In many cases additional forms of compensation will be made to the agency that is on top of the agency fee. This compensation may be in the form of commissions on production or media purchases, charges for the agency’s creative services department or other forms of agency charges.

Commission

Dramatic changes in agency compensation have occurred over the years, “According to the 2004 ANA Agency Compensation survey, a mere 10% of the 112 major advertisers surveyed said they still pay commissions, down from 21% in 2000. Nearly three quarters (74%) rely on either fixed/hourly fees or a blended compensation model that includes fees and commissions (8%).” (Source ANA Press Release)

However, in the past, agencies have traditional been able to charge a commission on out-of-pocket client costs in relation to media or production (print) purchasing. Although there has been a trend away from charging commission, agencies will strive to do what is financially in the best interest of themselves and their clients. Some agencies increase their rates to compensate for the loss of
commission, where some agencies have gone completely away from charging them.

In the past the traditional rate of commission on print or production related purchasing was .17625% and varies from 0% to 20%. Production commission is traditional charged on outside
vendor bills for items such as scans, art purchases, color house work, printing and manufacturing.
Media commission has also varied from 0%, 3%, 5%, and up to 15%. Media commission is traditional charged on purchasing advertising space in print, out-of-home, broadcast and other mediums.

Services not normally included in the fee.

Fee agreements should be very specific about what types of services the agency will provide, and additional services not provided in the fee will then be estimated and billed to the client on a project by project basis. This may be typical of clients who originally asked for traditional ad campaigns, but not internet related work or perhaps PR or research related projects.

Creative Services (Production & Studio Services compensation)

Traditionally, agency fee compensation included all staff members related to the clients work minus the production studio. In some agencies, sperate production estimates will be created for the client to include hourly or flat rate charges for studio mechanicals, proofreading, color copies, final file creation, final file releases, discs, programming and more. And in a few circumstances, the production estimates may include production management and traffic or project management.

Trends
There has also been a trend for agencies to bring traditional color house related work inhouse. This enables the agency to charge for color house related items that it would have normally passed through as out-of-pocket costs. These production services may include high resolution scans, retouching, proofs and final file creation and releasing.

To read more about trends in agency compensation, read the new 2004 ANA Compensation report, available at the ANA bookstore at: www.ana.net

The AAAA also has a variety of agency compensation related publications available at www.aaaa.org