Coke, HUL Moving To Pay-For-Performance Advertising

The Economic Times reports that major advertisers such as Coca Cola India and Hindustan Unilever are moving to a system under which they will compensate their media buying and creative agencies based on the performance of their brands. Currently, such agencies receive a fixed rate irrespective of the impact of advertising on sales.

While Indian advertising has won international recognition for its creative work, there has been persistent criticism that a lot of the creative work is self serving and does little for the brand. We can think of several ads currently on TV that are a joy to watch, but we don’t recall what brands/products they are advertising.

“Coca-Cola India has already started implementing a system, where part of the payment is linked to performance, with its media-buying agency Madison, which will be extended to creative agencies McCann-Erickson, O&M and Leo Burnett next year,” the ET story says.

Procter & Gamble is also globally moving into a system where part of the payment is performance-based.

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