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A simple way to check your advertising agency fees

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This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

Are you are an advertiser, marketer, procurement professional or even an agency manager? One of the key issues that arise on a regular basis is the advertising agency costs and specifically the rates charged.

TrinityP3 has been benchmarking and assessing agency fees and charges for more than a decade and one of the areas of conflict is determining a fair and reasonable rate for those advertising services. This is why we have developed an on-line system called Ad Cost Checker.

Ad Cost Checker your rates

Imagine being able to enter the agency rates into an Excel file against the pre-defined benchmarks and then uploading the file to a secure website and instantly getting a report back that shows where your rates sit against the industry benchmarks? It is fast, simple and provides an independent benchmark.

The five basic steps are to:

  1. Sign up
  2. Purchase a report
  3. Download the appropriate Excel template
  4. Complete and upload the Excel template
  5. Download and review the report

Beyond the steps required to use the system, it provides the industry with a valuable source of agency fees and rates against which you can compare and benchmark, no matter if you are the buyer or seller. Advertiser, Procurement and Agency can all access Ad Cost Checker to better understand where their advertising agency rates statistically sit against the industry.

Advertiser benchmarking your agency

Your agency fees have been in place for a while and the agency has been hinting that they need to review the fees as they are hopelessly out of date. Actually it has recently become more than a hint, with the discussion becoming a regular feature of the meetings with the agency. But with cost of living fluctuating in recent years between 2% and 3% in Australia, how far out are the current fees? And could it be that some rates have actually dropped with technology innovation and supply and demand?

AdCostCheckerOptions

With Ad Cost Checker you can download the appropriate cost benchmarks and have either the agency complete the rates or complete these yourself from the current agency contract or recent estimates. Then simply upload the template to the system and get your report to show where the current agency rates compare to the benchmark. Or you could even benchmark the proposed agency rates.

If the category of rates and benchmarks are not here or not currently covered, simply tweet to @adcostchecker with the description of the category of rates you are interested in and the #newcosts

Procurement benchmarking agency suppliers

You are the procurement category manager undertaking a tender in the marketing category. As part of the process you have had the agencies supply their rates. You now have a range of rates from the various agencies, but the question is, beyond just selecting the lowest rates, how do these compare to the market? Once you have signed up to the Ad Cost Checker system, four steps can definitely answer your question.

AdCostCheckerSteps

The other major issue is that often the agencies make it difficult to compare like with like, often using different role, job and fee titles, and descriptions in their responses. You could either, as part of the RFP or RFT, have the agencies populate the Ad Cost Checker templates to allow you to make a like for like comparison, while still allowing the agencies to use their specific job titles and cost descriptions. Or you could have the agencies, provide the Ad Cost Checker report allowing you to compare the rates to industry benchmark without the cost.

Currently this service is only provided for Australia. We have plans to roll this out to New Zealand and then South East Asia, including Singapore, Indonesia and Malaysia. If you are interested in this service in your market simply tweet to @adcostchecker with the name of the market you are interested in and the #newmarket

Agency assessing their rates against market

The Ad Cost Checker is also valuable for agencies themselves. When either a client or the client’s procurement team come back and suggest you are ‘above industry benchmark’, here is a truly independent source to use. You can also check your rates against other types of agency / client relationships. Perhaps in a pitch, you are a medium size independent agency and you are up against a large global network agency for a large local client? Or you are a large independent agency and are up against a large network agency who is aligned to the client global?

AdCostCheckerBenchmarkParameters

In each situation, you can not only check your rate against the market in your category, you can also check your proposed rates against the type of agency you are pitching against and the client type. This will provide you with a more informed view of the competitive market set and allow you to make a more informed decision on how to present your rates to your client.

The value of Ad Cost Checker

Instead of simply guessing where your agency rates sit in the market place, the Ad Cost Checker system allows you to quickly, simply and easily understand how they compare to the market, depending on the category of agency (creative, media, digital and design) the cost centre, the size and ownership of the agency (independent versus network and small, versus medium versus large) and the type of advertiser (Local versus global and small versus large) and the relationship with the agency (Globally aligned versus non aligned).

This provides the user, be it advertiser, procurement or the agency, with a useful and informative understanding of where the cost statistically sits against the market data, providing a valuable market benchmark.

Try it out and let us know what you think.

Please provide feedback here with a comment.

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Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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