17632: Got Multicultural? LERMA/ Wins Real California Milk.

MediaPost published unintentional Hispanic Heritage Month content by reporting LERMA/ gained AOR status for Real California Milk, the consumer-facing brand of the California Milk Advisory Board (CMAB).

LERMA/ once served as a Latino-focused advertising agency alongside The Richards Group, eventually breaking away on its own around the time Stan Richards left the building.

Here’s hoping Real California Milk comes with more than real California crumbs.

LERMA/ Named AOR For Real California Milk

By Steve McClellan

Dallas-based full-service agency, LERMA/ has been named agency of record for Real California Milk, the consumer-facing brand of the California Milk Advisory Board (CMAB), following a competitive review led by Mercer Island Group.  

The organization had previously worked with Deutsch LA for many years although it wasn’t immediately clear if that agency was still the incumbent when the review was called or if it participated in the review. 

The account encompasses creative, strategy, social, media, data and analytics, multicultural marketing and website responsibilities.  

LERMA/ is tasked with building greater meaning and relevance around the Real California Milk seal, with the goal of increasing consumer preference and purchase of seal-stamped dairy products at retail.  

“LERMA/ stood out from the beginning for the passion they brought to our business and their understanding of the opportunity ahead,” said Adrienne Daniels, Executive Vice President, Marketing at the CMAB. “Beyond the strength of the creative thinking, we felt an immediate cultural fit with the team.”  

The first work from the partnership is expected to launch in January 2027.  

The CMAB represents California dairy farmers, and its mission is to promote demand for milk and other dairy products made in the state. That’s a separate organization from the California Milk Processor Board (CMPB) which represents the companies that pasteurize, bottle, and distribute liquid milk. Their iconic “Got Milk?” campaign was created by Goodby Silverstein & Partners in the 1990’s. CMPB and Goodby parted ways in 2017 after 25 years.

17630: How To Partner With Non-White Advertising Agencies.

 

Advertising Age published probable Hispanic Heritage Month content providing pointers on partnering with multicrumbtual advertising agencies.

While the perspective spotlighted common mistakes, potential pitfalls, and marketing microaggressions, there were no blatant references to cultural cluelessness, crumbs, or Prime Redlining.

So, it sorta feels like whitewashing systemic racism.

When to partner with a multicultural agency—and how to structure the work

By Sabrina Sanchez

For many agencies, creating campaigns for multicultural audiences is a challenge. Some handle it in-house, translating existing work or trying to tack on cultural relevance at the end. But agencies that specialize in multicultural work say that approach leaves little room for cultural insight to shape the strategy. Ad Age asked three members of the Ad Age Small Agency Network with Hispanic and multicultural expertise—Cien+ (CulturePlus Group), BeautifulBeast and Macías Creative—when to call in a partner, how to divide the work and how to manage the client relationship. The following guide was assembled from their answers.

Step 1: Check when the work calls for a partner

Macías Creative leaders—Marcos Macias, founder and chief creative officer; Alex Macias, managing partner and chief operations officer; and Ernesto Ruiz, executive director of strategy and accounts—identified three situations that call for cultural expertise:

If the assignment explicitly targets Hispanic or multicultural audiences

Bring in a partner while developing the strategy.

If growth depends on a market where Hispanic consumers are a major economic force

Bring in cultural expertise, even if the brief does not explicitly name that audience. Macías Creative cited markets such as California, Texas, Florida, New York and the Southwest where winning with Hispanic consumers can be critical to growth.

If cultural nuance is central to the strategy or idea

Consider a multicultural agency partner, even if the brief does not name a particular audience. Macías Creative pointed to cultural spaces involving food, family, sports, music, identity and traditions—all of which are places where deeper fluency can help shape the work.

The agency also offered signs that a team may need outside expertise:

• If research is being used as a substitute for established cultural expertise.

• If a few Hispanic people on the team are being treated as proof of Hispanic marketing capability; that capability also requires dedicated expertise, experience, tools and processes.

• If the U.S. Hispanic market is being approached as one audience, without accounting for differences in country of origin, language preference or relationship to American culture.

Another sign, Macías Creative said, is asking someone at the end of the process whether the creative “feels right.” That person “probably needed a seat at the table much earlier.”

Flor Leibaschoff, BeautifulBeast’s co-founder and CCO, said general-market agencies should not wait for a sign; they should already be working with Hispanic and multicultural agencies. To her, a plan built around translating general-market work, rather than developing a strategy for the audience, already shows the need for a different approach.

Claudia Avans of Cien+ posed a broader question: “Do we have the right perspectives at the table for this opportunity?” Cultural insight can help an agency understand a particular audience, she said, and it can reveal shifts that matter to the wider market.

Step 2: Decide whether you’re creating or adapting

How an agency approaches its creative determines when a multicultural partner needs to join and what they can contribute.

If the work needs a new strategy, platform or idea that will resonate with Hispanic audiences

Bring the partner in from the beginning while the insight and creative direction are still being developed. “If a perspective could change the strategy, give it a chance to shape the strategy,” Avans said.

If the assignment involves adapting an existing idea

For an assignment focused on adapting an existing idea for a specific audience or market, bringing in that expertise later can sometimes make sense, Macías Creative said. Even then, Macías Creative said both agencies should discuss the audience’s needs and agree on their approach at the outset. The partner should help determine whether adaptation is the right assignment.

Joining early lets a partner help shape the insight, idea and plan. Once creative is underway, their role can narrow to changing what has already been decided. “They become translators and fixers instead of strategists,” Leibaschoff said. If collaboration cannot begin at the pitch or strategy stage, she said, bringing the partner in for the brief is the minimum.

Step 3: Agree on how the agencies will work together

The next decision is what expertise the assignment needs, and how each agency will contribute.

If the assignment calls for several kinds of expertise

Avans described several ways to assemble a team: a lead agency can bring a cultural partner into the strategy phase; two agencies can build the brief together and split leadership by expertise; a partner agency can join for a few critical sessions; or different partners can lead at different stages. A cultural agency might also bring in a technology, data, creator or community partner when the work calls for it.

If the question is who works directly with the client

Leibaschoff named three arrangements she has seen work: an introduction, where the general-market agency connects the partner agency with the client and lets it work with them directly on that part of the business; white-label work, where the partner agency works behind the scenes under the lead agency’s name; or a hybrid, where the partner meets the client but the lead agency keeps the relationship. Any arrangement can work “as long as it’s agreed on from the start,” she said. Cien+ has also worked both behind the scenes and directly with clients, depending on the assignment.

Macías Creative draws a different line. It will not take an assignment where its team has no direct client contact, at least for key meetings. The agency says passing cultural insights through another team can weaken the collaboration and reduce the partner agency to an execution role. One setup Macías Creative described involves a small senior team working alongside the lead agency from the strategy stage.

Before work begins, agree on who owns the client relationship, who presents the cultural insight, who makes decisions, how feedback and approvals move, how the work is credited, and how fees and billing will work.

Those choices can lead to different arrangements. In a healthcare partnership described by Cien+, the agencies led the general and Hispanic market work respectively and shared the client relationship. On a consumer goods launch described by Macías Creative, the lead agency kept the client relationship and led strategy, creative and execution, while a senior Macías team contributed cultural insight from the strategy stage.

Step 4: Avoid the mistakes that weaken partnerships

The agencies pointed to five recurring problems:

1. Bringing in expertise too late—or giving it too little time. Once strategy and creative are set, a cultural partner has little room to shape either.

2. Leaving roles and fees unclear. Responsibilities, decisions, client contact and billing need to be settled before work begins.

3. Falling back on translation under deadline pressure. Even with a partner agency involved, a team may revert to translating general-market work, reducing that partner to a translation role.

4. Creating a one-person department. A single Hispanic employee is expected to cover strategy, creative, media and social listening. “That’s a lot of hats for one head,” Leibaschoff said, “and it’s not fair to them or to the work.”

5. Treating the partner as competition or as an execution vendor. “If you value the expertise enough to bring in a partner, give them a real seat at the table,” Macías Creative said.

Step 5: Consider what the partnership can add

Sharing work with another agency may raise concerns about revenue and the client relationship. Leibaschoff argued that the greater risk is failing to help a client pursue the opportunity: the client may eventually find someone else who will. “It’s not about splitting the pie; it’s about making the pie bigger,” she said.

Macías Creative made a similar point: work that initially looks like shared revenue may lead to additional, dedicated budget for multicultural efforts.

Avans framed the benefit in terms of what the lead agency can solve for its client: “The lead agency becomes even more valuable because of the ecosystem it can bring together.”

This story used AI-assisted tools to summarize and structure insights from Ad Age’s original reporting. It is based solely on the responses Ad Age received for this story, and was reviewed by editors and reporters to ensure accuracy, clarity and context.

17611: On Annual Hispanic Heritage Month Pleas.

Advertising Age published the obligatory annual Hispanic Heritage Month perspective titled, “Hispanic growth is reshaping America—is your brand keeping up?”

Answer: ¡No!

Hispanic growth is reshaping America—is your brand keeping up?

By Flor Leibaschoff

This Hispanic Heritage Month, we’re happy to report that the stereotypes are finally moving out. We’re not just your gardener anymore. We’re your next-door neighbor now, too.

In 2025, Hispanic households accounted for essentially all of the net homeownership growth in the U.S. And a handful of brands have already figured out what that means for them.

Census data compiled by the National Association of Hispanic Real Estate Professionals shows Hispanic households added 441,000 net new owner-households last year, the largest single-year gain on record. Strip out Hispanic buyers and the country ends 2025 with roughly 125,000 fewer homeowners than it started with. Hispanics now represent 10.2 million homeowners nationally, an all-time high, and drove 92.6% of all new household formation.

The other half of the story is who’s building the homes: 18.8% of Hispanic-owned businesses are construction businesses, more than any other industry. Those businesses have grown by 75% in five years, while Hispanic-owned employer businesses overall grew 44.4%. That’s compared to 0.46% for all U.S. employer businesses.

The Home Depot, a brand I had the honor of working with for over eight years, already built its playbook around that overlap: Hispanics make up roughly 30% of the construction workforce and a “good majority” of its pro customer base, per the company. Its “Latina Doers” campaign and 15 years investing in this audience just earned The Home Depot the 2026 HMC Marketer of the Year. Molly Battin, chief marketing officer, put it plainly: “The Hispanic customer is not a segment for us; it’s central to how we think about growth.”

Ikea also moved on the Hispanic buyer. It launched a full Spanish-language e-commerce experience in the U.S. in July 2024, not as a campaign moment but as a permanent shopping infrastructure, with bilingual customer service built in. That’s a global furniture brand betting on Latino household formation well before this year’s numbers confirmed it was right to.

On the building side of the business, CertainTeed, a Saint-Gobain brand, runs a national program that provides Hispanic contractors with bilingual business training, credentialing and warranty benefits, helping the pros keep building, not just houses but their legacy. “We love helping our contractors build more than trust with homeowners; we help them build their legacy,” says Ana María Pulido, senior manager of CertainTeed, who leads the company’s Latino contractor initiative.

Sherwin-Williams is doing something similar for painters: its 2026 Leagues Cup push, “Gana con los Pros,” pairs sweepstakes and in-store activation with an existing platform, Acá Entre Pros, built specifically for Hispanic paint professionals.

That’s four categories moving forward:

• General retail

• Furniture

• Roofing and building materials

• Paint

Someone, please tell the Wayfairs of the world, they’re leaving money on the table.

Speaking of money, banks and mortgage lenders should be paying attention, too. Hispanic buyers are twice as likely as non-Hispanic buyers to use FHA financing, the exact product D.R. Horton, Lennar, Rocket Mortgage and United Wholesale Mortgage all sell at scale.

The data’s out there: Brands treating this as core infrastructure are naming it as their growth strategy in public, and watching their ROI move because of it. The ones still treating it as a seasonal moment are standing next to competitors who already made their move.

Speaking of moving, it’s time to move on this trend and start investing in the Hispanic market, vecino.

17581: Appealing To Black Consumers One Month—And One Holiday—At A Time.

 

Adweek interviewed The Gathering Spot Co-Founder Ryan Wilson, who was closing out Black Business Month and reflecting on brands appealing to Black audiences.

“The biggest mistake is treating Black businesses and Black consumers as a moment on the calendar instead of an important part of the economy and culture every day of the year,” Wilson opined. “Black Business Month can be a great catalyst for attention, but the goal should be to build relationships that extend well beyond August.”

There’s not much new to Wilson’s words, in terms of pointing out brands’ cultural cluelessness and dismal DEIBA+ dedication.

Black History Month, Black Music Month, Black Business Month, Juneteenth, and Kwanzaa are combining to create opportunities to collect crumbs all year long.

Just need nine more months of Black celebrations to complete the calendar.

Ryan Wilson On Why Many Brands Still Don’t Know How to Appeal to Black Consumers

“Manufacturing authenticity” will never capture the community’s $2.1 trillion in spending power

By Robert Klara

A recent study by the Brookings Institution found that Black-owned employer businesses have blown past the 200,000 mark for the first time ever, collectively accounting for 1.8 million jobs and $249 billion in revenue. 

But the growth comes despite persistent challenges. According to data firm WifiTalents, Black entrepreneurs start off with a third less capital than their white counterparts, receive just 1% of venture-capital funding, and often cite lack of mentorship as a growth impediment.

Few understand these dynamics better than Ryan Wilson. In 2019, the Atlanta native recognized the need for a club where Black entrepreneurs could convene, co-work, and make professional connections. Today, The Gathering Spot is an Atlanta institution “where business deals are made, ventures financed, and community initiatives take hold,” according to Black Enterprise.

Brandweek, ADWEEK’s three-day marketing summit, will host an evening social at RETREAT, The Gathering Spot’s rooftop venue, from 7:00 -10:00 p.m. on September 15. In advance of the function, we sat down with Wilson to talk about Black businesses, the Black dollar, and what major brands frequently get wrong about both.

ADWEEK: We’re wrapping up Black Business Month, when it’s common for major retailers and credit cards to spotlight Black-owned businesses and encourage people to shop with them. Do you have any thoughts on why these brands don’t encourage support of Black-owned businesses all year long? Are they missing an opportunity because they don’t?

RYAN WILSON: The biggest mistake is treating Black businesses and Black consumers as a moment on the calendar instead of an important part of the economy and culture every day of the year.

Black Business Month can be a great catalyst for attention, but the goal should be to build relationships that extend well beyond August. If a company only engages Black-owned businesses when there is a campaign or cultural moment attached to it, that engagement can start to feel transactional rather than authentic.

Yes, I think brands are absolutely missing an opportunity when they take that approach. Supporting Black-owned businesses isn’t simply a social-impact strategy; it can also be a smart business strategy. These businesses are creating products, employing people, building communities, and shaping culture. The brands that understand that will build deeper relationships and, ultimately, greater trust.

Why did you see a need for a networking hub like the Gathering Spot, and have you seen success stories emerge from it that have validated the concept?

When we started The Gathering Spot, we believed there was a need for a different kind of community. Traditional networking can be very transactional: you meet someone, exchange information, and hope something happens afterward. We wanted to build a place where connection was part of the infrastructure: a creative could sit next to an attorney, an entrepreneur could meet an investor, or someone with an idea could meet the person who helps turn it into something real.

One of the clearest validations has been watching that idea grow beyond a single clubhouse in Atlanta. We expanded physically to Washington, D.C. and Los Angeles and built membership communities in cities including New York, Detroit, Charlotte, Houston, and Chicago. 

There are countless individual relationships and collaborations that have come from people meeting at The Gathering Spot, but what validates the original vision most for me is that people continue to see value in intentionally being in community with one another.

According to 2025 Nielsen data, the U.S. Black community packs $2.1 trillion in spending power. Brands obviously know that on some level, and yet we still see examples of marketing that fails to reach that community effectively—and sometimes offends them. What do brand marketers misunderstand or consistently get wrong about Black consumers?

One of the biggest mistakes is trying to manufacture authenticity at the end of the process.

You can’t develop a campaign without meaningful Black perspectives in the room and then add cultural references at the end and expect that to create an authentic connection. Representation has to exist upstream. Who is helping develop the strategy? Who has decision-making authority? Who are your partners? Who are you listening to before the campaign ever reaches the public?

At The Gathering Spot, we’ve seen firsthand how powerful it can be when people are invited into genuine community rather than simply marketed to. The same principle applies to brands. If your first meaningful conversation with Black consumers happens when you’re trying to sell them something, you’ve probably started too late.

The companies that will get this right are the ones that approach the Black community with curiosity, consistency, and respect—not simply because of the size of its spending power, but because Black consumers are helping shape culture, entrepreneurship, and the broader marketplace every day.

17576: Does Coca-Cola & WPP Open X Create An Exclusive Hilltop?

   

More About Advertising panned a Coca-Cola advertisement created by WPP Open X featuring a Muslim family and Cat Stevens (aka Yusuf Islam) soundtrack.

The work demonstrates WPP Open X is consistently capable of generating lame creative—and probably preventing multicultural marketing practitioners from gaining opportunities to collect crumbs.

MAA Ad of the week: Coca-Cola from WPP Open X

By Stephen Foster

Coca-Cola is, or should be, the gold standard for advertising although every so often it slips off its perch. Its most famous efforts have encapsulated Americana in a way that would make even Donald Trump blush, “I’d like to teach the world to sing.”

Now, with WPP Open X, (have to make sure you don’t close the gap with the X) it’s gone well and truly global, Cat Stevens, alias Yusuf Islam, on vocals and a clearly Muslim family sitting down to enjoy dinner and with a gallon or so of Coke. Doesn’t look right somehow.

But where’s the magic, that sprinkling of stardust that got “I’d like to teach…” into cynical old Don Draper’s head? Too many boxes to tick maybe.

17567: On The Exclusivity Of Outcomes-Based Remuneration.

 

Advertising Age published lengthy, laborious content on outcomes-based remuneration. Hopefully, the reporter is paid by the word—because if compensation is based on views and website engagement (i.e., outcomes), he probably owes money to Ad Age.

Ruminating on remuneration reflects White holding companies’ impact on the industry. Fueling the commoditization of Adland—whereby people, places, and practices are repetitive, redundant, and replaceable—has made most offerings generic. And that’s just one point in a long list of reasons why outcomes-based remuneration won’t work across the advertising and media landscape.

Of course, the discussions have not included non-White advertising agencies. As such shops are relegated to lesser positions in the hierarchy—often forced to deliver translated versions or adaptations of mass market campaign platforms—how might they be identified and rewarded for positive outcomes?

In short, non-White advertising agencies can expect outcomes-based crumbs—or nothing at all.

Agencies want to get paid for outcomes—here’s what’s standing in the way

By Ewan Larkin

As agency leaders scamper to move away from hourly billing, outcomes-based pricing has seemingly become all the rage. In reality, rewriting the industry’s long-standing compensation model is a tricky proposition, complicated by everything from attribution disputes to the real financial risk agencies and marketers face.

A June study from Mediasense found that 85% of agency leaders expect to increase their usage of outcomes-based pricing over the next two years, and WPP has touted a deal with Jaguar Land Rover that ties fees to measurable sales and outcomes rather than hours worked. Dentsu media agency iProspect, meanwhile, is pushing to make outcomes the center of its reworked operating model.

The shift is being driven in part by AI and automation, which are reducing the time needed to plan and execute campaigns, undercutting the logic of a model built around billing by the hour. But as much as agencies long to do away with the time-and-materials model, adoption isn’t moving that quickly. For more than half of agencies, outcome-based arrangements still make up less than 30% of their client relationships, per the Mediasense report.

The reality is, most clients—and their procurement teams—are still defaulting to models they know and understand, dipping their toes in only modestly when they do experiment. For example, while iProspect is “very open” to putting its “entire fee at risk,” the agency has no clients on a fully outcomes-based model, executives said in a June interview.

Below, the core challenges around outcomes-based pricing and how agencies are attempting to navigate them.

A definition problem

There appears to be some confusion around what exactly outcomes-based pricing is, with different agencies defining it their own way.

What WPP and iProspect are referring to is a model in which a portion of agency compensation is tied to pre-agreed media or business outcomes, with clients essentially paying for performance. In general, if agencies exceed their targets, they can earn more than their baseline fee; if they fall short, that portion of the fee is reduced. This isn’t new; agencies have long tied portions of their fees to outcomes, but many are now trying to increase the percentage.

For other agencies, what gets labeled an “outcome” is really an output, a fixed fee tied to a defined scope of deliverables.

“There is absolutely a definition problem,” said Tracey Shirtcliff, CEO of Scope Better, which helps professional services businesses manage pricing. When agencies say “outcomes-based pricing,” what they’re usually landing on, she said, is a hybrid arrangement, meaning an output-based fee with a performance measure layered on top.

“I’ve almost never seen anything that is purely outcomes-based,” Shirtcliff added, describing a pattern the Mediasense report backs up. Pure outcomes-based remuneration, the consultancy found, is “exceedingly rare.”

The sphere of influence

WPP’s contract with JLR, focused on tying fees to measurable sales, appears to be a rarity. Tying compensation to business outcomes is difficult for any agency, given factors outside its control, and it’s especially challenging for agencies that only manage one piece of a client’s marketing, whether that’s creative, media, commerce or social. (WPP’s remit with JLR is comprehensive, spanning creative, media, production, customer experience and strategic counsel.)

As a media-only performance shop, iProspect is focused on outcomes including lead-quality metrics in pilots with e-commerce and business-to-business clients, executives said. Minneapolis independent agency Broadhead has one contract tied to performance, for a direct-to-consumer client, with 15% of fees at risk based on how many people the shop can drive to the client’s website, said CEO Dean Broadhead.

The agency—which is handling the client’s creative and media duties—avoided tying compensation to sales because it didn’t design the site, Broadhead added.

Working with a DTC client helps with measurement, Broadhead said, since “you can track the breadcrumbs a lot easier.” The Mediasense report supports that notion, finding that retail and e-commerce brands are best positioned for outcomes-based models, thanks to a high volume of digital transactions, clear conversion points and few intermediaries between an ad and a sale. Sectors such as healthcare and automotive, meanwhile, are seen as less suited to the model, hampered by regulation and longer purchase cycles.

It’s much easier for media agencies to dabble in outcomes-based pricing, Shirtcliff said, as media performance is seen as more measurable and less subjective than creative work.

One creative agency executive, speaking on condition of anonymity, said their shop sometimes forgoes 10% to 20% of its fee for the first few months of a new client relationship, money it doesn’t get back if it misses agreed-upon KPIs, such as lifting brand performance, but which comes back with a bonus if it hits them. The client tracks the metrics and shares them with the agency, this person said.

This executive described taking the risk as more a way to show “skin in the game” against competing agencies in a close pitch, rather than a genuine embrace of outcomes-based pricing.

Data and attribution standoffs

Coming to a mutual agreement on the outcomes is “probably the hardest piece to do,” Shirtcliff said, “because there’s so many things that can be measured.” Sales and revenue are the metrics most tied to business outcomes but hardest for agencies to control, while media metrics are easier to influence but don’t always reflect the results clients want.

It’s especially difficult to isolate an agency’s exact role in achieving a business outcome like sales, which is influenced by factors including pricing. Sixty-nine percent of agencies surveyed for the Mediasense report said difficulty agreeing on an attribution methodology was a critical or strong barrier to adoption, and 68% cited insufficient access to client data.

 

Before signing up for a percentage-of-revenue deal, Jared Belsky, CEO of independent media agency Acadia, asks new clients to share a year’s worth of data to model against—whatever metric the deal is priced on, whether that’s revenue, margin or something else. Some marketers are hesitant to share those insights until a contract is signed, creating a “chicken-or-egg problem,” Belsky said.

“The hard question isn’t what data do you need to model,” he said. “Sometimes it’s just availability; you don’t always get it.”

IProspect leans on its own tools for measurement, including incrementality testing, experimentation and what executives call a “more modern” approach to marketing mix modeling. The agency has also built force majeure clauses into its contracts that extend beyond typical service-delivery provisions to cover compensation, protecting against unforeseen shocks like tariffs, war or a pandemic.

There’s a case for third-party oversight, with a neutral party responsible for measurement, rather than agencies grading their own homework. But an independent process has its own drawbacks, too. Measurement approaches like marketing mix modeling and multi-touch attribution “are too slow,” said Ryan Kangisser, chief strategy officer at Mediasense, which is why agencies often fall back on proxy metrics instead.

Managing risk

In its contract with JLR, the majority of WPP’s fees are at risk based on performance, Ad Age has learned. That’s seemingly a suitable arrangement for JLR, which is looking to rebuild profitability and cut costs, but how can WPP—working through a turnaround—afford such risk?

In a June interview with Campaign, WPP CEO Cindy Rose said the company would not lose money by focusing on outcomes, explaining there are “ceilings and floors” in the JLR deal. WPP is also allowed to buy a share of JLR’s media on a principal basis—a practice in which an agency purchases and resells inventory, often at a markup—according to a person familiar with the matter.

WPP declined to comment and JLR did not return requests for comment, but their contract illustrates a broader reality of outcomes-based pricing models: agencies need predictable compensation to fund their operating costs. By leaning further into principal inventory with JLR, WPP is effectively hedging against the risk it is taking on.

Ultimately, it “has to be a two-way thing,” said Kangisser. “If the agency is taking risk, then the client needs to be comfortable that they are going to do whatever they need to do to deliver against those business outcomes. And so, if it does mean participating in some of those areas to supplement the fee, then I think that’s perfectly reasonable.”

Pushback from marketers and procurement

There are risks for marketers with outcomes-based pricing, too. A company may, for example, have budgeted $1 million, only to find it owes $1.5 million once an agency clears its performance targets.

“It’s a variable cost,” said Broadhead, and clients “don’t love that.”

Procurement teams apparently don’t either, with 69% of agencies surveyed for the Mediasense report calling them a critical or strong barrier to adoption. Procurement’s current approach relies on comparing proposals against legacy full-time equivalent models, making it hard to prove a cost saving when the two aren’t directly comparable.

Even when outcomes-based pricing does make it into the conversation, the report noted, it often gets “diluted until they fundamentally resemble more traditional fee structures.”

Success with outcomes can be a slippery slope, said Wesley ter Haar, chief AI and revenue officer at S4 Capital’s Monks. If an agency performs really well and gets paid more, “a procurement team or new leader will come in and go, ‘Hey, this agency is really expensive. We can get cheaper agencies,’” said ter Haar.

“I had [a client] who was honest with me. They said, ‘You’re just making too much money, and you didn’t spot it in advance and tell me,’” Belsky added, recalling a deal from his time as CEO of Dentsu’s 360i in which 100% of the agency’s fee was tied to a percentage of a car rental client’s revenue.

Acadia’s founders have built in caps on how much the agency can earn on performance-based deals, along with a “reverse tiering” structure, where the shop’s percentage rate declines as performance climbs higher.

What’s next?

Broadhead is candid about his limits with outcomes-based pricing and tying compensation to performance. “For any agency to go much over 20 to 30% would be crazy,” he said. Of course, agencies’ appetite for risk will depend on various factors, including how much control they are given over an account, but Broadhead seems to be onto something.

A hybrid approach, with inch-by-inch gains rather than a full shift, appears to be the most likely path forward. WPP’s Rose acknowledged as much while speaking to press last week following the company’s latest earnings report, saying that widespread adoption of outcomes-based pricing will “take a few years.”

Mediasense’s forecast is even less rosy. A full transformation, the report concluded, “still seems to be in the distant future, if it is to happen at all.”