How does an advertising agency get paid?

Question

I worked at a radio station selling advertising. When I would ask my supervisor and boss how a marketing / advertising agency works, the answer I would get is...it's not worth your time or hard work. I have since quit my job due to, well, my boss was a tyrant, but that's irrelevant. I have run into a couple of my old clients that have asked me to handle their advertising, but I have no idea how to charge them or how I get paid by the advertising avenues. Can someone please tell me, how does an advertising agency get paid? Please be specific...thank you!

Answer 1

I paid ad agencies two ways: either on a project basis ( the cost to complete a project) or a retainer of an agreed upon monthly amount with an agreed upon number of hours worked per month.Most companies in my industry placed their own ads to save the commission of the agency placing the ads ( easy to do since there were only a few magazines that covered the B-T-B market we were in and it was primarily print we used to advertise to the trade).

Answer 2

They charge a fee for creative work, and make a 15% commission on media.  This means if they place media buys, such as television or radio air time, or print media space, such as newspapers, magazines, or billboards, they add the standard 15% commission on the costs of the media.

If they produce print work, they add a commission on to that as well.

Or they may charge a flat monthly rate for creative work and sign a long term contract with a client guaranteeing X amount of work for X amount of money.  (A one to three year contract is normal.)

There may be fees for additional work requested by the client such as producing original market research--polling potential clients with taste tests of a product for instance.

(And you may be able to tie in bonuses for proof of pre-determined levels of effectiveness.  Say the client is opening a new store location, and you get 500 people to show up and get a spot on the local evening news.)

Go to the business section of your local library.  The librarian will be able to help you find shelves of books that explain this all in detail.