An Advertising Agency or ad agency is a service provider that works for clients to create an effective and goal oriented advertising campaign aimed at representing the Company positively in the eyes of its target customers.
So Ad-Agency should not be selected hurriedly. The advertiser should first develop its Job description, decide its needs, Ad-budget, & then look for a suitable agency whose talent. Image, experience & record matches closely with clients description, needs & Budget.
Suppose an Ad agency prepares a full page magazine advertisement for its client.
The card rate for this page is Rest. 50000/- and the agency is entitled to commission of 15%.
If there is cash discount of 2% on amount due then cash discount is computed on the amount agency owes to the media i.e. 42,500(not full card rate).
This cash discount is passed on to the client( advertiser) by Ad-agency.
Media bills agency Agency bills advertiser Cost of full page magazine Ad Less 15% Commission Less 2% cash Discount Agency pays Media Rs. 50,000 (-) 7500 Rs.42,500 Rs. 850 Rs. 41,650 Cost of full page magazine Ad Less 2% Cash Discount on Rs. 42,500(passed on to client) Agency charges from Advertiser Rs. 50,000 Rs. 850 Rs. 49,150