The Slovenia Times

Ad agencies paid by effect?



BIS is based on tighter cooperation between the agencies and the companies. Arih's agency is prepared to cover complete realisation of this action that includes production expenses and renting advertising space. Their goal is to participate in the profit of the product. Thus, the agency would actually be paid by the effect of their work. "Payment of advertising services by effect is not new just in Slovenia," claims Igor Arih, the creative director of Arih advertising agency. "It is novel worldwide!" The basis for BIS is the confidence in the product's success and mutual trust between the company and the agency. According to the model, the agencies would be fully in charge of the public relations. They would also cooperate in setting market prices. However, the distribution, development and services remain in the domain of the company. Most of the advertising world reacted in a reserved fashion. Some of the companies have welcomed the model, as it will assure a high motivation of the agencies and leads to a greater level of efficiency in investments to promotions. But the risk rests on the agency. Sales depend on various factors, including the quality of the product, distribution, positioning in the stores-none of which be influenced by the agencies. The model further requires the agencies to credit the companies, which raises some questions of its economic justification. It would also be difficult to define the border of responsibility between the companies and the agencies. With regard to the reserved reactions of both the companies and the agencies, one might claim that BIS will not become a prevailing model in the advertising industry, as Arih foretold. Jure Apih, the director of the Golden Drum Festival and the editor of MM - Marketing Magazine states that BIS is not appropriate for general usage, but that it might bring some extra clients to Arih's agency because of its attractiveness and usefulness. "Arih is an enfant terrible of Slovene advertising," he adds. "When we started to issue Slovenske novice (a Slovenian newspaper with one of the highest circulations), we made a contract with the agency where Arih worked that was very similar to the BIS model, but they resigned from it, claiming that they had liquidity problems."


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