“Creativity is not just a product of talent; it’s shaped by the incentives that guide agency behavior.”
How do financial incentives impact the way agencies approach creativity? This study by Koslow et al. (2025) explores the behavioral and perceptual consequences of two common incentive structures: competitive account reviews and pay-for-performance compensation. The findings shed light on how these systems influence both agency output and client perceptions.
In competitive reviews, agencies often increase creative risk-taking to stand out, presenting bold and attention-grabbing concepts. However, the research also reveals that clients sometimes perceive these ideas as less practical or strategically grounded, raising tensions between innovation and feasibility. This dynamic underscores the delicate balance agencies must strike between differentiation and credibility in pitch environments.
Pay-for-performance models, by contrast, are shown to channel agency efforts toward measurable outcomes—often improving accountability and efficiency but potentially constraining creative experimentation. Agencies may prioritize “safe bets” that align with performance metrics, which can limit breakthrough innovation. The study highlights how these compensation structures can unintentionally reframe what “good” creative work looks like in the eyes of both clients and agencies.
Ultimately, the research underscores the importance of advertisers and agencies alike to carefully design incentive systems. By understanding the trade-offs—between bold creativity and measured performance—clients can structure relationships that foster both originality and accountability, leading to stronger long-term outcomes.
Read the full study:
How Do Advertising Agencies Respond to Incentives? Perceptions of Creativity in Competitive Account Reviews and Pay-for-Performance Compensation.