Most advertisers today are concerned about how their media investments are being handled by agencies. While agencies still place the bulk of advertiser budgets in paid media, advertisers generally do not know all of the methods agencies often use to obtain media prices, track the performance of media delivery and then be fully accountable to the client before they are billed and invoices paid to the media. First, how do agencies negotiate with the media? The answer often seems simple, but it is not. The simple answer is they use research data to understand the characteristics, purchasing patterns and media habits of the consumer, arrive at the specific media vehicles, channels and platforms that attract the client’s key target audiences and then negotiate a price based on how they “read” the supply and demand of the market. (There are lots of ways to do this with trend data, money committed to the market, advertiser budgets being revealed, the general economic outlook and oftentimes an established client base for benchmarking year over year increases.) It is, however, in reality more complex.
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