Q:

How do ad agencies charge for their services?

A:

Quick Answer

Ad agencies charge for their services based on a number of factors, including common rates in the market, labor, value to the client and location. Agencies charge per hour of work, according to Ad Age.

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Full Answer

In the past, ad agencies were paid based on commissions on the media time that the clients purchased. However, this system was replaced with hourly fees in the 1990s, as media ad time got more expensive, reports Forbes.

The hourly fee system can be very complex. Location alone can play a big role, as can the size of the agency. Large agencies based in New York charge far more than agencies in other parts of the country. In addition, the talent working on the account can play a role. Top creatives and account executives can command higher fees than staff further down the ladder. Perceived quality of the agency's work and projected results can also play a role in hourly fees.

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