Advertising companies make money by charging clients for their services. The client pays an amount of money to the agency, which is then used to purchase online media. In addition, the agency charges a surcharge, typically 8%, to cover the cost of their staff and other expenses. Agencies can also monetize their marketing efforts by running PPC ads on their website.
Smaller projects are another way for advertising agencies to make money. These projects usually take between a few days and a month to complete and don't require a long-term relationship with the client. For example, an agency may offer a generic advertising campaign package that can be applied to almost any company and sell it to multiple small businesses in its area. Advertising agencies charge their clients for all the expenses involved in creating finished ads, including hiring third party contractors.
They also include a fee for account management, creative services, research and media placement provided by the agency, as well as a profit margin. Profit margins can range from 9% to 20-30%. In addition, major media agencies make money on the back end through reimbursements from different providers. Hourly billing is another way for advertising agencies to make money.
The agency will charge a fixed hourly rate and track the number of working hours needed to complete the project. Finally, partnering with other agencies and companies is another way for advertising agencies to generate additional revenue. The initial cost of hiring an advertising agency will save them in the long run, especially if it's a good agency.