No admin fees, value-based models, guaranteed results: A new era of agency contracts

On the other hand, measures of marketing budgets as a share of overall revenues have been in decline for half a decade now, with the only silver lining being a plateau (rather than continued fall) this year.

The mixture in outlook is enough to cause conservatism in budgets, which can trickle down quickly to agencies in the form of increased pressure to perform, withdrawn spend, or worse.

In response, many agencies are reconsidering the industry’s modus operandi, drawing up new commercial relationships with the brands they serve.

What exactly does that look like?

We asked agency leaders.

Lucy Freedman, chief growth officer, House 337: “We’ve evolved beyond the traditional time-and-materials model to a value-based pricing approach that better reflects the impact of our work. Our focus is on giving clients absolute transparency around deliverables, helping them to justify investment with the board more effectively. While this shift has meant having honest, sometimes challenging conversations, we’ve been encouraged by the openness to change. At a moment when the industry feels somewhat in flux, putting value front-and-center is proving to be a powerful rallying point.”

Jennifer-Quigley Jones, founder, Digital Voices: “We’ve made a bold shift: Guaranteed performance results. In the influencer marketing space, rare existing instances of such guarantees are typically top-line awareness metrics like impressions. But we’re aiming to set a new standard by tying our compensation directly to ROI-focused outcomes such as leads, conversions, app downloads, or sales. Clients are cautious, delaying campaigns due to tariff-related pressures and broader economic uncertainty. By putting our own fee at risk, we’ve removed a barrier: confidence in return-on-ad-spend. This approach has sparked strong interest across our client base and opened doors to new partnerships. We’re not just promising results; we’re providing them with performance-based activation and measurement models that turn marketing into a revenue center. It’s early days, but the response has been overwhelmingly positive.”

James Trowman, general manager, The Frameworks: “The Frameworks recently became an employee-owned business. This change is aimed at increasing individual responsibility and sharpening our collective focus on growth and profitability. It’s not a reaction to economic pressures, but a proactive move to build a more commercially engaged culture. We also see it as a clear differentiator in growth markets like the US and UAE, where clients value strong, committed teams. We believe employee ownership will help us perform better and grow faster in a challenging market.”

Ryan Dunlop, strategy partner, Jack Ryan: “‘Added value’: The two words every pitch deck ends with. But shouldn’t we be leading with them? With talk of ‘contracting marketing spends,’ I’d question just accepting that’s true: it’s up to us to help influence strategy and investment with solid business cases. We’re seeing the increasing importance of added value to brands – not just in media placements, but training and development, strategy, and advice: it’s all added value, but also added relationship.”

Luke Bristow, chief executive officer, MNC: “Big retainers work in boom times. But when growth stalls, they’re the first thing clients question. So we’re testing a new model: minimal base fees with upside tied to client profit. Specifically, we link part of our compensation to contribution margin (CM3) – profit after media costs but before overheads. One retail brand recently agreed to this after we mapped their full P&L and forecasts against media activity, producing a shared commercial plan focused on new customer acquisition. It’s complex, trust-heavy, and not for every agency, but it aligns incentives.”

Claudine Harris, chief executive officer, Miai+ Brand Partnerships: “We’ve noticed an increase in companies asking for substantial idea generation and pitches for free, especially with reduced or flatlining budgets. As a small independent agency, we’ve previously taken on these requests as an investment in potential new business. However, we’ve decided to stop this practice. After presenting ideas to companies, we’ve often found that they love the concepts but don’t have the budget to activate them, which has been frustrating.”

Joann DeLanoy, managing director, Toaster EMEA: “We don’t charge for delays any more. Typically, we scope to cover some feedback and are realistic with timing, but it’s just taking longer to sign off work. Why? There are more stakeholders, and those stakeholders are responsible for more on their side, so our priorities are not always aligned. Previously we would need 2 weeks’ notice to pause any work and/or charge our clients for any delays to delivery, but that seems unrealistic in this current climate. Most importantly, it's not something worth jeopardizing the relationship on. Now, we approach clients with understanding and try to navigate to the best outcome for quality work whenever that happens.”

Asher Wren, senior vice-president, growth, Dept: “We have a financial and commercial leadership pricing panel, which reviews all high-value client proposals. This ensures commercial models align with real business impact and client value. For one brand, we implemented a hybrid ‘retainer + performance-based incentive’ model. Our proposal doubled the competition, but projected first-year e-commerce revenue growth covering the premium 80 times over. Our agreement included performance bonuses for every percentage point increase. We won the work because we demonstrated value, not cheapness. The success of incentive-based models hinges on trust, transparency, and anchoring incentives to metrics within agency control. The broader the agency’s remit, the more we can craft innovative commercial models directly tied to business impact.”

Niki Chana, programmatic strategy director, SBS: “As money continues to move into social platforms, brands aren’t just chasing clicks anymore. They want tangible human connections. This has encouraged agencies to move away from traditional billing and measurement policies. We’re streamlining our commercial model by removing admin fees, focusing on clear, transparent margins, and staying fully independent in our media choices. We’re putting faith in simplicity, access, and transparency. While it may not reinvent the wheel, our model is refreshing for clients who have worked with larger agencies and become disillusioned with 20-40% fees on top of media, for a service burdened by red tape and inconsistencies. We’re prioritizing each brand’s individual needs, ensuring their budget is used effectively and efficiently. Transparency on marketing spend is essential; when helping brands reach audiences in meaningful ways, it’s about making every penny count.”

Liam McNally, managing partner, growth, 26PMX: “With so much noise (and a new AI update almost weekly), many brands are operating in a state of uncertainty, unsure of what to invest in or how to judge what’s working. To respond, we’ve shifted to looking at performance-based commercial models across multiple services, a model that can be mutually beneficial. Moving beyond traditional time or output-based billing will become a bigger part in our commercial discussions with clients, reflecting the belief that embracing AI is essential and that we should stand behind the results we deliver. By aligning our success with clients’ outcomes, we show we’re willing to share in the risk, not just the reward. This helps strengthen trust in partnerships and gives confidence that we will invest, and challenge clients to drive work that truly moves the needle.”

Amina Folarin, chief executive officer, UK Group, Oliver: “This austere time is an opportunity to innovate. We’re seeing a seismic shift in what’s possible for brands. Using technology, they’re creating higher-impact work faster, and at a lower cost, than ever before. Our response is to build bespoke solutions for them. We’ve developed AI-powered chatbots to make information access easier, improving accessibility to years of historical work and cutting search times. We’ve made tools that predict campaign success and iterate accordingly. We’ve embedded Pencil Pro, which aggregates the best LLMs to create end-to-end campaigns from one place. (We’ve created over 700,000 pieces of work so far.) Staff must complete proprietary AI training, teamed with lessons in applying human creativity via regular all-company workshops. We’ve optimized our in-house model to give clients better control and better proximity to experts in uncertain times. This includes matching clients’ office-day policies, encouraging more global connection and bridging cross-functional teams.”

Adrienn Major, founder, Pod Ldn: “In the current crisis, we’re stepping up our nearshoring services, particularly for small brands, production companies or independent agency businesses that desperately need to make cost savings. Nearshoring is a strategy for outsourcing services and talent to nearby countries with lower labour costs, overheads and taxes – for example, Hungary, Romania, Croatia or Portugal. It’s a potential solution for tasks that companies can easily outsource but without the huge up-front cost and risk of, say, setting up an office in India and hiring hundreds of people. It’s our job to convince smaller companies that this is a viable option to compete with the bigger players on costs.”

Ted Kohnen, chief executive officer, Park & Battery: “We’ve shifted how we price and package our strategic services, moving from hourly billing to fixed-fee strategy sprints. Amid tightened marketing budgets, clients are under pressure to show faster value and more tangible ROI (‘quick wins’). Traditional retainers or open-ended scopes felt misaligned with that climate: too slow, too opaque, too risky. We saw an opportunity to deliver high-impact strategy in a way that’s faster, more focused and more digestible for clients navigating uncertainty. So we launched a new offering of fixed-fee, three to five-week engagements focused on brand positioning, campaign architecture or go-to-market strategy. They’re scoped for clarity and designed to create a foundation for deeper work when the client is ready. We’ve opened doors to new clients who wouldn’t have signed on for a full retainer but are eager for strategic firepower.”

Daryl Goodman-Gordon, vice president, sales, Squared.io: “In a flatlining economy, agencies are under pressure to deliver more value with fewer resources. We’re seeing teams pivot from manual processes to automation, using our platform to cut time on audits, hygiene and optimizations by up to 70%. This shift frees specialists to focus on strategy, not spreadsheets. One agency partner even credited automation with helping retain a key client amid budget cuts. As pricing models evolve, these tools enable agencies to scale impact, protect spend, and deliver smarter results, fast. Efficiency isn’t just survival; it’s the new competitive edge.”

Monica Conway, chief operating officer, Fuse: “We’ve embraced output-based pricing for some years now. Scopes focus on deliverables and are priced as such, irrespective of how long they take to complete. Any inefficiency is on our heads. Where our focus will now shift is to how genAI can make us operationally more efficient, giving transferable savings and freeing us from manual tasks. Clients will increasingly demand a great ROI from marketing and sponsorship investments. Never has there been a great need for robust measurement to track the performance of each marketing dollar and be able to adjust the levers accordingly and flexibly.”

Mae Reddaway, managing director, Seen Connects: “Right now, clients’ budgets are needing to work harder than ever before. Measuring success within social and influencer campaigns has never been as important. We’ve shifted beyond vanity metrics to robust measurement frameworks that align with business outcomes and incorporate sales data, brand uplift study results, and econometric modelling outcomes. We’ve seen clients increasing social and influencer spends despite their total marketing budgets decreasing. We’re also seeing a trend in clients looking to consolidate their agency partners to achieve greater cost efficiencies.”

For more big-picture thinking, check out more from the Agency Advice series and our Editorial Intel hub. To contribute to future editions, email sam[dot]anderson[at]thedrum[dot]com.