Toyota GB to pay on performance

Toyota GB is renegotiating its contracts with its agencies Saatchi & Saatchi and Zenith Optimedia so that both agencies will be paid according to their effectiveness.

Speaking Wednesday (April 28) at Marketing Week’s 2004 TV Conference, Toyota GB’s commercial director Paul Philpott said: “My creative and media agencies have just agreed to be paid in part against performance metrics. They will be paid based on the progress we make together towards our communication objectives, but will also be paid in part against the achievement of our ambitious sales targets. They will quite literally share in commercial success.”

Philpott would like to see performance-related television ad rates, paying less for airtime that was commercially ineffective in return for agreements to advertise for a longer period. He said: “If I am going to continue to invest £25m on TV, shouldn’t you show me concrete evidence of how it is helping my business move forward and accept some of the commercial risk of my investment?”

Toyota GB hopes to have agreed the new contracts with its agencies within three months, tying in pay with car sales and external effectiveness monitoring.

The process is less advanced with Saatchi & Saatchi because of the difficulties in measuring creative effectiveness.

According to Nielsen Media Research, Toyota GB was the UK’s 18th-largest advertiser for 2003, spending £49m.