Billboard Insider received three queries over the past week asking about how to compensate sales reps.  Some introductory thoughts.

• An industry rule of thumb says that a small out of home company should pay sales reps no more than 20% of collections.  This should be thought of as the upper limit.  Payments should be based on collections, not bookings or you are incentivising employees to book business which never pays.
• The two most common ways to pay employees are draw against commission or base salary plus commission.
• Lamar, Clear Channel Outdoor and OUTFRONT don’t itemize sales expense in financials.  Sales, general and administrative expense was 17.6% of revenue at Clear Channel Outdoor Americas during 2022 and 24% of revenue at OUTFRONT during 2022.  You can infer from this that sales expense is prob 10-15% at those companies because SG&A expense includes other things besides just sales.
• Link Media Outdoor is the only one of the public out of home companies to specifically break out sales commissions.  Sales commissions totaled 7.7% of Link Media Revenue for the first 6 months of 2023.  Sales commissions and employee expense (all employees, not just sales employees)  totaled 24.2% during the first 6 months of 2023.

Some important questions to think about.

• Do you pay straight commission, straight salary or a mix of salary plus commission?
• What’s the right commission level to motivate employees if you are straight commission?
• How do you incent employees to book new business as opposed to simply renewing what they have?

How do you pay employees and what’s a reasonable commission.  Email davewestburg@billboardinsider.com or take our poll below.  We’ll provide the results tomorrow.

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