Introduction
For decades there has been frustration in the marketing community related to framing appropriate benchmark ranges for the currently predominant form of agency compensation, i.e., labor-based compensation.
4A’s members believe that there is an opportunity to fundamentally evolve the labor billing rate process through a transparent, efficient and mutually beneficial sharing of industry information. The 4A’s Labor Billing Rate Survey, for the first time, provides robust, statistically sound labor rate information that affords the agency and advertiser communities with a sound mechanism for discussing and benchmarking market-based labor rate ranges.
The rationale for providing industry labor billing rate information is to allow all industry constituents to satisfy their respective due diligence responsibilities through marketplace-based information. This information will afford the industry the opportunity to efficiently and equitably frame labor rates, which will in turn allow the parties to focus on the critical tasks of aligning scope of deliverables, service expectations and the desired scope of benefits.
Overview
The most frequent request that the 4A’s receives from agency members, marketers and industry advisors is for information about agency labor billing rates. In order to accommodate these requests and provide a credible framework for understanding labor billing rates, the 4A’s conducted a “Labor Billing Rate Survey,” which covered hourly rates charged to clients.
The intent of the survey is to provide the industry with reliable and statistically relevant hourly labor rates charged to clients.
The survey results are an important tool that provides—for the first time—useful hourly billed labor rate information for agencies, advertisers and industry advisors.
Why is Labor Billing Rate information so important, particularly now?
- Fees for service, based on agency labor, remain the predominant form of compensation in the marketing services industry.
- Agencies are under pressure to justify that the labor rates that they charge are reasonable and competitive.
- Marketers want to understand the relative range of labor rates and benchmark the rates that they are paying their agencies.
- Because industry labor rate ranges are not broadly available from a reliable source, the industry has struggled to gather valid and statistically reliable benchmarks.
- Agency labor rates are derived based on a range of considerations, including but not limited to rate card, budget, agency cost, value provided, opportunity cost and negotiated rates. The common denominator for framing labor rate ranges, regardless of how the rates were derived, is by looking at actual rates charged.
- Because reliable labor rates have not been available until now; the industry has tended to rely on surrogate cost component information (salaries, overhead rates, and profit mark-ups) that is complex, administratively burdensome and one-dimensional.
The 4A’s Labor Billing Rate Survey Report provides relevant parameters to help the industry frame labor rates that are utilized within the context of service types, size groups, and geographic regions.
The 4A’s Labor Survey Report
The 4A’s Labor Billing Rate Survey Report contains information on average billing rates charged to marketers by 232 agencies in 2008. Rate data is reported for 131 positions within 14 service departments, plus selected blended departmental and agency rates. Rate schedules are provided for general market—full-service agencies (reported by size and by geographic region). The survey report also includes specialist rate information for media service agencies, medical service agencies and interactive service agencies,
A copy of the 4A’s Labor Billing Rate Survey Report is available for purchase through the 4A’s. The cost of the 4A’s Labor Billing Rate Survey Report is $350 for 4A’s members and $750 for non-members.
>> Download Order Form.
If you have questions, contact Helen Miranda (helen@aaaa.org, 212-850-0767) or Nancy Petri (npetri@aaaa.org, 212-850-0761).
