Understand options and best practices to determine methods to compensate your agency and how to create a win-win for both you (client) and agency.
- Next, let me help you understand…how compensation works from the agency's perspective,…and some of the most common compensation models.…Many clients feel in the dark about…how their compensation to agencies is broken down.…Let me pull back the curtain and share…how this typically works.…Since the agency business is a service business,…about 50% of the compensation goes to labor,…such as agency employees' salary and bonuses.…I think this is good.…You want the bulk of your compensation…to go to the agency talent.…
About 30% goes to the agency's operating expenses,…like equipment, payroll expenses such as benefits,…or travel expenses.…And that leaves about a 20% profit margin.…Remember, agencies are for-profit businesses,…and they're entitled and expected to make a profit margin,…just like many of your businesses.…As far as compensation models go,…there are many of them, and they continue to evolve.…Let's discuss the four most common models.…One, the commission-based model.…
This was most popular years ago,…but it's used less and less today.…
- Explain the role of an account manager in a marketing agency.
- Review information from a request for proposal before deciding which agencies will present a pitch.
- Identify the purpose of a non-disclosure agreement.
- Recognize the benefits of assigning a liaison as a point of contact.
- Define scope of work and explain why it is typically an exhibit to a contract.
- Determine the most effective way to manage risks before issuing a contract.