Aware of its responsibilities towards the industry it represents, The Croatian Association of Communications Agencies – HURA has issued guidelines for agency fees. The purpose of the Guidelines is to make it easier to advertisers and agencies alike to navigate in the process of determining, assessing, and deciding on agency fees. HURA stated that advertisers and agencies have made significant progress in transforming creativity, innovation and speed of marketing activities, and that its time to transform the main types of agency fees, ie work-based compensation.
Andrea Štimac, head of HURA’s working group for developing guidelines for agency fees, emphasized: “As a leading trade association in the market communications sector, HURA has recognized the importance of providing guidelines for agency fees, all with a view to achieving and maintaining partnership cooperation between agencies and client, based on trust and transparency. If the agencies adopt the proposed model, we think that they will be given the opportunity to achieve a better profit margin and more reliable revenue that can be planned. Of course, these are guidelines that are not binding on the members of HURA, but we really hope that they will voluntarily apply them, with the common goal of developing industry and setting good business standards.”
HURA recommends that agency fees and pricing reflect the value, complexity, and quality of the services provided, and should not be based on individual components of cost and gain of the agencies. The point of price determination is value rather than cost – it is precisely why different experts, not just the finance team, should be involved in pricing. We can add to this the fact that pricelists in other activities of providing professional services (e.g. in law, accounting, counseling) are usually not divided into cost and profit components. It is in the best interest of both the agency and the client that both sides focus on the effects they expect, the deliverables that the agency needs to produce, and the value that both sides attribute to agency services.
HURA’s recommendations to clients and agencies to align in terms of the desired compensations are the following:
- Collaborate to harmonize incentives
- Establish responsibility for transparency
- Harmonize the compensation with your business goals
- Perform timely audits by applying mutually agreed criteria
For specific guidelines and recommendations, please visit the HURA website at the following link: http://hura.hr/dobra-praksa/smjernice-za-agencijske-naknade/
