Real-World Education for Modern Marketers

Join Over 600,000 Marketing Professionals

Start here!
N E X T
Text:  A A

How Marketing and Advertising Agencies Are Compensated

by Ayaz Nanji  |  
June 7, 2017
  |  4,488 views

Most marketing and advertising agencies receive fixed or labor-based payment for their work, rather than commission-based payment, according to recent research from the Association of National Advertisers (ANA).

The report was based on data from a survey conducted in December 2016 and January 2017 of 82 marketers with knowledge of 1,167 client-agency compensation agreements.

Respondents were asked whether they use six common types of marketing/ad agency compensation structures: commission fixed rate (a percentage of media billings and markup on production costs); commission sliding scale (payment varies based on the level of media spending); fixed/output-based fees (set payment is negotiated for a specific project/time period with additional costs billed at net); value-based fee (price is established based on the value, not the cost, of the services and work provided by the agency); labor-based fee (price is determined by the amount of labor time multiplied by a negotiated hourly labor rate); and sales commission (agency compensation is a percentage of the brand's sales).

Marketers say 68% of their agency compensation agreements have a fee structure (fixed or labor-based), 12% have a commission structure (fixed or sliding scale), and 20% are structured based on other methods (value, etc.).


Compensation structure varies significantly by agency type, the analysis found.

For example, 24% of compensation agreements with media planning/buying agencies are commission-based, whereas just 6% of compensation agreements with creative agencies are commission-based.


Sign up for free to read the full article.Read the Full Article

Membership is required to access the full version of this how-to marketing article ... don't worry though, it's FREE!

WANT TO READ MORE?
SIGN UP TODAY ...
IT'S FREE!

We will never sell or rent your email address to anyone. We value your privacy. (We hate spam as much as you do.) See our privacy policy.

Sign in with one of your preferred accounts below:

Loading...

Ayaz Nanji is an independent digital strategist and a co-founder of ICW Content, a marketing agency specializing in content creation for brands and businesses. He is also a research writer for MarketingProfs. He has worked for Google/YouTube, the Travel Channel, AOL, and the New York Times.

LinkedIn: Ayaz Nanji

Twitter: @ayaznanji

Rate this  

Overall rating

  • This has a 5 star rating
  • This has a 5 star rating
  • This has a 5 star rating
  • This has a 5 star rating
  • This has a 5 star rating
1 rating(s)

Add a Comment

Comments

  • by Stacy L. Wed Jun 7, 2017 via web

    Great information!

MarketingProfs uses single
sign-on with Facebook, Twitter, Google and others to make subscribing and signing in easier for you. That's it, and nothing more! Rest assured that MarketingProfs: Your data is secure with MarketingProfs SocialSafe!