This post is by Darren Woolley, Founder of TrinityP3. With 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.
We have been benchmarking advertising agency costs for more than a decade. This is usually undertaken with an historical focus, looking at the outputs the agency has produced in the past year.
Then, using the TrinityP3 resource and cost benchmarks we calculate the industry equivalent cost for the same output and compare this to the resources the agency used and the amount charged. This allows us to calculate the anomalies which helps us identify the cause of any inefficiencies in the relationship. e.g. If account management is higher than expected it could be because of over servicing or poor client processes. Or if there is a skew of staff mix to the more junior it could be because of inadequate remuneration or high volume workflow with low strategic requirement etc.
But we have been able to refine this process so we can more accurately calculate and predict the agency level resources, mix of resources and cost of resources based on the client category, the size and complexity of the scope of work.
This video explains how TrinityP3 is able to calculate your agency fees against your scope of work with a high degree of accuracy.
What should your agency costs be?
Rather than what “would”, or “could” my advertising cost be, we are increasingly being asked by our clients what “should” our agency costs be?
It is an interesting question and one that we are able to answer with a high degree of accuracy.
You see rather than making a guess, like a lot of consultants, procurement professionals and agency staff, we can calculate what your advertising should cost based on your requirements or scope of work, the category you are advertising, the market and the type of agency you are working with – both in quality and discipline.
Media, brand, digital, social, PR, sales promotion, retail or shopper activation and the like.
How do we calculate agency costs?
At TrinityP3 we have been collecting and analysing agency resources and cost across a wide range of categories and projects and we have developed benchmarks and a methodology to accurately calculate what an advertiser’s projects or requirements should cost.
Interestingly these benchmarks vary by the category with automotive and alcoholic beverages being at the high end, telecommunications and financial services in the middle and retail at the lower end. But the relationship types between the advertiser and the agency also impact the cost too.
What this means is we can take a scope of work, and by defining the various variables, calculate accurately, within 5 – 10% what the agency cost should be.
This is useful as it means you can do a few really neat things, like assess how efficiently you are currently working with your agency or budget your agency fees for the coming year or accurately benchmark your agency arrangements, against a result calculated and customised specifically to your circumstances.
At TrinityP3 we have been providing this service for more than a decade. So if you want to know what your agency “should cost” ask us at TrinityP3.
We never guess, because some things are too important to be left to chance.
Don’t you agree?