Burnett's brush with sales-linked business

Leo Burnett, the Rs 540 crore advertising agency, has taken the lead in working out sales-linked remuneration plans with its clients.

"It is early days yet and we are currently experimenting with about four clients," says Arvind Sharma, chairman and CEO, Leo Burnett.

One of the clients is the fast-food multinational brand McDonald's. The agency's first brush with the sales-linked compensation system, however, was five years ago when its client Proctor & Gamble decided to change the way it paid its agencies worldwide.

Today, Sharma has no doubt that the sales-linked remuneration is lot better than the older system of a flat fee. "The compensation system ensures that agencies and the clients behave like marketing partners" he says.

"We're taking it up with our clients to hold part of our remuneration and give it back as bonus or incentive linked to their sales," adds Jayhree Sundar, Leo Burnett's executive director who heads the Delhi branch of the agency.

Sharma maintains that it is as simple as determining a fixed percentage of sales as the agency's compensation. The percentage ratio determined for the agency, however, varies from one product category to another. Sharma insists that the system works like magic as "client's and agency's fortunes are linked to marketing."

With the new remuneration system in place, Arvind Sharma expects Leo Burnett to grow twice as much as the advertising industry average of about 12 per cent.

"The growth will come from innovations in all areas including the new divisions that will come up."

Neither Sundar nor Sharma is willing to share details about the agency's upcoming specialist division for cricket- Leo Cricket. It has also launched Leo Social to look after social advertising and public service campaigns.

Sharma says its other two divisions "" Leo Entertainment (for in-film placements and celebrity endorsements) and Leo Activation (for on-ground events) "" launched some time back are doing well.

Sundar, in fact, claims that 2004 saw Leo Burnett emerge as one of the top five agencies in the capital. Its client list today includes Godfrey Phillips India Ltd, Atlas Cycles Ltd, National Geographic Channel, History Channel, Aerens Sold Souk, Philips India Ltd, Connaught Plaza Restaurants, Oriental Insurance, Tetra Pak, Modi Enterprises, Perfetti and others.

The year 2005 seems to have begun well too. It's already bagged Dishnet Wireless Ltd's AirCel, a leading brand in the South, besides being empanelled by GAIL.

According to Sundar, Delhi's advertising market is growing at a faster pace than that of Mumbai. "Going by the current trend, Delhi will overtake Mumbai in another five years time," says Sundar.