By Madigan Pratt

Agency commission is one of the hottest issues in travel today - travel agent commissions that is. It is, and will remain a sensitive issue, and one you may be pleased to know will not be addressed in this column.

As a travel marketing professional interested in taking advantage of Integrated Marketing Communications, there is however another commission issue you probably need to address. It's an issue that could be robbing your organization of the true benefits of IMC. I am speaking specifically about advertising agency commissions.

Ad agencies & Commissions. Commissions & Ad agencies. They just seem to go together, don't they?

Over the course of the past year we have had the opportunity to review and discuss numerous agency contracts with clients. We have also helped clients negotiate agency contracts designed to help foster IMC.

In each instance questions concerning commission payments are invariably raised. How much commission should I pay? What's the going rate for a client our size? How do I know what's "fair"? Should I use a graduated commission structure? What about fee plus commission?

So, what is the "right" commission structure you should have for your agency? Assuming you want IMC, the answer is quite simple. So simple in fact that it applies to every travel client regardless of industry segment, company size or competitive rank within the category.

The answer is zero! You should never pay agency commission!

While paying 15% commission on media placements was an imperfect compensation system, the truth is, it seemed to be the best alternative for most clients up until the mid-1970's. Increased competition and profit concerns then lead clients to re-evaluate the 15% commission standard resulting in a wide array of reduced or graduated commission and fee plus commission structures.

Few travel marketers pay 15% commission today and most would be hard pressed to name anyone who does. But no marketer who is truly integrated pays any agency commission at all.

You see, commissions in any form run counter to the principles of IMC. Integrated Marketing Communications requires agencies to be accountable for results and to deliver a return on investment. Therefore, marketing vehicles best suited to achieve these objectives should be recommended and used.

When commission is paid on media or production, for that matter, you are actually providing an incentive for your agency to recommend media.Whether or not it's in your best interest or the agency's, is difficult to determine. Is your agency recommending an extensive media campaign because they truly believe it will enhance your image, build brand equity and lead to even greater sales - or to increase the agency's bottom line?

The truth is, you'll never know.

The same concerns that you as a client may have concerning ad agency recommendations can also arise among your other marketing communications partners. And IMC can only be effective when there's harmony between all your communications agencies.

So what is the best way to compensate an advertising agency? The most effective way is to treat them like the professionals they are. Pay them a fee based on hours put against your business - just like you would a lawyer, doctor or consultant.

There are countless ways to structure a fee based compensation program. They are certainly more complicated than a straight or even graduated commission arrangement, but can prove well worth the additional effort over time.

When negotiating a contract, consider providing a bonus compensation system for your agency based on delivering the best ROI. It's an excellent way to keep the agency focused on your bottom line, not theirs.