MARKETING

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  • Hiring Ad Agencies

    Game Plan

    In-Depth

    Agency Fees and Costs

    Advertising agency fee and compensation structures and ad rates can vary greatly. Some work on a retainer, meaning that you pay a set monthly or annual fee based on expected hours spent at a certain rate, for which they handle all your advertising.

    Other agencies work on a per-project basis, in which you both scope out a project and its parameters, then agree on a set fee. (This is very often the way small businesses, with limited budgets, like to work.)

    Agency fees aren’t the end of your cost of advertising, however. You’ll also incur out-of-pocket ad agency costs that are generally not covered in the agency fee. These can include:

    • Media. The cost of purchasing space to place a print, radio, TV, billboard or online ad. These costs vary greatly, depending on the specific media you’re considering, and may be substantial.
    • Printing. The cost of printing pieces such as direct mailers, brochures, sell sheets, flyers, signs and the like.
    • Production/fulfillment. The cost of handling and mailing a direct mail piece.

    You can choose to manage these activities and vendors yourself, or you can have your agency do it. Note that the agency will generally get a discount on these services, then build in a management fee for handling these activities for you.

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    Here’s an excellent source to learn more about agency fee structures. For more detail on advertising budgets and what you should spend, go to the “On the budget topic” section of this article.