Question

Defenders of the commission system argue that:

A) it is generally easier to administer and keeps the emphasis on nonprice factors in agency compensation.
B) it encourages agencies to recommend direct mail, sales promotion, and public relations to their clients.
C) it does not tie agency compensation to media costs.
D) it helps in reducing skyrocketing media costs.
E) it is similar to the fixed-fee method

Answer 1

The commission system is defended for being easier to administer and emphasizing non-price factors in agency compensation by tying agency fees directly to media expenditures. Option A.

Step-by-step explanation:

Defenders of the commission system in advertising agency compensation argue that this model has several advantages over other compensation methods.

Primarily, advocates suggest that a commission system is easier to administer because it ties the agency's compensation directly to the media expenditures of their clients. This creates an automatic and straightforward calculation for payments without the need for complex negotiations or calculations that other systems might require.

Furthermore, supporters believe that it keeps the emphasis on non-price factors by aligning agency success with the success of the media placements, which can foster a focus on media quality over just cost.

This can also encourage more strategic thinking in campaign management, where the agency prioritizes the impact and effectiveness of the advertising rather than only trying to minimize costs. Option A.