ONLINE-ADS>> Ad Agency / Media Buyer commissions

Mark J. Welch (markwelch_at_ca-probate.com)
Fri, 03 Jan 1997 10:15:22 -0800

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At 09:53 AM 1/3/97 -0700, Steven Heath wrote:

>BTW, in the past agencies received a 15% commission from the "publication"

>for ads as well as the client paying for work. However, over the last few

>years it is quite common to see the client not paying for creative
>services and

>the agency only gets the commission, or vice versa.

I keep hearing this bit about a "standard 15% agency commission" for media

placements, and I am well aware that many advertisers won't pay an agency

anything more. I think this is a short-sighted "standard" when looking at

web advertising, especially for small or niche companies. The use of flat

percentage commissions based on ad sales seems like an excellent way to

assure over-purchase of media, and under-utilization of free or low-cost

media options. In the case of web advertising, it drives the agency toward

single-outlet placements rather than tedious and time consuming

placements with many different online publishers. Hence, despite the

existince of several web site advertising registries and similar databases,

virtually all agency effort is focused on the handful of online media

outlets that have full-time ad representatives, and the ad networks that

have full-time ad representatives.

As a potential advertiser, I certainly will be resistant to ad agency fees

that I think are too high, and I certainly don't want to pay for an agency

employee to learn from scratch about online advertising -- but I think

it is short-sighted of advertisers, agencies, and online media to try to

"enforce" a 15% rate that simply does not reflect the additional work

required for an agency to properly investigate and manage placements

with a wide array of online media.

Let's look at my situation as an example: I am an attorney who

limits his practice to estate planning & probate. I want narrow,

targetted advertising: geographically limited to just part of two

counties and demographically limited to certain financial tiers

and ages. Assuming that an ad agency would talk to me at all,

I think a competent ad agency would recommend a very limited

online ad budget, narrowly targetted to a small group of web

sites and perhaps some very narrow search-engine keywords

combined with ISP-based geographic targetting.

I understand that some online ad networks (including Internet

Link Exchange) are working not only on narrow demographic

targetting, but also ways for "mom and pop" advertisers to do

all ad transactions ONLINE -- with a very low transaction cost.

Oh, yes, let me explain why I think 15% will be increasingly

unfair as online advertising booms: I believe that the "correct"

rate for untargetted banner advertising -- the rate which I expect

will prevail in 12-18 months -- will be measured not in cents,

but in tenths of a cent. In other words, base rates of 7.0 or 5.1

or 2.2 cents will end up being the rates for targetted advertising,

and untargetted ads will drop well below a penny per impression.

In that market, FINDING the right places for an ad will require far

more time, effort, and energy than anything else -- even more than

the cost of the editorial content.

-- <bold>Mark J. Welch: </bold>http://www.ca-probate.com/chap00.htm

-- <bold>Web Site Banner Ads:
</bold>http://www.ca-probate.com/comm_net.htm

-- <bold>PSA Banner Ads: </bold>http://www.ca-probate.com/psa_bann.htm

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