Agency remuneration in Brazil: how the standard discount, fee and BV work

Agency remuneration in Brazil, also called agency compensation, is the set of rules that defines how an advertising agency is paid for its work for the advertiser. It combines four sources: the standard discount, paid on media buying; the fee, an amount agreed directly with the advertiser; handling fees (honorários) on production and third-party services; and the incentive plans offered by media outlets, known in the market as BV, the Portuguese abbreviation for volume bonus. The basis is Law No. 4,680 of 1965 (Lei nº 4.680) and the Normas-Padrão da Atividade Publicitária (Standard Norms for Advertising Activity), issued by CENP, the Executive Council of Standard Norms.

For multinationals, the subject carries weight because the global agency contract usually starts from a different premise: the agency is paid by the advertiser, and every benefit obtained in media buying goes back to whoever invests. In Brazil, part of the remuneration passes through the media outlet and is provided for in law and in self-regulation. Without understanding this flow, the procurement team ends up comparing proposals that are not comparable.

What the law says: agency, media outlet and discount

Brazil's Law No. 4,680/1965 defines the advertising agency as a specialized legal entity that studies, conceives, executes and distributes advertising to media outlets, on behalf and for the account of advertiser clients. The phrase on behalf and for the account (por ordem e conta) matters: the agency buys media in the client's name; it does not resell space of its own.

Article 11 provides that the discount due to agencies is set by media outlets on their rate card prices. Its sole paragraph prohibits commission or discount on advertising sent directly to media outlets by anyone who is neither an agency nor an advertising agent, the professional linked to the media outlet who brokers the sale of space.

Decree No. 57,690/1966 regulates the law. As worded by Decree No. 4,563/2002, Article 7 provides for handling fees and reimbursement of authorized expenses, with reference to items of CENP's Normas-Padrão. The decree also requires media placement to be invoiced in the advertiser's name and the agency to present, every month, the previous month's expenses with supporting documents.

What CENP is and what certification means

CENP (Conselho Executivo das Normas-Padrão, the Executive Council of Standard Norms) is a nonprofit civil association that brings together organizations of advertisers, agencies, media outlets and digital companies. It issues the Normas-Padrão, maintains an Ethics Council for mediation and arbitration, and grants agencies the Technical Qualification Certificate.

According to CENP, the certificate attests that the agency has a technical and professional structure and uses media research to support its recommendations. Under the norms, certification is the condition for the agency to receive the standard discount. The certificate is valid for one to five years.

How the standard discount works

The Normas-Padrão da Atividade Publicitária define the standard discount as the agency's remuneration for conceiving, executing and distributing advertising, calculated as a percentage of the negotiated amount. The negotiated amount is the media outlet's rate card price less commercial discounts. A certified agency is entitled to a standard discount of no less than 20% of the amount it forwards to the media outlet on the client's behalf and for the client's account.

In practice, the advertiser pays the negotiated amount. The media outlet keeps the billed amount, which is the negotiated amount less the standard discount, and the agency receives the standard discount. The norms ask that the media outlet's invoice state the reference amount of the standard discount, which shows the advertiser how much of the purchase remunerated the agency.

Law No. 12,232/2010, in Article 19, reinforces this interpretation: the standard discount is agency revenue, and the media outlet may not record it as its own revenue.

The portion negotiable with the advertiser

The norms allow the agency to negotiate part of the standard discount with the advertiser. Annex B, updated by an addendum approved in 2019, ties this portion to the advertiser's total annual investment in media outlets that adhere to the Normas-Padrão, added up across the certified agencies that serve it. The larger this investment, the larger the portion that can be returned to the advertiser, in brackets defined by CENP. Below a minimum investment threshold, there is no negotiable portion.

Three details change the calculation. Only adhering media outlets count, not those that do not set agency remuneration. When there are several agencies, the average of the amounts returned must respect the parameters. And the parameters do not apply to an agency whose account represents less than 15% of that advertiser's media investment.

Fee: an alternative or a complement

The Normas-Padrão allow remuneration by fee, a fixed amount agreed in writing, as an alternative to the standard discount or in addition to it. The fee can cover media, production and occasional work, such as public relations.

When it replaces the standard discount, the norms ask that the fee result in an amount equal or close to what the agency would receive from the discount, and the 2019 addendum speaks of an amount equal or greater. The norms also recommend reviewing the fee every six months, comparing the investment made with the budget that served as its basis.

Production and third-party services: handling fees

External services, such as a film production company, a print shop or a sound studio, are quoted with suppliers and approved in advance by the client. On these, the norms provide for handling fees of 15% for the agency. When the agency merely hires or pays for the service, handling fees range from 5% to 10%. Negotiating these handling fees is allowed when annual investment is substantial and the media budget is at least twice the production budget.

In-house services, performed by the agency's own team, follow benchmarks from the regional agency trade association, with no handling fees. Unless otherwise agreed, the agency absorbs the cost of regular audience research, circulation audits and media monitoring.

Incentive plans and BV: what the norms say

Incentive plans are programs that a media outlet creates, on its own initiative, for agencies. Annex C of the Normas-Padrão covers them in five points:

• They are lawful and directed to the agency as a company. The media outlet defines the criteria, targets and proceeds, which may or may not be in cash.
• They do not include advertisers and impose no burden on them.
• The proceeds are agency revenue, recorded in its books and taxed.
• Media recommendations must follow sound technique, which prevails over the incentive, subject to the advertiser's right to choose. Incentives cannot serve as a pretext for passing over media outlets that do not offer them.
• The client may ask whether the agency takes part in incentive plans. The agency and the media outlet may keep amounts and criteria confidential, as provided by law.

Government accounts: the Law 12,232 rule

In public administration, Law No. 12,232/2010 sets its own rules. The contracted agency must hold a technical qualification certificate, which can be obtained from CENP or from an equivalent organization. The advantages obtained in media negotiation, including discounts and bonuses in time, space or reinvestment, belong to the contracting public body.

Article 18 deals with incentive plans: they are optional, and their proceeds are the agency's own revenue, outside the rule that transfers advantages to the contracting body. The agency may not place incentives above the interests of the contracting body or pass over media outlets that do not grant them. The choice must follow research and technical data, and noncompliance is a serious breach of contract.

How the Brazilian model differs from other markets

In many markets, remuneration is negotiated directly between advertiser and agency, through a fee based on hours and scope, a commission on media or performance-linked components, and media buying usually sits with media agencies separate from the creative agency.

In Brazil, the remuneration for buying media from adhering media outlets originates with the media outlet, through the standard discount, and goes to the certified agency responsible for the account. The Normas-Padrão do not accept buying through closed media buying centers, media brokers or independent media agencies, which are not entitled to the standard discount. The article on marketing in Brazil for global brands covers the other differences.

What a multinational's procurement team should ask and put in the contract

• Remuneration basis by type of spend: standard discount and negotiable portion for adhering media outlets, fee for channels that do not set agency remuneration, production handling fees and the cost of in-house services.
• Certification: CENP certificate number and expiration date.
• Billing and accountability: media outlet invoices in the advertiser's name, the reference amount of the standard discount on each invoice and a monthly statement of expenses with supporting documents.
• Incentive plans: a statement on the agency's participation and a commitment that the choice of media outlets follows documented technical criteria.
• Accounts and data: media accounts, pixels, audiences and reports in the advertiser's name, with administrative access guaranteed at the end of the contract.
• Rights to creative work: the norms presume that ideas and campaigns belong to the agency that created them, so the contract needs to define the assignment of usage rights, with term, territory and media.
• Audit rights: access to insertion orders, invoices, proof of placement and verification reports, at a defined frequency. The article on media audit details the process.
• Scope and review: deliverables, team, trigger for reviewing the fee and termination notice, which the norms set at no less than 60 days.

Common mistakes when applying a global agency contract in Brazil

• Requiring the pass-through of every benefit received from media outlets without reviewing the clause, with local legal counsel, in light of the norms on incentives.
• Providing for the agency to buy space to resell to the client, when the law describes the agency acting on the client's behalf and for the client's account.
• Separating creative and media agencies without checking how each one will be remunerated in the local environment.
• Calculating the negotiable portion per agency, ignoring that the reference is the advertiser's total investment in adhering media outlets.
• Comparing proposals by discount percentage, without adding up fee, handling fees and in-house services.

Hypothetical example: an advertiser with R$ 30 million in adhering media outlets

The following figures are illustrative. A company invests R$ 30 million a year in adhering media outlets, through a certified agency. With a 20% standard discount, the agency receives R$ 6 million and the media outlets receive R$ 24 million. Suppose the bracket applicable to this investment allows 5% to be returned to the advertiser, a percentage that is also illustrative. The parties agree on this cap, R$ 1.5 million, and the agency keeps R$ 4.5 million of this portion.

The company also contracts R$ 2 million in external production, with 15% handling fees (R$ 300,000), and invests R$ 8 million in platforms that, in this example, do not set agency remuneration. For this work, it pays a fee of R$ 80,000 a month, or R$ 960,000 a year. The agency's remuneration totals R$ 5.76 million (4.5 million, plus 300,000, plus 960,000). The company's total spend is R$ 39.76 million: R$ 28.5 million in adhering media after the return, R$ 2.3 million in production with handling fees, R$ 8 million in platforms and R$ 960,000 in fee. Proceeds from incentive plans are left out of the calculation. To decide how much goes to each channel, see the article on media budget allocation.

Frequently asked questions about agency remuneration in Brazil

What is BV in advertising?

BV, the Portuguese abbreviation for volume bonus, is the name the market gives to the incentive plans that media outlets offer agencies. Under the Normas-Padrão, they are created by the media outlet and directed to the agency, and their proceeds are the agency's revenue. The client may ask whether the agency takes part, and media recommendations must follow technical criteria.

Can an agency be paid by both the media outlet and the advertiser?

Yes. The standard discount is part of the media amount the advertiser pays and is set by the media outlet in favor of the agency, while the fee and production handling fees are paid directly by the advertiser. The contract should make clear what each source pays for.

What percentage is the agency standard discount?

The Normas-Padrão provide for a standard discount of no less than 20% of the amount negotiated with adhering media outlets, for agencies certified by CENP. Part of this amount can be negotiated with the advertiser according to total annual investment in adhering media outlets.

Can the advertiser negotiate the agency's remuneration?

Yes. The norms allow negotiating a portion of the standard discount, agreeing on a fee and, under specified conditions, negotiating production handling fees. All of this follows the parameters of the Normas-Padrão and must be in writing.

Does the agency have to be certified by CENP?

To receive the standard discount under the Normas-Padrão, yes. In contracts with public administration, Law No. 12,232/2010 requires a technical qualification certificate, which can be obtained from CENP or from an equivalent organization.

To take this into the contract and the operation, explore our Media practice and the media audit service.