THE world's biggest advertisers have forced advertising agencies in the United States and Britain to adopt new charging methods - and Hong Kong agencies are coming under pressure to follow suit.
The advertising industry association issued a set of guidelines for fee-based compensation last week and urged members to adopt the new charging system.
'It is already happening, both internationally and locally,' Association of Accredited Advertising Agents (4As) chairman Jeffrey Yu Pui-man said. The association produced the guidelines to help set standards for fee-based compensation in Hong Kong.
The change has been led by pressure from some of the world's biggest advertisers, notably Procter & Gamble, which have demanded a more flexible and transparent payment system.
Advertising agencies have largely welcomed the new approach, although fee-based compensation is a more complex system than the previous commission-based arrangement.
Leo Burnett general manager Charles Cadell said: 'Fee-based [compensation] takes more up-front negotiation. There is an awful lot of education the ad industry has to do.' Since the 1940s, advertising agencies have charged for their services through commissions, based on the amount a client spent on the production of the advertising and the amount spent on media.