July 20th, 2009
The agency commission structure is dead to us.
Posted by
Michael Calienes in
branding, transplant news
transplant and the conversation factory believe the agency commission system — as defined below (and here) — neither fairly nor honestly represents the best interest of any client.
What’s it mean to your business? Media placement services rendered by us will be approximately 15% lower than those of traditional agencies.
It’s about building trust.
Buying media should be based solely on strategy, not commission. We want you to trust us to make the right decision for your brand, your company, and its future. Doing away with this standard agency commission fluff is absolutely a step in the right direction for all agency/client relationships.
We think you’ll agree (well, unless you’re a traditional agency).
agency commission:
- fee that an advertising agency charges a client for time and effort spent in selecting and supervising production work done by another company (e.g., printing, photoengraving, photography, commercial recording, filming, and film editing). The amount charged the client is usually 17.65% of the gross production cost.
- compensation paid to advertising agencies by the media (broadcast or print) for purchases of time or space made on behalf of clients. Since the ad agency saves the media the expense of direct sales and billing, the media allows the agency a 15% discount (16.67% for outdoor advertising), based on the gross advertising rate billed to the client. (The discount also serves as incentive to the agency.) For example: If XYZ Corporation spends $1 million on advertising placed through a recognized ad agency, the agency commission is $150,000 and the balance of $850,000 is paid to the media. The agency commission system represents the basic financial structure of the ad agency business.


