Multinationals Have Shifted Agency Pay Models
Brands are moving away from labor-based billing toward fixed-fee and performance-based structures to align costs with output.
Updated on Sept. 28, 2026 in Advertising
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Multinational companies have significantly reduced their reliance on labor-based agency compensation, with usage falling from 54% in 2011 to 17% today. This shift impacts global marketers and agencies as brands increasingly prioritize fixed-fee and performance-linked billing to better reflect actual output.
Why it matters
Brands are pursuing these changes to align agency fees directly with measurable outcomes, especially as AI technologies enable agencies to deliver work more efficiently. This transition forces agencies to demonstrate value beyond the number of hours billed while navigating evolving client demands for cost transparency.
Survey data from 69 multinational brands representing $147 billion in spend shows that labor-based models have dropped to 17% of total compensation structures. Meanwhile, labor-plus-performance models have climbed to 23% over the past 15 years, while agency tenure has risen to 4.3 years.
The players
World Federation of Advertisers
An international organization representing the interests of marketers and providing global standards and benchmarking for advertising procurement.
The details
Agencies now typically receive compensation through a mix of fixed-fee, output-based, and performance-based contracts for media planning and buying. Brands utilize these global frameworks to ensure they are paying for specific deliverables rather than simply staff time. Despite this shift, only 45% of brands report having sufficient transparency into agency costing, highlighting a persistent disconnect in contract management.
Timeline
2011 marked the baseline usage of labor-based models at 54%.
2018 began the tracking period for agency relationship tenure.
September 2026 saw the release of current research findings.
Market Landscape
This move marks a definitive departure from traditional hourly agency billing that dominated for decades. It follows a wider trend in professional services where clients prioritize output-based pricing over time-and-materials to better capture productivity gains from new technologies.
Operators should review their current agency contracts to determine if they are compensating for time or for measurable business impact. With 58% of global firms planning to expand performance-based fees, businesses should prepare for more rigorous, outcome-driven performance metrics.
The takeaway
The era of the billable hour is fading as brands demand greater accountability and value for their marketing spend. Operators should audit their current agency agreements to ensure incentives are tied to performance rather than volume of labor.
Further reading
For more on evolving agency-client relationships, visit the Advertising section.
Source note: This article includes information reported by Marketing Magazine.
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