wellbeing officer role
Brands make the most of Germany's dramatic victory over Brazil
Adios Justin King! Watch our video tribute as he leaves Sainsbury's after a decade
Nike calls time on 13-year Manchester United kit deal
Three TV ad banned over misleading 'free' call claims
GNM boss David Pemsel: 'The Guardian has got its mojo back'
M&S has missed a massive opportunity to put digital strategy at its heart
Google partners with the Barbican to show coders are artists
Samaritans encourages men to talk about issues with #DownNotOut campaign
Lego's partnership with Shell 'not awesome', according to Greenpeace viral
Chevrolet launches £350m Manchester United shirt deal with nostalgic video
Warburtons rebrands to 'Warbeartons' in Paddington Bear movie tie-up
M&S blames new website as non-food sales fall again
Top 10 skills for young creative talent: The Mad Men era of on-the-job learning is long gone
Pepsi Max calls on fans to take part in Kelly Rowland video
From mutton chops to manscaping, Gillette takes a trip through 100 years of male grooming
Digital democracy creation: how the marketing industry made its voice heard
Three prints spoof apology letter to hapless holiday-less consumers
Sponsors congratulate Novak Djokovic on Wimbledon win