---

Ford and Its Advertising Agencies Craft New Global Compensation Agreement

10 September 1998

Ford and Its Advertising Agencies Craft New Global Compensation Agreement

    DETROIT, Sept. 10 -- Ford Motor Company and the
advertising agencies serving Ford, Mercury, Lincoln, Jaguar, Mazda and Ford
Customer Service Division brands have jointly developed a new labor/incentive-
based compensation agreement that will be implemented worldwide beginning in
January 1999.
    "We and our agencies agree that changing our compensation arrangement is
an important element in the evolution of how we market brands at Ford Motor
Company," said Robert L. Rewey, Group Vice President, Marketing Sales and
Service, Ford Automotive Operations.  "Together we have developed an
arrangement that gives our agencies the incentive to expand beyond advertising
to become full marketing partners."
    The agreement replaces commission-based compensation arrangements
presently in effect and will be used for all work done worldwide for these
brands by J. Walter Thompson, Young and Rubicam, Ogilvy and Mather and W.B.
Doner.
    "We and our agencies have worked for nearly a year to craft a compensation
agreement that will help us achieve our mutual goal of making Ford a great
marketing company," said David Ropes, Director, Corporate Advertising and
Integrated Marketing, Ford Automotive Operations.
    "The new arrangement will enable us to optimize our return on our
marketing investment and will enable the agencies to develop programs that
integrate all aspects of marketing to achieve the best result for each
client."
    Labor-based compensation arrangements have replaced traditional media and
ad-production billing-based programs for the majority of advertisers,
according to the Association of National Advertisers, Inc.  However, billing-
based programs have remained the norm for most automotive advertisers.
    "Given the size of our accounts (combined billings of more than $1 billion
worldwide in 1997), the only way we could change our agency compensation
structure was to involve all the clients and agencies in the planning," said
Ropes.  "As a result, we have been able to craft an arrangement that all
parties think not only is fair, but also is a unique blend of labor-based and
incentive compensation that will enable us to work together on making our
overall marketing programs more effective."
    The arrangement consists of labor-based fees and performance incentives
that will be mutually established between the clients and their agencies.  The
incentives will ensure that agency and client objectives are aligned and will
be determined based on results on three metrics:  marketing effectiveness,
profits and agency performance ratings.
    The agreement does not include work performed by the agencies for dealer
associations.  Ford Motor Media, Ford's agency of record for negotiating media
placements in the U.S. for Ford Central Media, adopted a labor-based fee
arrangement in 1998.