I work for a marketing company and will be conducting advertisements through various media (print, online, etc.) on behalf of a client. Upon receiving ad rates, they are specified as "net", "gross", or have neither description. Based on these rates, I’m not sure how to charge my client. Thanks!
I’m surprised media companies are still doing this. But basically here’s how it works.
Gross rates are the rates media companies charge client companies directly (and likewise are the rates ad agencies are expected to charge their clients). So no way around it, gross rates are the rates advertisers pay to run their ad.
Net rates are the rates media companies charge advertising agencies to place ads on behalf of client companies. Not sure if this is still true, but years ago there was a 15% difference between the two, leaving ad agencies with a 15% commission to cover their time, costs, salries, etc. for planning and placing the media.
At least that’s the way agencies made their money for a hundred years. Things changed dramatically in the 1980s when clients began paying agencies monthly retainers and essentially stopped paying that 15% commission deeming it too high.
September 17th, 2009 at 11:40 pm
Here’s a good breakdown
http://en.allexperts.com/q/Advertising-2052/Net-v-Gross.htm
References :
http://en.allexperts.com/q/Advertising-2052/Net-v-Gross.htm
September 18th, 2009 at 12:08 am
I’m surprised media companies are still doing this. But basically here’s how it works.
Gross rates are the rates media companies charge client companies directly (and likewise are the rates ad agencies are expected to charge their clients). So no way around it, gross rates are the rates advertisers pay to run their ad.
Net rates are the rates media companies charge advertising agencies to place ads on behalf of client companies. Not sure if this is still true, but years ago there was a 15% difference between the two, leaving ad agencies with a 15% commission to cover their time, costs, salries, etc. for planning and placing the media.
At least that’s the way agencies made their money for a hundred years. Things changed dramatically in the 1980s when clients began paying agencies monthly retainers and essentially stopped paying that 15% commission deeming it too high.
References :