February 21, 2023
By:EmpoweringCPO Insights Team

Media Buying (Rates & Agency Commission)

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Media planning involves deciding where (on which TV or digital channels, in which newspapers etc.) the advertisement should be placed in order to achieve the best impact on its intended audience. Media buying is the process of negotiating with individual media owners (such as broadcasters or publishers) over availability and price. This report gives overview of media services market, pricing models, agency commission, media rate structure and many other insights on this category.

Abstract

  • The market size of Media Services which broadly consists of Media Planning & Media Buying is expected to reach $54.6bn by 2021 in the USA.
  • Media Agency provides services like Market Research, Creative Services, and Media buying; and charges according to their Reach, Frequency & Continuity.
  • The traditional pricing model for media agencies was 15% commission; gradually it has decreased and currently, it is a combination of fixed pay and performance incentive.
  • According to a survey by the Association of National Advertisers, in the USA majority of advertisers use either Labour based or Fixed Fees for Media Planning & Buying services.
  • According to a survey by the Association of National Advertisers, the majority of advertisers pay around 1.5% to 6 % commission to media agencies for Traditional Media Buying.
  • Commission for Digital Media Buying services is higher than Traditional Media Buying services; mostly ranging from 5.5% to 10% in the USA.
  • The major factors that affect the advertisement price in newspapers are circulation and readership, ad placement, ad size, ad frequency, and color types.
  • The price of a Television advertisement is decided based on a variety of factors, such as Network, Length of the TV ad, Competition for the time slot, and other factors.
  • The cost of an advertisement on the Radio largely depends on the Reach of Radio stations, how long the ad is, what time and day the ad is being played, and the ad frequency.
  • Factors such as the location of the billboard, the size of the ad, Lighting, Impressions, the Level of competition in the area, and Duration decide the price of the billboard advertising.
  • Major factors affecting Social Media rates are Ad quality and Relevance, Target audience, Time of the year, Ad placement, and Ad frequency.
  • Search Media Advertisement rates mainly depend on Keywords that are purchased through an auction-based system and their relevance to an ad (Quality Score).

Table of Content

ContentSlide No.
Media Services – Overview & Market Insight2
Media Services – Price Deciding Factors3
Media Services – Agency Commission4
Use of different Pricing Models across Different Media Channels5
Commissions for Media Buying -Traditional Media6
Commissions for Media Buying – Digital Media7
Media Rate Structure – News Paper8
Media Rate Structure – Television9
Media Rate Structure – Radio10
Media Rate Structure – Billboards11
Media Rate Structure – Social Media12
Media Rate Structure – Search Media13

If required EmpoweringCPO can support with additional information and the next steps with executing procurement sourcing projects like Creative Media Buying. Feel free to reach us if a similar report is required for any other category. We also help organizations with tools like Procurement Dashboard, Spend Analysis, Procurement Intelligence, and Procurement Consultancy.

EmpoweringCPO is a team of experienced sourcing and procurement professionals with hands on experience of having worked with many fortune 500 companies. The company was founded in 2011 and since then has executed multiple strategic sourcing projects and have achieved average savings of 10-12% so far. In addition to Strategic Sourcing their other offerings are Spend Analysis, Procurement Intelligence, Procurement Analytics, Best Cost Country Sourcing, Procurement Outsourcing, Built Operate Transfer, Supplier Diversity, Sustainable Procurement, Tail Spend Management, Item Master Optimization, Collective Buying, Compliance Tracking and Managed Procurement Services.

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Compliance management is very critical as otherwise the procurement organization may run into a scenario where there is a huge gap between realized savings and reported savings. Many procurement functions estimate large savings numbers when contracts are signed. They also invest significant time and effort in negotiating contracts for necessary goods and services, only to have a third or more of their purchasing dollars flow outside those deals. Some of the obvious fall-outs of non-compliance and maverick purchases are:

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