AGENCY FINANCE

AGENCY FINANCE
Shruti Kalra
Ankita
Kanabar
Priyanka
Dhir
Ambika
Khanna
Purvi Betai
The agency's fee for designing and
placing advertisements. Historically,
this was calculated as 15 percent of the
amount spent to purchase space or
time in the various media used for the
•Easy to Administer.

•Keeps the focus on‘NON PRICE’ factors in

Agency Competition .

•It is a flexible system.

• It may not be equitable to the Services
rendered.

• It ties Agency Compensation to Media Cost.

• It may ignore ‘NON COMMISSIONABLE

 FEE
ARRANGEMENT
Types of Fee Arrangement

• Fixed Fee Method

• Fee Commission Combination
 COST PLUS
AGREEMENT
Client pays a fee based on the cost + some profit
on margin
Advantages Disadvantages

The fee-based Difficult for the

system can be agency as they
advantageous to the require careful cost
client as well as the accounting
agency
Agencies are
A detailed break
reluctant to
down of the amount
disclose the actual
 INCENTIVE-BASED
COMPENSATION

Tying agency compensation to

performance
Compensation level =
predetermined performance goals
Case study:- DDB Needham
Worldwide
PERCENTAGE
CHARGES
Adding a markup to percentage
charges to various services

Added to the clients bill

Covers administrative costs

Allows profit
Case Study
Task

Agency: McCann Erickson

Client: Johnson & Johnson
Product: Acuvue
Task: Concept Cards
FUTURE OF AGENCY
COMPENSATION

No one method

35% used by Advertisers.

IMC is used more often

Eg:- BMW, P&G.

Conclusion
Thank You