NEW YORK (AdAge.com) -- Chief creative officers at large U.S. agencies, on average, billed $964 an hour to clients in 2008, while top account and media executives billed an average of $533 and $478 an hour, respectively.
Those are just a few of the enlightening figures contained in a soon-to-be widely available 117-page survey conducted by the 4A's that details labor billing practices at ad agencies around the country.
In the past, the trade group has compiled and distributed such information for its membership, but never shared it broadly. Tom Finneran, exec VP-agency management services at the 4A's, said the decision to spread the data comes partly because the organization has been inundated with requests for information about labor billing rates. It also wants to provide credible benchmarks for these fees -- which, for all the talk of value-based models -- are still the predominant form of agency compensation today.
"Everyone is seeing requests for proposals more and more ask for rate comparison data ... clients are looking for ways to do their due diligence and to have some kind of market-based information," said Neal Grossman, chief operating officer at TBWA/Chiat/Day in Marina Del Rey, Calif., who also serves as chair of the 4A's large-agency finance committee. At the same time, agencies are increasingly under pressure to show that the labor rates they charge are competitive with the marketplace, as clients' procurement departments play a bigger role in selecting agency partners.
The 4A's culled data for the report from its members between May and August 2009, asking them about hourly rates billed to clients in 2008 for some 130 positions across 14 service departments, such as creative, media services, account planning, research and print production.
Over 230 marketing agencies of varying sizes, geographies and specialties responded to the survey, though the majority netted out to be full-service shops. Among the ones represented in the study: BBDO, TBWA/Chiat/Day, Crispin Porter & Bogusky, McCann Erickson, Digitas, MediaVest, JWT, Y&R and Carat.
It's important to note that the rates reflected in the survey are what agencies quote on their "rate cards," and the rates actually negotiated by clients may come in lower. Still, it's a pretty comprehensive snapshot of how much marketers are paying for agency labor. It offers data points for four different regions of the country, average labor-billing rates and mid-range data for rates (kind of like Olympic scoring, it knocks off the 20% of the highest rates and 20% of the lowest rates).
The survey reveals just how much geography can affect billing differences for highest-level positions, though that doesn't seem to make much of a difference for mid-level or junior positions.
In 2008, a director of client services in the New York Metro area billed an average of $453 an hour compared toh $260 an hour at agencies in the middle part of the country, while an account supervisor billed clients between $140 or $150 on average, no matter where they were located in the country.
Some other geographical differences: An executive director of account planning in the New York Metro area billed $545 vs. between $315 to $355 in other parts of the country. Research directors in the South made about $277 per hour vs $520 in the New York Metro area last year.
With a top creative, the disparity in billing rates is huge: A chief creative based in the New York Metro area billed an average of $751 an hour last year -- more than double what a chief creative in other parts of the Eastern U.S. or in the South billed, at $319 an hour. In the central part of the country, a head creative billed an average of $420 an hour, and in the West, an average of $461.
David Beals, president-CEO at industry consultancy Jones Lundin Beals, estimates that "very senior positions at large agencies are rarely billed out for more than a percent or two of the person's time ... if a person at this level bills more than 25 to 50 hours of time to a given client, it would be rather unusual for most of the agency's client relationships."
Based on the 4A's survey, that nets out to a minimum of more than $18,000 billed to a client for a top creative in the New York Metro area.
For all the talk about media agencies becoming a more valued partner during the recession, they're not compensated nearly as much as other positions: An executive media director at a media agency bills a mid-range high of $500 and low of $281, while a media buyer makes a mid-range high of $100 and a low of $65.
According to Mr Beals, the numbers track with agency labor-compensation trends for several years: "Typically, the creative folks make the most money on a per-hour basis -- though sometimes a really good strategic planner will be right up there too -- followed by account services, then media services tend to be the lowest paid."
As digital talent continues to become more sought-after, the trend is probably more in a state of flux, Mr. Beals said. In 2008, the range of hourly billing rates at digital specialist agencies was between about $400 an hour for the senior-most roles and $85 an hour for the most junior.
To obtain a copy of the report, contact Helen Miranda at the 4A's.
2008 Hourly Billing Rates
|Average Hourly Rate
Billed to Client
|Position||50 or less employees||Over 500 employees|
|Director Client Services||$203||$533|
|Executive Director Account Planning||$240||$601|
|Executive Research Director||$266||$427|
|Chief Creative Director||$271||$964|
|Executive Media Director||$194||$478|
|Executive Director Print Production||$134||$391|
|Source: 4As Survey|