Final answer:
The ad agency charges its clients by using a commission system, where it earns a fixed percentage of the advertisement cost. Option D is correct.
Step-by-step explanation:
CL Ads, an advertising agency, employs a commission system in its business model, specializing in the preparation and placement of advertisements in magazines. The agency charges its clients a fixed commission rate of 15 percent, calculated as a percentage of the total cost of the ads. This commission-based compensation structure is prevalent in the advertising industry, where agencies commonly earn revenue by taking a percentage cut from the expenses associated with media placements.
Under this commission system, CL Ads aligns its financial success with the advertising expenditures of its clients. The 15 percent commission serves as a straightforward and transparent mechanism to determine the agency's compensation, directly correlating with the scale and impact of the advertising campaigns it undertakes.
By tying compensation to a percentage of the ad cost, CL Ads not only aligns its interests with those of its clients but also establishes a scalable and adaptable pricing model. This commission-based approach is a standard practice in the advertising sector, reflecting a mutually beneficial arrangement where agencies are incentivized to optimize ad placements and clients pay in proportion to the scale and effectiveness of their marketing endeavors.