Paying the ad agency

Roderick White

This paper includes an historical look of how agencies have been remunerated for their work, including a brief examination of the main approaches currently in use (commission, fees, incentives and hybrid schemes).

Paying the ad agency

Roderick White

Traditionally, advertising agencies were paid a commission by the media on the value of the ads they placed for their clients. This commission was 15% of the gross (commission-inclusive) cost, or 17.65% of the net cost. A few individual media paid less than this, and it was the custom to increase the rate to 20% for international business.

The system had the apparent merit of simplicity and transparency, and as agencies became progressively more involved in the physical production of the advertisements, they successfully extended the process to cover production costs, too, on...

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