According to the new guidelines, MSA agencies will recommend a flexi-commission structure to clients, that operates on a percentage of total annual billings across three categories: media buying, media planning and a combination of both.
Pro-rated fees will range from as low as 1.5 per cent for planning alone, up to 7.5 per cent for the combination service on annual billings below RM 1 million (US$263,151). Carat chairman and MSA president Margaret Lim explained that the fee structure was necessary to combat declining agency revenues, which have slid an estimated 40 per cent in five years.
"The quality of work handled by media specialist agencies has increased in the past five years while our fees have steadily declined," said Lim. "The media landscape has changed so dramatically in recent years that we now have to grapple with not only more media choices, but their effectiveness in reaching the desired consumer segments."
Lim also expressed the hope that the fee structure would put an end to price-cutting.
"Competition must be based exclusively on capability rather than fees," said Lim.
Malaysian media agencies launch payments guide
Malaysia's Media Specialists Association (MSA) has released a proposed fee structure for clients, in a bid to head off rampant price-cutting.