There are many hybrid models, but the most common has as a foundation a small, retained resource plan, usually for Account Management, or senior agency specialists. Then all other services are provided on a needs and cost basis. This can either be a fix project fee or hourly rates or estimate basis to pay for the variable resource requirements. Increasingly popular where scope of work is unpredictable but where a full retainer is not acceptable.
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- Almost all of these agency fee models can be combined as a hybrid model.
- Hybrid models have become more popular as agency services are becoming more diverse and complex. Media trading fees may be paid as commission, while strategy and planning could be retained and
econometric modelling is then paid as a project fee. - The most common hybrid model is to retain a certain resource capability (Account Management) or to a certain stage of the process (To agreed concepts) is retained and then a more flexible model such as estimated project fees for the remainder.
- The important consideration with hybrid models is avoiding potentially double-paying the agency, therefore defining each fee is particular important.
Advantages
- Easy to negotiate using historical data once a base level of resources has been established.
- Easy to budget as generally based on previous year with a small increase for inflation.
- Gives the agency guaranteed resources as they are paid for by the retainer.
- Often leads to inefficiency within the internal marketing department as the marketer can often lean on the agency for additional resource requirements.
Implications
- Non-retained services often come at a slight premium to if they were retained.
- Requires a scope of work to ensure retained services are ‘relevant’ and deliver value based on specific service and output requirements