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Agency remuneration revisited

It was inevitable that at some stage this column would address how agencies get paid, and since this is an agency-orientated feature it was predictable that we would put forward the case for the resurrection of the retainer fee. In the agency world in general – and especially in the B2B sector – the notion of paying your agency a flat fee every month has fallen into disrepute. It seems that the pressure on client's budgets and the rise of 'accountability' as a business idea has consigned retainers to the same sepia tinted nostalgic reminiscence as the four hour agency lunch. And yet ABBA would argue that from a client's point of view, the retainer fee – if administered and managed properly – represents not only good value for money, but a good way to get the best out of your agency.

At first sight, clients' antipathy to the concept of the retainer fee seems a logical attitude. “Why should I pay my agency when they aren't working for me?” Clearly, most agencies would argue that the slack times when activity is slight is more than made up for by the busy times when the hours put in more than outweigh the level of the retainer. But that argument simply reinforces the notion that the fairest way of remunerating an agency is to pay for what you get, project by project, and that any retainer fee system of remuneration is bound to be either unfair to the client or unfair to the agency. Most clients believe that it is usually the agency that gets the most benefit. And it is true that for some agencies, the retainer fee is a lazy way of getting paid – you rarely have to justify it, and you sometimes don't even need to record the time spent covered by the fee.