Briefly Explain the Three Major Methods of Agency Compensation

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The Answer is The commission system is based on the amount of money the advertiser spends on media. Under this method, 15 percent of the total amount billed by the media organization is retained by the advertising agency as compensation for all costs in creating advertising for the client. This system can create pressure on agencies to recommend the most expensive media options.
With a fee system, compensation is based on an agreed-upon hourly rate for services provided. A variation on the fee system, the fixed-fee system, is based on a single fee charged for a project. Unless the agency and client agree precisely as to what services are covered by the fee, serious rifts can result.
Recently many advertisers and agencies alike have been working on compensation programs called pay-for-results that base the agency's fee on the achievement of agreed-upon results.

Briefly Explain the Three Major Methods of Agency Compensation

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