Why 0% Commission Models in Paid Media Agencies Are Both Possible and Essential for Clients
In my years as a digital marketing professional and now as CEO of CostaDigital, I’ve seen first-hand how traditional commission-based models in paid media can impact clients. One memorable experience involved a startup I worked with at another agency: our ad campaign was so successful that they sold out their product in just five days. However, the commission on their ad spend was so significant that it drained their cash flow to the point where they couldn’t fulfil the orders they’d paid us to help sell. This experience stuck with me and solidified my belief that the commission model often misaligns agency and client goals.
At CostaDigital, I decided to do things differently. By implementing a 0% commission model on ad spend, we offer clients a transparent approach that maximises their budget and focuses on performance without hidden fees. Here’s why the 0% commission model isn’t just possible—it’s crucial.
The Drawbacks of the Traditional Commission Model
While commission-based fees once served as a way to ensure agency profitability, they now create several challenges for clients:
Conflict of Interest: Commission fees can incentivise agencies to increase ad budgets unnecessarily. I saw this in my time as an Account Director at a leading global agency, where one client needed to spend a huge budget in just one day. The commission they paid on that single day’s ad spend ended up being worth more than my flat at the time. For the client, it was an eye-watering expense—and one that didn’t necessarily translate into higher value.
Budgeting Challenges for Clients: One of the main reasons clients outsource their paid media campaigns is to leverage the agency's expertise in planning, managing, and optimising their campaigns. However, the traditional commission model can create significant budgeting challenges. Clients who lack the in-depth knowledge to plan media campaigns themselves often fail to budget for commission fees accurately, causing unplanned overspend. This can make it incredibly difficult for clients to plan ahead, ultimately straining their cash flow and impacting other business areas.
Lack of Transparency: Commission-based models can often obscure the true costs, making it hard for clients to understand how their budget is being allocated. When a large portion of the budget goes toward agency fees, clients may struggle to see where their money is actually going, reducing clarity around ROI.
Stunted Client Growth: Under the commission model, the agency may grow immediately as a result of higher fees, while the client’s growth and ability to scale may be hindered by these added costs. This creates a scenario where the client, bearing excessive fees, finds it harder to reinvest in their business or campaigns, ultimately slowing their growth rate. In contrast, a 0% commission model supports a more sustainable client-agency relationship, where growth occurs in tandem—when the client succeeds, the agency succeeds too.
Why Relying on Commissions Is Unsustainable
While commissions may seem like an easy way to boost agency revenue, they come with risks. For one, commission-dependent revenue fluctuates alongside client budgets, making it unpredictable for agency planning and resource management. This instability can make it challenging to invest in long-term improvements, training, or tools that truly benefit clients. Relying on commission can also lead to short-term client relationships; when clients feel they’re not getting value, they’re likely to shop around.
An alternative is a fixed monthly retainer. This approach builds a more stable revenue base that allows agencies to focus on sustainable growth while delivering consistent quality for clients. A transparent, fixed fee means clients know exactly what they’re paying from the outset, making it easier to plan and allocate their budgets. This model also makes it possible to scale as a client’s business grows, providing a win-win foundation for the agency-client relationship.
The Benefits of a 0% Commission Model
A 0% commission model not only eliminates these drawbacks but also aligns agency goals with client success:
Aligned Goals: At CostaDigital, our model ensures we’re incentivised to focus on efficiency and effectiveness rather than pushing ad spend. This shift means our success is directly tied to the client’s performance, not on encouraging higher budgets.
Clear and Transparent Costs: By using a fixed monthly retainer or project-based fee, clients understand exactly what they’re paying for. This transparency helps them manage cash flow and calculate ROI accurately, without surprise fees.
Focus on Performance: Without commission fees, agencies are free to focus on maximising the client’s results. For example, we carefully optimise campaigns to deliver results within the client’s budget, ensuring that each pound spent is impactful.
Long-Term Growth and Client Retention: The 0% commission model fosters a relationship where both the client and agency can grow sustainably. When clients are supported with fair fees and the resources to scale, the result is higher client retention, more referrals, and a foundation of trust that leads to healthy, sustained growth for the agency.
Conclusion: A New Standard for Transparent Client Partnerships
The 0% commission model offers a path forward that aligns with client needs and industry demands for transparency. As someone who’s worked with clients of all sizes, I created CostaDigital with the goal of prioritising client goals over hidden fees. This model represents a commitment to transparent, performance-driven partnerships that build trust and drive results.
If you’re currently working with a paid media or digital marketing agency and paying commission on ad spend, you don’t need to. Reach out to CostaDigital and save yourself thousands of pounds to reinvest into the growth of your business and brand.