How are media costs decided. For example if I am company ABC and I buy Meta or YouTube ads in house vs. if I get an agency to do it. Does the agency get a preferred rate? And then does the agency charge the company a % fee so they are making money or charge them the actual cost and then keep the difference between that and their preferred rate?

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Now a days, most digital platforms like Meta or YouTube are bid based platforms so there are no preferred rates - small or big - costs come down to targeting, objectives, etc. (There may be some exceptions for multi-million dollar budgets - but if that is not you then don't worry) The agency will typically either charge commission to cover their costs or a separate fee. Commission is typically a percentage that is added to / taken out of your total media budget. This allows the agency to scale their revenue if the media budgets increase, which typically align with more channels or more work. Fee model could be hourly rate that is billed based on actual hours worked, or fee could be project based where the agency sets a fee for the project based on the current scope. If the scope changes there would typically be a renegotiation of the fee.

For Meta & YouTube, these are campaigns that should be monitored closely & daily, so worth hiring a partner to manage it. And for most clients, getting one invoice to include both out-of-pocket costs & management costs is the smoothest route

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