From billable hours to business outcomes: WPP’s new pay model sparks debate in India

WPP’s latest strategy presentation in London last week has revived a long-standing question in advertising: should agencies be paid for effort — or outcomes?

The global agency network signalled a gradual shift away from traditional manpower-linked billing towards performance-based remuneration, where agency fees are tied directly to measurable business outcomes such as sales growth.

“A commercial model that is more closely linked to client outcomes will enable us, over time, to move away from time and materials and decouple revenue from headcount,” WPP CFO Joanne Wilson told analysts, suggesting the approach could improve revenue productivity and margins over time.

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It remains unclear whether WPP intends to formally adopt the model or has defined timelines for its rollout. e4m reached out to WPP for comment, but the company did not respond.

Notably, the proposal comes at a time when the London-based group is undertaking a sweeping structural overhaul—moving away from the traditional holding company model, consolidating its creative networks under a unified structure, merging four PR agencies into two, reporting revenue declines, and targeting £500 million in annual cost savings by 2028—moves that have also fuelled speculation about potential layoffs.

While the proposal aligns with global shifts in marketing accountability, its practical viability in India — a market still deeply anchored in relationship-driven agency contracts — remains open to debate.

Clock-hour billing still dominant

Historically, agencies were compensated through commission-based structures, typically a percentage of a client’s media spending. While some large mandates still follow this model, the industry has diversified its commercial arrangements.

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Today, hourly or time-based billing remains widely used, particularly for projects where scope evolves. Agencies charge clients based on clock hours using internal rate cards linked to employee seniority and expertise. Retainer agreements for ongoing services and project-based fees for defined assignments are also common.

The model’s appeal lies in its transparency and flexibility, allowing agencies to bill for actual effort as client requirements change. However, it carries structural limitations: because revenue is tied to time spent, it can discourage efficiency and cap earnings unless agencies raise rates or expand manpower.

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“Those limitations are becoming more pronounced as automation and AI-driven workflows begin reshaping agency operations. Hence, billing clients purely on headcount or hours in such an environment may become harder to justify,” senior executives admit.

‘AI is changing the pricing logic’

For decades, agency economics — globally and in India — have rested on retainers, billable hours and team sizes. Growth typically meant adding people. Generative AI is beginning to disrupt that equation.

Industry observers say the shift reflects a deeper transformation in how agencies create value. “The writing is on the wall,” said an industry consultant. “In an AI-enabled world, headcount-based billing becomes increasingly difficult to defend. Agencies will need to monetise intellectual property, data capabilities and business impact rather than manpower alone.”

“Hybrid models more realistic”

The outcome-based compensation is realistically scalable in India but it will happen selectively”, says Shubhranshu Singh, senior marketer, who has been a strong proponent of such a model for a long time.

He explains, “Outcome based models work best when the outcomes are clearly attributable and measurable for example in performance marketing, digital commerce, lead generation, or conversion optimization.”

However, in areas such as brand building, reputation, or long term equity creation, attribution becomes far more complex. In creative duties there is no certain end outcome except client acceptance. Thereafter outcomes, even if material is tested, is speculative to a degree, he noted.

Singh suggests, “India can adopt hybrid models where a base retainer ensures continuity and strategic capability, while a meaningful variable component is linked to defined business outcomes. The real shift is philosophical with marketers increasingly wanting partners who are accountable for impact.”

Echoing this view, Vinay Hegde, Head of Investments at Madison World, says multiple factors complicate a pure outcome-based framework.

“While the global narrative around outcome-linked compensation appears compelling, the Indian market presents unique operational challenges. Hours of deliverables do contribute to the final outcome, even if AI is in play,” Hegde said. “And business performance depends on many variables beyond the agency’s or even the client’s control. It also requires deep data sharing between both parties, which can involve confidentiality concerns.”

As a result, he believes hybrid structures are more practical. “Yes, it is a structural shift, but the model will likely involve a fixed time-based fee along with a variable component linked to business outcomes,” he added.

‘Disproportionate risk for agencies’

Shradha Agarwal, Co-founder and CEO of Grapes, says the model is scalable in India, particularly across social media, SEO, affiliate marketing and influencer ecosystems that already operate on performance metrics. 

Agarwal, however, cautions that agencies pitching outcome-based contracts may assume disproportionate risk. “If an agency enters a pitch proposing an outcome-based formula, it is effectively taking on most of the risk,” she said.

Clearly, any reset would involve both agencies and advertisers. Agencies will need to rebuild specialised capabilities, strengthen measurement infrastructure and invest in analytics and AI talent before fully embracing outcome-linked remuneration. Advertisers, in turn, must be willing to share deeper data access and accept shared commercial accountability.

Shubhranshu Singh admits, “The outcome-based models require shared accountability. Without transparent data access and attribution frameworks, he said, the structure can become asymmetric for agencies.”

WPP’s proposal may therefore represent less an immediate overhaul of agency economics and more an early signal of where the global industry is headed. Whether India is ready to operationalise that vision at scale remains an open question.

‘Structural constraints remain’

Veteran advertising leader Ashish Bhasin believes outcome-based remuneration faces structural barriers in India.

“I wish outcome-based compensation could work in India, but agencies are currently not in a position to negotiate such models with advertisers,” said Bhasin, founder of The Bhasin Consulting.

He argues that years of cost-cutting across the industry have weakened agency capabilities. “Before linking remuneration to outcomes, agencies need to reinvest in people and technology,” he said. 

Technology firms, he noted, surged ahead in AI by investing heavily in top talent, while agencies focused on reducing costs — creating a cycle of weaker talent, declining work quality and limited AI readiness.