What is a Performance Related Payment? (PRIP)
A PRIP payment is a mechanism widely used by clients to evaluate and reward their agency partner(s). It essentially aligns agency performance with a company’s marketing objectives. Payment is normally subject to achieving pre-agreed targets/criteria. They are done on an annual basis and generally cover all aspects of the agency relationship from planning/buying to team performance etc.
A PRIP shouldn’t be agreed without FULL disclosure of other commercial opportunities for an agency to make money
Two distinct parts make up a PRIP:
- Agency performance is a qualitative review of agency performance from client team perspective. It can be very subjective and heavily based on key relationships between both parties.
- Media performance is a quantitative measure of how an agency performs against predefined media and business metrics. This tends to be based heavily on media buying performance against media ‘quality’ parameters. It can be rendered useless if success parameters are unclear or conditional on too many ‘get out of jail’ caveats.