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Lever shifts to fee-based system

01-May-2001
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Lever shifts to fee-based system

Uniliver, one of the world’s largest advertiser is charting out a new ad remuneration system, which is likely to make an impact on Indian advertising agencies commission on media spends. India, China and Brazil have now been classified as ‘developed’ market’ by Unilever from earlier big-budgeted ‘underdeveloped’ ad markets. This at once slashes agency commission by 2 per cent.

If these cuts actually happen, the 12.75 per cent commission on media billings will go down to 10.5, since about 0.7 per cent will go to media planning, other than the 2 per cent cut for developed markets.

About 10 per cent of Uniliver’s ad business is expected to come under the performance driven fee-based system, and media observers expect this to only move upward. Many agencies would welcome this since some of them say that Lever’s accounts are high-service and high-maintenance in nature.

Again, media planning margins of a base average of 0.7-0.8 per cent will move out of the creative agencies’ domain to that of the media specialist’s; the later also gets its media buying and implementation fee.

All over the world, every major MNC advertiser from P&G to Colgate-Palmolive, Coca-Cola and IBM have been increasingly treading the performance driven fee way instead of a fixed commission.

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