Commissions from ways to make money media – marketing communications – zabanga marketing

The traditional method of compensating agencies is through a commission what are some ways to make money system, where the agency receives a specified commission (usually 15 percent) from the media on any advertising time or space it what are some ways to make money purchases for its client. (for outdoor advertising, the commission is 16% percent.) this system provides a simple method of determining payments, as shown in the following example.

Assume an agency prepares a full-page magazine ad and arranges to place the ad on what are some ways to make money the back cover of a magazine at a cost of what are some ways to make money $100,000. The agency places the order for the space and delivers what are some ways to make money the ad to the magazine. Once the ad is run, the magazine will bill the agency for $100,000, less the 15 percent ($15,000) commission. The media will also offer a 2 percent cash discount what are some ways to make money for early payment, which the agency may pass along to the client. The agency will bill the client $100,000 less the 2 percent cash discount on the net what are some ways to make money amount, or a total of $98,300, as shown in figure 3-8. The $15,000 commission represents the agency’s compensation for its services.

Another criticism of the commission system is that it ties what are some ways to make money agency compensation to media costs. In periods of media cost inflation, the agency is (according to the client) disproportionately rewarded. The commission system has also been criticized for encouraging agencies what are some ways to make money to ignore cost accounting systems to justify the expenses attributable what are some ways to make money to work on a particular account. Still others charge that this system tempts the agency to what are some ways to make money avoid noncommissionable media such as direct mail, sales promotions, or advertising specialties, unless they are requested by the client.

Defenders of the commission system argue that it is easy what are some ways to make money to administer and it keeps the emphasis in agency competition what are some ways to make money on nonprice factors such as the quality of the advertising what are some ways to make money developed. Proponents argue that agency services are proportional to the size what are some ways to make money of the commission, since more time and effort are devoted to the large what are some ways to make money accounts that generate high revenue for the agency. They also say the system is more flexible than it what are some ways to make money appears because agencies often perform other services for large clients what are some ways to make money at no extra charge, justifying such actions by the large commission they receive.

The commission system has been a highly debated topic among what are some ways to make money advertisers and agencies for years. Critics of the system have argued that it provides an what are some ways to make money incentive for agencies to do the wrong thing, such as recommending mass-media advertising when other forms of communication such as direct what are some ways to make money marketing or public relations might do a better job.18 they argue that the commission system is outdated and what are some ways to make money must be changed. This does indeed appear to be happening. A recent study of agency compensation conducted by the association what are some ways to make money of national advertisers (ANA) indicates that agency compensation based on the traditional 15 percent what are some ways to make money commission is becoming rare.19 the survey found that only 21 percent of advertisers what are some ways to make money paid commissions to their agencies and only 16 percent paid what are some ways to make money the standard 15 percent. The clients who have stuck with commissions do so either what are some ways to make money from inertia or from administrative simplicity. However, the survey also found that most clients and agencies use what are some ways to make money the 15 percent commission standard as a starting point for what are some ways to make money determining other compensation agreements such as labor-and performance-based plans.

While the use of the 15 percent commission is on what are some ways to make money the wane, many advertisers still use some form of media commission to what are some ways to make money compensate their agencies. Many advertisers have gone to a negotiated commission system to what are some ways to make money compensate their agencies. This commission structure can take the form of reduced percentage what are some ways to make money rates, variable commission rates, and commissions with minimum and maximum profit rates. Negotiated commissions are designed to consider the needs of the what are some ways to make money clients as well as the time and effort exerted by what are some ways to make money the agency, thereby avoiding some of the problems inherent in the traditional what are some ways to make money 15 percent sytem. Some of the leading agencies now receive a commission based what are some ways to make money on a sliding rate that becomes lower as the clients’ media expenditures increase and end up receiving average commissions of what are some ways to make money 8 to 10 percent versus the traditional 15 percent.20 agencies are also relying less on media commissions for what are some ways to make money their income as their clients expand their integrated marketing communications what are some ways to make money programs to include other forms of promotion and cut back what are some ways to make money on mass-media advertising. The percentage of agency income from media commissions is declining, and a greater percentage is coming through other methods such what are some ways to make money as fees and performance incentives.

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