This e-mail arrived from the Media Buying Academy on July 4th and I thought it was right on the money. Sales Managers, please take note:
What Are These Rates? Gross or Net?
Years ago, all media types quoted the agency media buyer rates that were gross, except for newspaper. Newspaper has always quoted “net” rates, and left it to the media buyer to “gross them up.” This is easily done by either multiplying the net rate by 1.1765 or dividing the net rate by .85.
In today’s world, more and more media types are leaning towards quoting “net” rates. The problem is, they aren'’t labeling them as “net.” Too many times have I received a “Rate Quote,” that doesn't stipulate the rates as either “net” or “gross.” So what are these rates?
The media needs to specify “net” or “gross” rates, and the media buyer needs to question any rates that come in without the word “net” or “gross” on the rate page. An agency can easily lose their commission when a media buyer “assumes” the rates quoted were “gross,” and they turned out to be “net.” No agency wants to go back to their client and have to say, “Oh, by the way, the Media Plan we just gave you last week was wrong. We need to increase it by 15% in order to get our commission.”
Many outdoor companies have switched from quoting “gross” rates to “net” rates at Clear Channel’s lead. It matters not which rate is being quoted. It does matter that it is clearly stated on the rate sheet what those rates are.
Most websites are quoting “net” rates, which means the agency media buyer must take the time to “gross them up” before quoting the rates to the client.
Know what those rates are! They'’re either “net” or “gross.