What Is the Difference Between Net & Gross Ad Rates?

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Advertising can take a wide variety of forms.
Advertising can take a wide variety of forms. (Image: Medioimages/Photodisc/Photodisc/Getty Images)

You will frequently hear two different price levels, net and gross, tossed around when you're negotiating advertising rates. The difference between the two is generally consistent from agency to agency, so you'll want to make sure that you're paying a fair rate for the services you're buying.

Gross Advertising Rate

The gross advertising rate is also referred to as gross media. This includes the cost of the creative work that goes into your campaign, as well as the agency's costs for placing your ads with media outlets.

Net Advertising Rate

The net advertising rate is also called net media. The difference between net and gross media is generally 15 percent, which is the customary commission that agencies receive for planning your advertising, handling the purchasing of time or space and managing your ad tracking.

Hidden Pricing

Your ad agency is going to make a profit -- that's their goal. Get another quote or two, especially if an agency offers to waive the commission and just charge you the net rate. Offering to waive the commission could mean that the agency is padding the net rate. Going down the street to the competition will give you the leverage of choice, and may get you a lower quote.

When to Request a Discount

You shouldn't have to pay the agency the gross rate if you are negotiating with various media outlets yourself to place your advertisements. That 15 percent commission is intended to pay for the work involved in that placement. Be sure to let the agency representative know that you're doing your own placement, and ask for the net rate.

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