Ad Agency Compensation: The biggest frustration of CMOs

John Winsor ad agency compensation

For small to mid-size ad agencies, it’s time to address the cost of creating advertising in terms of time and money. 

All our clients want to know is this – Can your agency solve my  problems quickly and at less cost?

Advertising agencies aren’t changing of their own accord, they are being changed. We’ve seen digital technology bring about fundamental change to the news industry, then the music industry. Now seismic change is being forced upon the advertising industry.

Ad industry downsized. There are nearly 120,822 advertising and marketing services companies in the US. We have  an over supplied market and receding demand. This is an industry that has already laid off over 160,000 people because of the bloat, the wrong kinds of people and too much inefficiency. Not to mention that we are in the worst economic periods since the great depression and it is far from over.

The same problems that led to he agricultural revolution and the industrial revolution are now plaguing the ad industry in this digital revolution.

John Winsor is currently the CEO of Victors & Spoils, the world’s first creative (ad) agency built on crowd sourcing principles and former VP/Executive Director of Strategy and Innovation at Crispin, Porter + Bogusky. John addressed the future of advertising agency compensation head on in a recent article  written for his blog, John Winsor: Views from the CEO of Victors & Spoils about the future of marketing and product design.

Personally having discussions with dozens of CMOs of Fortune 500 companies John addresses their greatest frustration, the cost of creating advertising – both time and money.  

He writes,

Businesses act based on the way they are compensated. And, the majority of agencies are compensated by selling their people’s time.  Compensation is based on the number of FTE’s or full-time employees working on a piece of business. In the age of collaboration the FTE model is broken. The fact is that many agencies make more money when they put more people, or say they do, onto a piece of business. Likewise, it’s more profitable to take more time to do something. If a project should take a month there’s no disincentive for most agencies to drag it out longer.

If advertising industry is to thrive in the age of collaboration we must address the root of the problem, the way we are compensated for our work. If we don’t many companies won’t survive the current economic transformation that’s underway.”

John encourages agencies to come together to fix the problem and proactively transform our industry before it is changed without us.

Click on the following link to read John’s article, “Fees, Lies and Advertising”  also follow John on Twitter. John’s books include:


About Michael Gass

Consultant | Trainer | Author | Speaker

Since 2007, he has been pioneering the use of social media, inbound and content marketing strategies specifically for agency new business.

He is the founder of Fuel Lines Business Development, LLC, a firm which provides business development training and consulting services to advertising, digital, media and PR agencies.


  1. I agree that bigger agencies have a huge challenge at hand. My husband and I have owned an agency for 17 years. We are small and nimble, we are very efficient. We make more money the faster projects get completed because we bill by project not by hours. And then when a client wants to drag a project on, we bill for our additional hours. We get things done and take the smart actions needed for success. At the same time, we are personable and listen. Perhaps what the traditional agency world has done is have too many people handling a job at the same time — when you think about it the designers or copywriters can also be the account managers. That way feedback is more straightforward and all goals are being met, while being efficient.

  2. Thanks for sharing your perspective as a small agency principal Kirsten.

  3. Come together to transform the ad industry? Good luck with that. I’ll bet on profit motive and innovation. How else to explain ad agencies gutting senior staff and going green–as in inexperienced? It’s about making the numbers work. Was V&S started for the better nature of the ad biz? I doubt it. They’re out to make a buck, like everybody else. There’s nothing wrong here. It’s about serving the client and doing what’s best for them. Bring on cloud computing and Google Fiber and whatever else. Serve the client and plus it up. 

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