Advertising Agencies

Commission in Advertising Agencies

Advertising agencies operate in an industry where relationships and creative delivery are crucial. In Denmark, the advertising industry generates approximately DKK 15 billion annually, and commission constitutes a significant part of compensation for those who acquire new clients and maintain existing relationships.

Unlike many other industries, advertising agencies often combine commission with project-based bonuses. Account managers can earn commission on both new clients and upsells to existing ones, while new business teams primarily focus on landing new accounts.

Typical Commission Models

OTE for Sales Roles

On-Target Earnings (OTE) in advertising agencies varies significantly based on agency size and client portfolio:

• New Business Director: $130,000-215,000 annually
• Account Director: $100,000-160,000 annually
• Senior Account Manager: $80,000-110,000 annually
• Account Manager: $65,000-85,000 annually

Bonus Structures in Agencies

Beyond direct commission, many agencies use supplementary bonus schemes:

• Pitch bonus: Fixed amount for won pitches (typically $1,500-7,500)
• Retention bonus: Annual bonus for retaining key clients
• Team bonus: Distributed among the entire account team for major wins
• Creative award: Bonus for award-winning campaigns

Special Challenges

The advertising industry has some unique aspects that affect commission models:

• Long sales processes: From first meeting to signature can take 3-12 months
• Pitch culture: Many agencies compete for accounts through pitches
• Project-based work: Some clients buy standalone campaigns rather than retainers
• Client churn: Agency-client relationships change more frequently than in other industries

Due to these factors, many agencies include clawback clauses in their commission agreements, particularly for new business roles.

FAQ About Commission in Advertising Agencies

How is commission calculated on retainer clients?

For retainer clients, commission is typically calculated on the annual contract value. Upon renewals, the rate is often reduced to 50% of the original commission.

Do account managers receive commission on all projects?

This varies between agencies. Some give commission on all work for the client account, while others only give commission on upsells beyond the agreed retainer.

What happens to commission when changing teams?

Most agencies have clear rules that commission follows the person who originally sold the client, with a transition period of typically 6-12 months.