The issue that may rankle, however, is how to design the most efficient contract to govern the relationship. And that is a tricky job. First, in any marketing campaign, other promotional, marketing and environmental variables in addition to advertising influence final sales. In that sense, environmental uncertaintiesmarketers refer to extraneous factorsplays a key role in influencing the outcome of a campaign and this may be beyond the agencys control. Second, it is difficult, if not absolutely impossible, to ascertain the actual impact of advertising on sales. That is because some of these influences are stochastic, that is, a campaigns subsequent outcome is determined both by the predictable elements as well as the random.
Globally, agencies have been dabbling with the outcome-based compensation model for some time now. Way back in 1990, DDB Needham Worldwide announced a guaranteed results incentive-compensation plan under which it offered rebates to clients if performance goals were not met, but expected bonuses over and above its base compensation if goals were exceeded.
Agreed you cant six-sigma the creative process, but remember, a good compensation contract can balance cost control with creative excellence.