Advertisers do not pay advertising agencies, the media do. How?

It sounds rather absurd that the advertising agency works free of charge for the advertiser.I want to know the intricacies.

Advertisers do not pay advertising agencies, the media do. How?
Umm... Where did you hear that? Of course advertising agencies charge the advertisers, who in turn pay the media. If it were the reverse, how would we get free TV if "the media" were paying the agencies to supply adverts to interrupt programmes?





The customers of media companies are the advertisers. All this mucking around creating TV programmes is just a way to get people watching adverts.
Reply:That's incorrect - partially!!





Well, here goes:





The Advertiser chooses an ad agency for a TV commercial. The ad agency can either charge the client a portion of the total fee for market research and media planning. After that fee is paid, the agency works on creative concepts and presents the ideas and the media plan to the client. After the client approves, the agency handles the media buys and production of the commercial(s).





NOW: If the client were to go directly to the production company and the stations, they'd have to pay full-price. The agency gets a commission of 10-15% - which is taken off the bill for the commercial/production. This commission is given because, as professionals, the ad agency:





A) Knows what they're doing,


B) Is usually a much quicker turnaround job.





If the agency does NOT get a commission, they will add on 15% to the total fee - AFTER getting any discounts (mainly for frequency of ads run) from the production company/station, and pass the cost to the client.





So, the client goes through the agency and pays them, and the media gives the agency discounted advertising rates not available direct-to-public.
Reply:Ah, no. 'The Media' is a conglomerate of people and news about people, and 'The Media' can mean several things. The Media does not pay advertisers, however.





Advertisers are the ones who pay the Agencies, to promote their wares. An agency's job is to find the right 'media outlet' that is appropriate for the advertiser, such as selling 'Joe's Orange Juice' ads during the morning hours on a TV station oriented to families.





So the advertiser pays for the ad on the TV station, but since the agency is acting as the 'middleman' to broker the deal, the agency gets a portion of the cost which is usually 10-15% of the original price.