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.


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