Even though a lot this region does is future-looking, when it comes to agency remuneration, the old adage of "better the devil you know" unfortunately still rings true. Advertising started here in the Gulf more than 30 years ago and some formulas have stuck so well we're finding it hard to move on with the times.

When advertising was provided by what we now call full-service agencies that looked after a brand from top to bottom, the media commission, or percentage of the media budget, basically paid for all its services, including creative. The standard was set at 15 per cent in most places, including here.

The clarity and simplicity it provided clients was compelling, as it funded a wide range of services to the client at no direct cost to them. This fee gave them access to strategy, research, ideas, production, planning and buying of media, even PR and direct marketing. With this, agencies also had to cover general administration and overhead costs, while still squeezing a profit out of it.

One of the biggest problems with this formula is that it fails to recognise the individual value of all the components and when the split of media from creative happened in the 1980s, the issue became too obvious to ignore. No longer relying on the media 'income', creative agencies had to put a price tag on their ideas and now have to negotiate a fee for each client and sometimes each campaign. The way this is done is usually a function of the time allocated to each individual involved in the conception of the idea and its execution.

In media, several models co-exist. The commission on budgets is still applied, although clearly no longer set at 15 per cent, but increasingly media specialists also rely on the resource allocation (or scope of work) model, in other words the time and resources involved on the account. The incentivisation through payment by results is another element of the remuneration of an agency that can validate the impact it has had on a client's business. Payment by results (PBR) first appeared in the 1990s in the food and beverage sector, where budgets are larger and sales results are more easily and independently tracked. Here, it is still rare but its significance is growing, including beyond incentivisation.

After decades of practice, one simple observation is that none of the current systems used for agency remuneration actually fully satisfies the various parties. Remunerating a media agency by commision opens the doors to biased media investment decisions, where media or vehicles are selected according to their respective level of commissions. Obviously, media neutrality is or should be the goal of both clients and their agencies, without commission considerations clouding investment decisions. Another dimension in this is the changing nature of our work. Planning in a highly fragmented and cluttered media environment is no longer as straight-forward as it once was and today, our involvement with social media and other digital platforms means that our work is no longer a straight media planning and buying exercise. Our input is much more intellectual and even conceptual, something that isn't rewarded by a commission on media bookings.

As digital and user-generated media takes hold, our work is decreasingly about campaigns with a start and an end. Instead, we're moving towards "commitment planning", where brand communications are a series of messages, experiences and conversations that cumulatively build over time to produce a compelling brand story.

Understanding and being able to exploit the relationship between paid, owned and earned media to maximise the return on every dollar has given media specialists an opportunity to clarify and justify through an adequate remuneration their purpose and business impact based on quantifiable and measurable objectives.

Equally, time-based fees do little to recognise the quality of the work produced, an agency's intellectual property, and may actually reward inefficient work practices. Some would argue that it ends up rewarding the wrong things, such as extra levels of staffing that slow things down or decision processes that take months or years, instead of weeks.

A recent study of advertisers in Japan and their agency remuneration models has shown generally low levels of satifaction with their current system (16 per cent overall) but this varies greatly between the different models used. Of those paying through scope of work-based fees, 34 per cent express satisfaction but this shoots up to 75 per cent for those paying by results. Another key factor of satisfaction is transparency, both in terms of their agency's profit margin and all costs in general.

Accountability across the board has been a goal in the region for years, even decades, but success has so far been elusive. Demand for independent data may be strong but the resources to pay for it are often limited so hoping for an agency remuneration model based on full accountability and transparency is likely to lead to disappointment for some time yet.

Payment By Results is clients' firm favourite option, as can be seen from the Japanese survey, although few rely on it. The reason is that for this model to work, both parties need to set KPIs that are meaningful and robust enough. This is far from easy with the data limitations we face. The ideal solution for us in the region is probably only a few steps further from where we're currently standing. Our starting point ought to be a time-based remuneration, modulating it to recognise the value of that time, starting with the seniority of individuals involved. This is already often the case. To root this in reality rather than a concept during contract negotiations, agencies need to invest in state-of-the-art financial reporting and time-sheet systems, that are effective and efficient, or else clients will end up paying us more for filling in paperwork than actually working on their brands. Lastly, agencies need to welcome client audits. As we have found, such openness does cement trust and create a spirit of partnership instead of a mere supplier relationship.

We need to go further though and recognise the value of an agency's input and its results. Adjusting this remuneration, both upwards and downwards, based on quantitative and qualitative measure or KPIs, is essential to reward performance and penalise under-performance, be it in media or business terms. Obviously, this makes the identification of each agency's impact on the total outcome essential and this is where analytics and business intelligence come into play.

In the creative world, there is talk of payment for ideas, since it is one of the main contributions of a creative agency. In spite of the inherent difficulties with the concept, such as what is an idea or its value, it does intimate the worth of an intellectual contribution, particularly over time, which is not currently addressed by the prevalent remuneration models.

This also applies to media agencies. Our contribution is starting to get measured and rewarded by festivals, clearly a step in the right direction. Be it though our insights, our strategies, our ideas and innovations, our content and our management of social media campaigns, we do provide outcomes that are beneficial to our clients. Call it knowledge, expertise, skills or consultancy, there is a value to it and this is why our clients entrust us with their brands and their budgets. The question now of course is how much it is worth to them.

Too often, the answer has been "as little as possible", something the pitch process has allowed to continue for too long. This debate is long overdue and now that industry developments allow us to provide new answers, the time has come to start the conversation about a system that works for all parties.

- The writer is CEO of Omnicom Media Group, Mena. The views expressed are his own