The remuneration models we use in advertising are not static , but rather evolve along with industry practices. In recent years we have seen a shift from a model based on Scope of Work (SOW) to one based on Scope of Value (SOV). But what does each of them consist of and what advantages does this change offer?
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Advertising remuneration models from Scope of Work to Scope of Value
Remuneration models throughout history
In the 1970s, advertising agencies charged for their services on an agency fee basis , i.e. a percentage of the advertiser's investment in media or production. In other words, the larger the size and scope of the campaign, the more the agency charged.
In the 90s, we moved to a fee- based remuneration model (per project, annually, etc.) negotiated based on the Scope of Work , that is, the amount of work to be carried out by the agency (in the next section we will look in more depth at what this consists of). This is the system that is still in force today.
Finally, around 2015, the more variable fee-based remuneration model began to be introduced . This was the first introduction of the Scope of Value , that is, taking into account the value of the work and the ROI . Today, we see a trend towards incorporating mixed remuneration formulas.
