FAQ

Ad Cost Checker is designed to provide accurate benchmarks for the hourly, day rate and unit charges imposed by advertising, media and digital agencies. These are the fundamental cost building blocks used to calculate the cost of the services provided.

The hourly rate or day rate has within it the cost of the resource including the direct salary cost, agency overhead and profit margin.

However many agencies also have hourly rates that are simply market competitive and therefore the cost does not directly relate to the underlying cost.

The data in the Ad Cost Checker database is the same data used by TrinityP3 in our assessment of agency remuneration both through our benchmarking and pitch consulting. This data is constantly updated and reviewed to ensure accuracy of the data.

We are adding markets all of the time. But currently we offer benchmarks for the following markets:

• APAC – Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore and South Korea
• EMEA – Austria, Belgium, France, Germany, Italy, Portugal, Spain, Switzerland and the United Kingdom
• Americas – United States of America and Canada

Let us know which markets you are interested in having access to by tweeting the market to @adcostchecker with the hashtag #newmarkets.

If there is enough interest then we will expedite these markets.

We have tried to capture the most common cost centres and charges by category. But if there is a cost centre or description you really want, let us know by tweeting the cost description to @adcostchecker with the hashtag #newcosts

If there is enough interest then we will look to add these to the system.

The Ad Cost Checker database is set up to collect hourly rate data and unit charge out rates only. It is not set up to collect or benchmark salaries. However you can use our Head Hour Rate Calculators available on our website or the Head Hour Rate Calculator Phone App for iOS and Android.

Both are free and allow you to calculate hourly rates from salaries and annual salaries for hourly rates.

You can even find step by step instructions on how to do this here.

The benchmark reports are generated in real-time based on the most up-to-date benchmark data. There are constant data updates both from the Ad Cost Checker users and weekly updates from TrinityP3 as we undertake projects for our clients. This is the data we use for our benchmarking projects.

To ensure the benchmarks are up-to-date we retire the data on its anniversary. Therefore none of the active data is out of date.

It is important to ensure you enter the right data into the Ad Cost Checker template. This is why we set the template up in Microsoft Excel so that you can share with colleagues and save it.

Once you upload it to the Ad Cost Checker system it is too late to make any changes. If you have entered the wrong data then the only way to correct this is to make the correction and upload it again. This will be charged as a new or additional upload.

That is why it is important to check, re-check and check again before you upload your completed Excel template.

The data comes from an extensive range of sources across the market. Primarily this is data collected by either TrinityP3 or one of our colleagues and sorted and collated into the database. The data is anonymous in the database with information on the size and type of client and the size and type of agency recorded.

The data is entered into the database on a regular basis to ensure the data within the database is comprehensive, extensive and relevant. While the number of data points against any cost centre will vary, there is always a statistically significant sample size in the database.

The data also comes from those using Ad Cost Checker. The data entered into the database by those using the system is also included in the database, but only after been checked that it sits within the statistically accepted range. Any spurious data entered is flagged and checked by TrinityP3 staff to ensure no false of dubious data is entered into the database.

This data is also not recorded in any identifiable way, except against the same criteria as the rest of the data in the database being the size and type of agency and the size and type of advertiser.

All data is date stamped and is retired from the active database 12 months after it is entered to ensure that the data remains current and relevant.

If the data entered obtains a result of zero standard deviations then this means it is equal to the mean. But we do not provide the actual means as this is a benchmarking exercise to demonstrate how far above or below the benchmark median the data is that is being benchmarked.

The reason we do this is it is more important to understand where the current rates sit against the marketplace than simply what the average rate is. The purpose of the Ad Cost Checker system is to provide an accurate reference point, depending on the cost centre and circumstances, around which a discussion on value can ensue. It is not to provide the average or to set the average as the average only begets average. That is an important consideration when using the Ad Cost Checker system.

The statistically significant way to do this is to provide the standard deviation of the data to the median.

There are a number of potential reasons for this.

First as more data is added to the sample the benchmark changes. This is a dynamic sample and the data is constantly being added and retired. Therefore the mean will change based on the data in the sample.

Secondly, the benchmark is dependent on the size of the agency, the ownership of the agency and the size and type of advertiser. Therefore the benchmark mean will depend on a combination of these factors.

We do not provide salary benchmarks and the reason is that salaries are just a component of the final cost. In most cases the final cost is the salary cost, divided by the number of billable hours per year and then multiplied by the overhead and profit multiple. All of these variables impact the final hourly rate. Therefore to provide a more relevant and comprehensive benchmark unit we have chosen the final cost unit rather than simply the base component. Also we have found that, as salaries are personal and therefore confidential information, they are also notoriously unreliable, except under confidentiality protection.

The Ad Cost Checker report uses colour coding to visualise the statistical results in the report. • GREEN: This is one standard deviation and is acceptable in most cases • YELLOW: This is between one and two standard deviations and is considered possibly too low or high • ORANGE: This is between two and three standard deviations and is considered too low or high • RED: This is between three or more standard deviations and is considered far too low or high

What this means depends on your perspective.

As Marketers or Procurement:

1. Look for patterns in the benchmarks. Are they consistently over or under? Is there any particular category that is over or under? Or is it simply individual roles here and there?
2. Next look to how far they are over and under. More than one standard deviation? Two? Three? Or more?
3. You then need to consider the areas that are over and consider the value equation. Are the rates over the mean important in the strategic and creative delivery of the work? Do they add value to the process? Do you consider the relevant individuals to be above average in the value you bring? There is nothing wrong with paying more if you are either getting increased quality or increased performance and therefore great value.
4. Then look at the areas that are below average. Is this an area that has had previous cost attention? Are these areas where there are performance concerns? If there are no apparent issues then accept the lower cost delivery, but perhaps check how these lower costs are applied on a job-by-job basis.

As an agency:

1. Look for patterns in your benchmark result. Are they consistently over or under? Is there any particular category that is over or under? Or is it simply individual roles here and there? Does this reflect a pricing strategy on your part? Or does it reflect the real cost of the individual based on their expertise?
2. Next look to how far they are over and under. More than one standard deviation? Two? Three? Or more? The further the rate is over or under benchmark the more you need to consider the following:
   1. Does the rate reflect the underlying salary or is there some aberration?
   2. Is the role being benchmarked against the right level of seniority?
   3. Does the particular individual reflect value to your client in that role?
3. Look for opportunities to develop a pricing strategy, rather than simply a cost recovery strategy. Hourly rates are the cost of services and the value equation is not in the rate but in the quality of the resources and the output of those resources for your client.

If you have any questions or require assistance interpreting the results, TrinityP3 can be contracted to assist with this. Simply contact us with an email to people@trinityp3.com with your contact details and requirements. We will then contact you to discuss the best way forward.