For over twenty years, TrinityP3 has worked at the forefront of marketing operations, helping brands manage and optimise their relationships with agencies. During this period, we’ve seen many industry trends come and go, but one constant remains: the pressure to cut agency costs. This pressure often prompts marketers and procurement teams to seek external assistance, mainly through agency fee benchmarking.
However, many traditional benchmarking methods, while well-meaning, depend on fundamentally flawed metrics. They provide a simple, often misleading snapshot of input costs, creating an illusion of control and savings while frequently overlooking the real driver of marketing efficiency: value.
At TrinityP3, we moved beyond simple cost benchmarking years ago. Our method, honed through thousands of engagements, focuses on Value Benchmarking. This approach recognises the complexity, nuance, and strategic significance of agency relationships, making sure our clients don’t just pay less but pay smarter.
We believe genuine financial insight comes from understanding the relationship between the price paid and the quality, speed, and strategic impact delivered. Here, we outline the five key flaws of mainstream agency benchmarking and explain how our Value Benchmarking approach offers truly accurate and actionable insights.
Flaw 1: The Hourly Rate Fallacy – Focusing on Inputs, Not Outputs
The most common trap in traditional benchmarking is overly concentrating on comparing agency hourly or day rates. On paper, Agency A might have an average hourly rate 15% lower than Agency B, leading a marketer to believe they’ve found a cheaper option.
The Reality: The hourly rate is only half the story.
An agency with a lower hourly rate might employ less experienced staff, use inefficient processes, or lack specific category knowledge. As a result, that ‘cheaper’ agency could take twice as long to complete the same task, leading to a much higher overall project cost.
The TrinityP3 Solution: Benchmarking the Total Resource Requirement.
We don’t just benchmark the hourly rate; we benchmark the total, appropriate resource requirement needed to deliver a clearly defined output. Our extensive database enables us to identify the typical time (measured in FTE days or hours) required by a high-performing, appropriately-staffed agency to complete a like-for-like deliverable.
By combining a market-appropriate, seniority-weighted rate with a realistic resource allocation model, we can accurately establish the true cost of the output, not just the input rate. This avoids the false economy of choosing an agency based solely on a low hourly fee, only to face increasing project timelines and costs later on.
Flaw 2: The Danger of the Median – Ignoring Quality and Expertise
Many benchmarking reports depend on simple statistical measures—such as the median or average—to set a target rate. This approach treats all agencies as interchangeable, assuming that an average creative director at one agency is the same as an average creative director at another.
The reality: Agencies are not interchangeable. Their value is heavily influenced by their relative quality, the proven expertise of their senior staff, their proprietary tools, and their market reputation. You don’t pay the same price for a local, generalist shop as you would for a globally recognised, specialist agency with a track record of winning major awards and delivering proven, transformative business results.
Benchmarking against a flat median penalises high-quality agencies, pushing them to slash their prices to match their less capable competitors, while also creating an unrealistic expectation for marketers aiming for world-class delivery. It overlooks the essential fact that expertise justifies a higher price.
The TrinityP3 Solution: Quality-Weighted Benchmarks.
Our approach is customised. We include a Quality and Expertise Multiplier in our benchmarking analysis, starting with a qualitative review of the agency relationship that considers:
- Agency Reputation and Peer Recognition: Awards, thought leadership, and market standing.
- Team Quality: The demonstrated experience and proven history of the staff proposed for the engagement.
- Category Expertise: In-depth understanding of the client’s specific industry, which enhances efficiency and speed.
- Proprietary Value: The presence of unique methods, data tools, or IP that justifies a higher price.
By applying a weighted adjustment based on these factors before setting the fair price, we ensure the benchmark accurately reflects a fair payment for the quality of service the client actually receives. This helps our clients distinguish between cost management and value sacrifice.
Flaw 3: One-Size-Fits-All Application – Overlooking Scale and Duration
Traditional benchmarks often fall short because they use the same rigid formula, including identical overheads and utilisation targets, regardless of the size or duration of the client engagement. A three-year contract for a full-service global retainer and a six-week, one-off project are treated the same.
The Reality: Scale matters. Contract longevity and scale fundamentally change the financial risks and operational demands on an agency.
- Large, long-term retainers: Offer the agency security, stable income, and high utilisation, which should lead to reduced commercial risk overheads and possibly improved blended rates.
- Small, project-based work: Brings higher financial risk, lower guaranteed utilisation, and increased administrative overhead relative to the project size, often justifying a higher relative cost.
Using a benchmark based on large, secure retainers for a small, volatile project sets an unrealistic and unfair financial target. Conversely, applying a small project benchmark to a large retainer results in the client overpaying significantly.
The TrinityP3 Solution: Dynamic Benchmarking by Engagement Profile.
We classify and evaluate engagements according to their profile:
- Duration: Short-term project vs. 12/24/36-month retainer.
- Scope Stability: Consistent workload versus highly variable, on-demand support.
- Scale: Total fees committed annually.
Our models dynamically adjust the justifiable overhead loading and commercial risk margin based on these specific contract parameters. This guarantees that the client receives fair pricing for the security and scale they provide, while still enabling the agency to sustain profitability for smaller, higher-risk work.
Flaw 4: The Blended Rate Trap – Mismanaging Seniority Mix
Using an ‘average cost per FTE’ or a simple blended hourly rate as a main benchmark can be misleading. While this metric offers a single figure for comparison, it completely obscures the real efficiency and quality benefits gained from resource seniority.
The Reality: Often, a team with a slightly higher average hourly rate, because of a greater mix of senior strategists and directors, can produce faster, more insightful work, ultimately resulting in lower total costs and higher quality output.
A junior team with a lower average hourly rate might take 100 hours to complete a strategic brief that a senior team could finish in 60 hours. Although the senior team’s rate is higher, the total cost for the 60 hours is lower, and their output quality is clearly better. Traditional benchmarking, focused only on the low FTE cost, would wrongly label the senior team as ‘expensive’.
The TrinityP3 Solution: Benchmarking the Seniority Mix.
We assess the resource requirements not only by volume (hours), but also by seniority mix within the scope of work.
Our models recommend an ideal combination of senior, mid, and junior resources needed for each project type (e.g., brand strategy, media planning, digital production). We then compare the client’s proposed resource mix against this ideal structure. This helps us determine if the higher average rate charged by an agency is justified by a more efficient, senior-heavy team, which often indicates better value rather than higher cost. We assist clients to stop concentrating on the average rate and instead focus on the optimal mix for faster delivery and higher quality.
Flaw 5: The Cost-Input Obsession – Failing to Benchmark Value Outcomes
The four flaws all lead to this final, crucial mistake: traditional benchmarking is mainly focused on input costs (rates and resource volume), entirely neglecting the value of the output or deliverable.
The Reality: The CEO doesn’t focus on the agency’s hourly rate; they care about the total cost of a successful campaign, the expense of an innovative platform, or the price of a market-shifting strategy. The true indicator of pricing value is the cost efficiency of the final, quality-verified deliverable.
The TrinityP3 Solution: Value Benchmarking of Deliverables (Output-Based Pricing).
This is where TrinityP3’s two decades of proprietary data truly set us apart. Instead of simply comparing two agency rate cards, we utilise our benchmark knowledge of rates and resource requirements to evaluate the cost of the final product.
For example, instead of asking: “Is this Creative Director rate fair?”, we might ask:
- “Is the total cost for a fully produced, high-definition 30-second digital video asset, including all strategy, creative development, and production supervision hours, fair for an agency of this quality?”
- “What is the benchmark cost per completed strategy document, considering the required research and seniority mix?”
By shifting the focus from the agency’s internal cost structure to the tangible cost of the deliverable, we change the entire approach from cost management to value assessment. This enables clients to accurately gauge the pricing worth of the work and negotiate based on market expectations for the final product, not just the individuals involved in its creation.
Moving from Cost Control to Value Maximization
Traditional agency fee benchmarking offers a quick but ultimately superficial answer to a complex question. It creates a false sense of security by confirming that you’ve secured a ‘below median’ rate, even if that low rate is associated with poor quality, slow delivery, and ultimately higher total costs.
TrinityP3’s Value Benchmarking recognises that the relationship between price, performance, and quality is complex. By evaluating the total cost of output, the agency’s quality-based expertise, the context of the engagement, and the seniority mix, we offer our clients a detailed, practical, and precise assessment.
Don’t accept the illusion of savings. Focus on assessing real value beyond input costs.
Ready to maximise your investment?
Contact us today to organise a Value Benchmarking assessment and ensure you are paying a fair price for world-class results.
