But the amount you pay is almost certainly not the sticker price on the car. You expect to pay a bit more than dealer invoice to compensate the salesperson (this is the equivalent of the agency compensation). Instead, you do a little research to find out the dealer invoice for the car (the dealer invoice is the equivalent of the Net Media Cost). But you don’t expect to actually pay the price on the window.
Media math calculator windows#
When you visit a car dealer to buy a new car, you see pricing stickers on the windows of every car. Gross Media Cost is like the sticker price on a new car There’s no perfect formula, but keep in mind that you will be paying your agency above and beyond the Net Media Cost. Others get compensated based on performance. Some still use commissions of varying percentages and calculations. Some agencies still operate at 15% of gross, but that’s rare and becoming rarer. These days, there are a variety of compensation methods. You will also pay your advertising agency on top of this Net Media Cost for the work they do for you. Don’t forget to add advertising agency compensation Net Media Cost is always the Gross Media Cost minus 15%. If your media is priced in gross, you can easily calculate the net media cost: Calculating Net Media Cost from Gross Media Cost To find the real cost of the advertising media – the Net Media Cost – you have to do a little math. Why? In a nutshell, it’s illegal because it’s anticompetitive for an entire industry to agree on a set compensation amount.ĭespite this inconvenience of illegality, traditional media is still often priced in gross rates. The agency kept the 15% as compensation for themselves and sent the remaining 85% (the Net Media Cost) to the media vendor.īut this “standard commission” was long ago deemed illegal by the Department of Justice. What is Gross Media Cost?īack in the old days when advertising agencies took a standard fixed 15% commission, Gross Media Cost was the amount you paid your agency to place your ad with the media vendor on your behalf. This is what you pay the New York Times to print your ads. This is what you pay Google to show your ads.
Media math calculator tv#
This is what you pay the TV station to air your ads. Net media cost is the amount you pay the media vendor for the advertising media. Net Media Cost is simple and straightforward. So, it’s important to understand and deal with gross media cost and its relationship with net media cost. “Net” and “Gross” dollars are an archaic holdover from a compensation model that no longer exists, and the current differentiation between the two serves no purpose other than to create a source of confusion and inefficiency in the media supply chain.Īlthough technically obsolete, the tradition of gross media pricing persists in traditional advertising media such as television, radio, billboard, and print. What’s the difference between Net and Gross? According to Leslie Bursack at Media Audit… These two alternative costing methods are super-confusing even to long time veterans inside the advertising industry. When buying media for advertising, it can either be priced in gross cost or net cost.
0 kommentar(er)
