Media cost is the price of all impressions, clicks, and activities during a certain period of time, based on the schedule and pricing info estimated for each placement individually. Media cost reports cover only the placement’s data range and are calculated due to the cost structure and delivery details. All the clicks, impressions, and any other actions that are not included in the run dates of the placement will be ignored in media cost calculations.
In media advertising, there are 2 main types of media cost:
- Net media cost. It refers to the amount you need to pay to the media vendor for the ad services. Basically, that’s the payment you make to Google to show your ads.
- Gross media cost. That stands for costs you pay to the mediator that works with media vendors to publish your ad on your behalf. As a rule, this implies not only the payment to your media vendor but also the additional commission for services to your mediator as well. The standard compensation for the mediator agencies usually is 15%, however, it was also called illegal because of being anti-competitive for the entire industry to agree to provide the services on a set service pricing.
The formula for calculating the Net Media Cost can be presented as follows:
Net Media Cost = Gross Media Cost × 0.85
