Agency in talks over billings

One of the world's largest media agencies is in talks with Middle East advertisers over the introduction of performance-based billings to better reflect the effectiveness of advertising campaigns. Currently, advertisers pay a fixed rate no matter how successful an ad campaign is in boosting sales. A lack of transparency and data within the industry often means the return on investment is unclear.

But Omnicom Media Group (OMG) is in talks with regional clients to change the fixed-rate business model and charge clients according to the impact that a particular campaign has on consumers. "Eventually, agency and media remuneration will be solely time or performance-based. Remuneration will be based on success," said Dimitri Metaxas, OMG's regional executive director for digital. Elie Khouri, the chief executive of OMG in the MENA region, says talks on this matter are under way on a global level and also locally.

"I see this happening [in the Middle East] within three years. We're having frank discussions with clients. "We have to move in this direction. For local clients it will be three years plus; for global clients, it may happen sooner," said Mr Khouri. "We as an industry have failed miserably in demonstrating the value we offer clients. "Our idea is to be remunerated by the value we give our clients."

The move would help clients justify the expense of advertising but would depend heavily on better measurement systems and data. For example, no accurate measurement system is in place to measure television audiences in the Arab world. The introduction of such a system would boost regional advertising spending by US$2 billion (Dh7.34bn), according to a recent report by the management consultancy AT Kearney.

"The only thing holding us back is the data," said Mr Metaxas. [e-mail]