Posted in Marketing and Strategy Terms, Total Reads: 511
Definition: Agency Commission
There are numerous types of advertisement and numerous broadcasters to send it towards us. The broadcasters can be of any type – A newspaper publication house (Print Media), a television channel or Radio (Electronic Media) or any internet based broadcaster like YouTube (Social Media) or from any other type. These broadcasters transmit the advertisements which are prepared by the advertising agencies for their clients (companies for whom advertisements are made).
So, when the client (broadcaster) avails the services from the service provider (advertising agency), a fee is charged by the advertising agency which is called the agency commission. In the process of providing services, it is generally the percentage of the costs which the agency incurs. In some cases, agency commission refers to the discount given by the broadcaster to the advertising agency for bringing in the advertiser.
The agency acts as an intermediary and performs the work of saving broadcaster’s time and expense for finding clients. This is a beneficial setup for all the stakeholders – the company for whom advertisement is made, the advertising agency and the broadcaster. The company needs an advertisement and a medium to communicate it to its prospective clients. The advertisement agency designs the advertisement according to the target market and product itself. The advertisement agencies has close ties with the broadcasters and know which broadcaster caters to the target group the company is aiming at. Accordingly the broadcasting medium is chosen and a contract is made. The broadcaster need not find the company whose advertisements it can broadcast and the company need not find a broadcaster for its advertisements.
The advertisement agency does that for both for them and receives a commission for it called as Agency Commission. Historically agency commission was calculated based on amount spent to purchase time or space by different media used for advertising. The percentage amount was 15% and has become negotiable in the recent years. Some advertisement agencies try to increase the percentage to rake in more money from the clients. In some cases the commission was based on performance of campaign’s success.