Final answer:
The correct compensation arrangement where an agency charges a monthly rate and credits media commissions back to the client is known as the fixed fee method.
Step-by-step explanation:
The correct answer to the question is A. fixed fee method. In a fixed fee method, an agency charges the client a set monthly rate for services rendered. This rate includes all of the services provided by the agency, as well as any potential commissions from media buys, which are credited back to the client. This approach provides a predictable cost structure and can be advantageous for clients who want a more consistent billing experience.
It is different from other compensation models such as the negotiated commission method, which involves agreeing on a certain percentage of commission on media purchases, or the cost-plus agreement method, where the agency charges for the cost of services plus a markup. The incentive-based compensation system ties agency earnings to performance outcomes, and the objective-and-task compensation system involves setting specific objectives and tasks with related compensation.