Traditional commercial advertising agency models are no longer keeping pace with economic reality. At the SCOPEN Africa Decade Awards held in Joburg last month, the message from industry leaders was clear: the full-time equivalent (FTE) model is failing, and the industry must either evolve its remuneration structures or risk systemic obsolescence.
César Vacchiano, president and CEO of SCOPEN, said the traditional agency-client model is unfit for purpose. Vacchiano argued that while the FTE model allows procurement departments to compare costs easily, it fundamentally fails to reflect the true value agencies create.
Chris Botha, group MD of Park Advertising, highlighted the structural flaws inherent in these archaic systems. “With FTE-based remuneration, you’re incentivised to employ more people — the bigger your team, the bigger your fee,” Botha noted, adding that commission models create the opposite problem.
The shift towards outcome-based remuneration is gaining momentum, but it brings new complexities. Andisa Ntsubane, managing executive at Vodacom Group Africa, said the conversation must shift towards meaningful outcomes. “If we don’t have conversations about balancing resources with outcomes, we have a problem,” he warned.
This sentiment was echoed by Khensani Nobanda, CMO of Nedbank Group, who noted that in her board presentations, she no longer shows ads but rather demonstrates how marketing creates future business value. The implication is clear: if marketers must speak the language of finance to justify spend, agencies must meet them there.
Something has to shift
— Carl Willoughby
However, Bridget Harpur, head of marketing at Volkswagen South Africa, offered a sobering perspective on the risks of pure outcome models. While she welcomed the accountability, she cautioned that external market factors, including the current volatility in the motor industry, could leave agencies in serious trouble “if pay were tied solely to immediate sales results”.
For advertising agencies, the failing FTE model isn’t just a financial hurdle; it’s an operational crisis. Agencies are under pressure to deliver more and faster with fewer resources. “Something has to shift,” said Carl Willoughby, CCO at TBWA.
The problem, said Kabelo Moshapalo, CCO at Ogilvy, is that while creativity has long-term value, it is still being incentivised through outdated structures.
The consensus is that the next decade will be defined by a mix of solutions. These include hybrid structures blending base fees with outcome-based incentives, productisation as agencies license proprietary AI tools and platforms, and project pricing as agencies move away from the always-on FTE retainer. The FTE era may not vanish overnight, but the industry has reached an inflection point where bravery in testing new commercial models is no longer optional but rather a requirement for survival.
As the industry grapples with how it is paid, it is also facing a crisis in where the money goes. Gillian Rightford, executive director of the Association for Communication & Advertising (ACA), says digital complexity has made it harder to ensure investment reaches real people. Between ad fraud, bot activity and invalid traffic, the digital supply chain requires a radical move toward transparency.
To address this, the ACA has partnered with cybersecurity investigator Augustine Fou to offer a free webinar to help brands ensure every advertising rand works harder. The webinar is aimed at CMOs, brand owners, CFOs, media strategists and buyers, and anyone with a vested interest in maximising digital ad spend. Register here to attend the webinar.
The big take-out: The advertising industry’s failing FTE model needs to be replaced by transparent, hybrid and outcome-based remuneration structures that align with business growth
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