Kickbacks, commissions and working for free

Long ago, but not that far away, the ad biz was a very different place, kids.

Not that I’m old or anything, but I’ve been told there was a time when not one single Canadian ad agency with sufficient cash flow to buy its president and his good wife a couple of airline tickets to the ICA off-season Bermuda conference had ever gone under.

Yes, it was that swell! When I was creative director on one of Canada’s biggest accounts at the tender age of 24, the client would come to a meeting at the agency once a year and say something like well, we spent eight million with you last year and it seemed to work, so we’ll spend 10 million with you next year. And then they’d notice it was almost 11:30 and repair to Winston’s for the afternoon.

A nice long lunch was probably the least you could do for a client who, in 20 seconds, had fundamentally written you a cheque for one million, five-hundred thousand in the next calendar year. A year, by the way, in which one could purchase a new Corvette Stingray for five thousand bucks, just to put things into perspective.

Such was the gentle genius of the 15% commission system. Of course, you’d have to purchase ten million bucks worth of TV time. But you’d only pay eight million, five hundred thousand for it, ’cause you were an accredited agency, old chap. And you’d have to send your ex-CBC TV producer to Los Angeles to make four or five TV commercials. But you charged back your costs, and added seventeen-point-six-five for your trouble as well.

The late, great David Ogilvy went one better. In Ogilvy On Advertising he advises clients to offer their agencies sixteen per cent commission. This, he felt, would focus their minds on the business, as well as double their profit on the account. You’ve gotta like the man.

And if that wasn’t a pretty good way for agencies to make enough money, there were lots of more, um, resourceful schemes floating around. The wink-wink-nudge-nudge invisible volume rebate was rumoured to be the funding source for half the Christmas parties in town. And they were big parties, too.

One agency was famous for never paying the final one-third of the television production houses’ bills. (Ultimately, there wasn’t a film house in the city that would even quote on one of their storyboards, but it took years for that to happen!)

Another agency would base its new business pitches on the promise that if they were awarded the account, they’d take several million dollars of Other People’s Money from their bank account and invest it in shares of the client’s publicly traded stock, causing it to rise both sharply and predictably. Well, you can’t say they weren’t creative!

If you’re curious about how agencies and buying services get paid today, the answer seems to be every way you could possibly imagine and then some. The official ICA party line is nicely enunciated on their Web site, and it’s interesting to note that in 1995 in the U.S., 14% of advertisers still paid a full 15% commission, down from 33% in 1992. Forty-five per cent paid a reduced-rate commission, and 35% paid fees.

So there are commissions and shaved commissions and fees and bonus arrangements and stock deals and kickbacks and incentive schemes and the ever-popular how’d you like to work for free deal.

I polled some industry pals on how they get paid, which is just a bit more awkward than asking them what they like to do in bed. One top outfit said a campaign is seventy-five thousand. A roll-out of an old campaign is fifty.

There are people who charge everybody in the agency, from president to lowly gofer at a hundred-and-change an hour. The Workers’ Paradise Approach! This means never having to tell your client your own rate is actually five hundred bucks an hour.

I’ve heard there are agencies who, from time to time, say they work for free, but charge like bandits as the work goes through their satellite studios, printers, and sundry captive suppliers.

Personally, I tell clients that my hourly rate is that of a mediocre downtown lawyer. But after speaking with my friend the hotshot downtown lawyer last week, I find I’ve recently been charging less than a mediocre downtown lawyer. Shit.

I asked Gary Reinblatt (yeah, the McDonald’s Gary Reinblatt) how agencies should get paid. Gary, who’s undoubtedly spent billions and made trillions by willing the creation of great advertising, replied It’s never what you pay. It’s what you get.

Barry Base creates advertising campaigns for a living. He writes this column to promote the cause of what he calls intelligent advertising, and to attract clients who share the notion that many a truth is said in jest. Barry can be reached at (416) 924-5533, or faxed at (416) 960-5255, at the Toronto office of Barry Base & Partners.

Cannes Lions 2025: Canadians nab more medals on final festival day

Strategy is on the ground in Cannes, bringing you the latest news, wins and conference highlights all week long. Catch all the coverage here.

Friday’s batch of Silver and Bronze winners included the oldest category at the Cannes festival, Film, as well as Sustainable Development Goals, Dan Wieden Titanium, Glass: The Lion for Change and Grand Prix for Good. Canadians were recognized with four Lions today: two Silver and a Bronze in Film, as well as a Bronze in Sustainable Development Goals.

FCB Toronto was given yet another nod for its work, “The Count,” for SickKids, bringing the medal count for that campaign to four, including a Gold for Health & Wellness. Another Canadian agency recognized on the final day of the festival was Klick Health Toronto, which earned a Silver in Film for its work “Love Captured” for Human Trafficking Awareness and a Bronze for “18 Months” for Second Nurture. And over in Sustainable Development Goals, the Bronze went to Publicis Canada and its “Wildfire Watchtowers” work for Rogers.

Another massive win for Canada included not one, but two Young Lions (pictured above) taking home medals in the annual competition. In Design, the Gold Young Lion was awarded to Rethink’s senior motion designer Jesse Shaw and ACD Zoë Boudreau. The second, a Bronze in Media, went to Cossette Media’s business intelligence analyst Samuel David-Durocher and product development supervisor Tristan Bonnot-Parent.

Film (2 Silver, 1 Bronze)

1 SILVER: “The  Count” by FCB Toronto for SickKids Foundation

“The Count,” a striking campaign from FCB Toronto for SickKids Foundation, has earned 1 Gold, 2 Bronze and now 1 Silver for Film at Cannes. If you watch it, it’s easy to see why. The collaboration between brand and agency honoured the hospital’s “VS” platform, while steering it in a new direction from its initial development by previous AOR Cossette. The creative celebrates childhood cancer patients who have to fight for every birthday, while honouring the hospital’s own milestone – 150 years and counting.

 

1 Silver: “Love Captured” by Klick Health Toronto for The Exodus Road

Klick Health Toronto added to its medal tally with a Silver in Film for it’s work “Love Captured” for The Exodus Road. The creative features a romantic getaway that isn’t what it seems in an experiential short film for the global anti-trafficking organization. The experience takes viewers through a tragic and twisting experience of exploitation.

 

1 BRONZE: “18 Months” by Klick Health Toronto for Second Nurture

Klick Health Toronto also won a Bronze in the Film category for its work, “18 Months,” done for the charity organization Second Nurture. The animated film is based on a real-life story in which a same-sex couple adopts a baby found in a subway station, and the 18-month journey into a story of hope.

Sustainable Development Goals (1 Bronze)

1 BRONZE: “Wildfire Watchtowers” by Publicis Canada for Rogers

Publicis Canada landed on the winners board for its work, “Wildfire Watchtowers,” for Rogers. The Canadian-developed wildfire-detection tech – which has been billed as “a fire alarm in the forest” – uses AI-powered sensors installed on 5G towers to monitor vast remote areas in real time. By scanning, identifying and reporting early signs of wildfires (up to 16 minutes faster than other systems), the technology helped prevent 54 fires in 2024 alone.

Catch the Gold winners later today when they’re revealed at the gala in Cannes.