The Agency Commission System in Britain: A First Sketch of its History to 1941
The 'commission system' is the term generally used to describe the arrangement by which advertising agencies provide services to advertisers which are paid for out of the discount, or 'commission', allowed to the agencies by the media, on purchases of space or time. Pitman's Dictionary of Advertising1, published in 1930, defined 'Advertising Agency' in these terms: 'a firm which undertakes the advertising of other firms and organisations. Its remuneration is provided by special discounts allowed by newspapers, etc, to agencies on all space used. This is usually 10 per cent ad valorem.'
How did this seemingly illogical system (thought to be so by many people before, and since, 1930) come about, in which the advertising agent who considered himself to be, and acted as, a principal from the 1850s onwards was 'paid' by the media for the work he was doing for his client the advertiser?