Commentary

Advertising As A Service: The New Agency Compensation Model?

We recently learned that the CEO of the Association of National Advertisers, Bob Liodice, is retiring, as is ANA Group Executive Vice President Bill Duggan. The ANA under their leadership has had some phenomenal successes and accomplishments. The ANA conferences have become industry standards, and some of their industry education has been groundbreaking.

I will leave it to others to share an overview of all the important thinking the ANA has delivered across a wide range of topics (such as transparency, ad fraud, measurement, etc.). Yes, I am sure some critical notes are fair as well. But all in all, the retiring ANA leadership team leaves the industry in a better place. And that is really all you can ask for from an industry special-interest group.

One of the areas I feel passionate about, and have contributed to in my own small way, has been evolving the agency remuneration model. Back in the early 2000s, my team at The Coca-Cola Company was involved in the very first iteration of an agency comp model we now know as value-based compensation.

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I read an interesting article from Lexis Nexis, active in the legal profession, about how that service industry evolves away from pure billable hours under the emergence of agentic AI clerks, paralegals and junior lawyers. LexisNexis notes that “as AI reshapes legal workflows, the power could soon shift from individuals towards shared knowledge, collective client ownership and tech products that promote the firm.”

Sound familiar? It got me thinking about agency fees, and whether a transition from billable to value-based compensation is still the right way to go. I think maybe not. Or at least, not for everything.

There are some agencies that are moving to an “agency as a service” or AaaS, model (Monks, or Frontier Agency in Australia). Essentially, this is a move away from the agency as a "talent shop" toward the agency as a "delivery engine." You pay the agency a flat subscription and for that cost, the agency delivers all that you contract them for.

But wait, isn’t that just a retainer with a new name? No. The traditional retainer was usually just a bulk purchase of hours. AaaS is a fundamental shift in where the risk and the value sit. With a retainer, you are selling capacity: "I will keep X people available for you." If those people sit idle, the client is still paying for their time.

With AaaS, you are selling capability and output. The client isn't buying "X number of people"; they’re buying "unlimited social assets" or "managed search performance." How many people (or AI agents) it takes to do that is none of the client's business.

The reason I say this may not be the best option for all your agency contracts is because AaaS is best for "repeatable output." If you are delivering a set volume of social content, or media placements, a flat-fee subscription is perfect. It's essentially productized service.

Value-based pricing is best for high-stakes outcomes. It’s still the king for branding, major product launches, or high-level strategy. If you’re reinventing a brand’s identity, the value isn't in the "subscription" -- it's in the market share it might capture.

So perhaps the evolution of agency compensation should be the hybrid of both models, based on an advertiser’s needs.

And the ANA will need leaders who can continue to guide the industry by building understanding of those needs.

1 comment about "Advertising As A Service: The New Agency Compensation Model?".
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  1. Ed Papazian from Media Dynamics Inc, April 24, 2026 at 3:41 p.m.

    Maarten, when I started in the agency business they ooperated on a flat 15% commission basis, based on media spending. The advertiser didn't buy a particular number of hours. Such information was used, internally, by agency top and account management to control costs and, thereby, make a profit.

    The current fee for "creative" and "media" system runs on more or less the same basis. Usually, an advertiser agrees to pay the "creative" agency a particular fee for its services and the meida agency--frequently a separate operation which may be owned by another agency holding company---gets paid fees for various media services--planning and buying, with distinctions drawn between  media based on the complexity of making the buys and servicing them. Again, I don't think that these deals call for the purchase of a specific number of agency hours--though  tabs on who is working on an account are often referenced by client bean counters when they are challenging an aency about its fees beng overloaded with "overhead" types or people who they never see.  

    As for going to a combination of systems--say a flat fee that guarantees the agency a certain amount of income plus some sort of incentive system linked to "outcomes" --that sounds fine in theory. And it may even work in certain situations--direct response campaigns, for example.. But It's hard for me to see it being generally adopted as the agency does not have--or want--the degree of control over non-advertising aspects like product quality, distribution, pricing, etc.  which affect "outcomes" that it needs to participate as a full "partner". And the agency can't dictate how the brands are to be positioned or what their basic sales pitch should be--it can only make recommendations based on whatever information or direction is provided by the client. The client can overrule its "partner"--as often happens--and it is not unusual for the client's judgement to be faulty. 

    The basic premise behind all of these discussions about the agency system  being "broken" and needing to change seems to be that if only this were done all would be well. But the other systems are also "broken". The advertiser holding companies, which often consist of forced marriages of companies serving disparate marketing categories--all poorly coordinated if at all---is one of the prime reasons why the agencies have become what they are. They have mostly responded to what their clients are doing, how they are organized and the process of consolidation that is going on.

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, Founder, Flock Associates