Title

Advertising Agency Compensation: An Agency Theory Explanation

Publication Title

Journal of Advertising

Publication Date

1999

Document Type

Article

DOI

10.1080/00913367.1999.10673589

Keywords

advertising agency, compensation, agency theory

Disciplines

Business Administration, Management, and Operations | Marketing | Other Business

Abstract

Advertising agency compensation may change dramatically in coming years as advertisers put pressure on agencies to reduce commissions and tie compensation to performance resulting from advertising campaigns. Drawing on agency theory from the economics discipline, the authors develop and test several hypotheses to address the advertising agency compensation decision. Their study provides the first comprehensive look at the prevalence of outcome-based compensation tied to performance and other compensation systems currently used among U.S. advertisers.

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