Survey Finds Digital Agency Execs Bill Clients Less Than Creatives
A senior digital executive at a New York-based shop bills clients an average of around $350 an hour. Senior creatives on the traditional side of Madison Avenue can bill nearly twice as much.
In other words, for all the fretting over a digital talent gap in adland, many digital and social-media positions, mobile developers or technologists earn far less than their old-school counterparts.
That's a key takeaway from a 109-page report published by 4A's last week that reflects 2011 hourly rates billed by agencies. The survey -- which updates information contained in the first labor-billing study it conducted three years ago -- collected data positions including account management, creative, analytics, digital, media services and talent management. It then spliced and diced the data by agency size and geography.
When this study was initially published back in 2009, it sparked a furor in the industry, with many agency executives saying that the published benchmarks were the equivalent of a "suggested retail price" established by the agencies, and asked that published rates not be confused with rates actually paid by clients. Many, fearing a backlash from clients who were already slashing fees during the recession, also pointed out at the time that the hourly billing rate data was "fully-loaded," including overhead and other costs rather than reflecting what employees were paid.
Roth Associates founder Dick Roth, who says about 40% of his business now is focused on compensation consulting for marketers and agencies, thinks that while the 4A's labor-billing survey is helpful insight for clients looking to get a sense of agencies' expectations, the data should be taken with a grain of salt. "It's what the agencies would like to charge and it doesn't represent marketplace pricing, which is what people should benchmark themselves against."
The 4A's maintains that while there's been a wealth of efforts to move agency compensation toward newer models such as value-based arrangements, fees for service based on agency labor are still the predominant payment method. The trade group says that many of their members feel that sharing the hourly billing rates can help with compensation discussions by establishing benchmarks. Indeed, more shops volunteered to participate this time around.
This survey represents hourly rates billed by 251 agencies, vs. 230 in 2009. The agencies that participated include global agency networks, such as Ogilvy, BBDO, Grey , JWT, Y&R, McCann and Leo Burnett as well as shops such as 72andSunny, CP&B, BBH, Mullen and the Martin Agency. There was also a smattering of big digital shops, media agencies and PR shops in the mix, including: SapientNitro, 360i, VML, Carat, Initiative , Mediacom, Maxus Cohn & Wolfe, Hill & Knowlton.
In the 2012 survey, data were gathered for several new titles linked to digital advertising or content, including director-content management, creative technologist, mobile web developer, rich media developer, digital-analytics manager or blogger. At their highest, each of those roles command hourly rates shy of traditional creatives, such as $355 for a head of content to less than $200 an hour for a mobile-web developer.
While the disparity between New York-based creatives and those in the parts of the country is still huge -- Madison Ave. pays the most -- the hourly billing figure has fallen to $637 an hour in 2011 from $751 an hour in 2008. Meanwhile, the average amount chief creatives in other parts of the country bill is on the rise. In the East or in the South it went up to $361 an hour in 2011 from $319 an hour in 2008; up to $487 in the West in 2011 vs. $461 in 2008 and just above flat in the central part of the country, to $422 an hour average compared to $420 in 2008.
Account managers' hourly billing rates are seeing slight upticks, too, and senior account execs can also command more than many digital roles. A director of account services in New York bills an average of $461 an hour compared with $453 in 2008.
Adland's tendency to charge more for senior traditional creative talent than digital talent isn't isolated to the agency world. Jerry Bernhart, a recruiter in digital and direct marketing who runs his own firm in Minnesota, said he's also seeing it on the marketing side.
Another factor in digital talent commanding less is their ability to be associated with well-known work. "It's about identifiable product. A senior traditional creative person can say, "I did the Apple commercials' or "Where's the Beef?'" Mr. Roth said. "It's like being an Academy Award movie winner; it's more recognizable."
"Try to think of the person who handled a digital campaign -- and you'd be a bit more hard-pressed," said Mr. Bernhart. "Eventually there will be superstars and real home-run hitters who distinguish themselves. ... Recruiters and a lot of folks at agencies know talented digital people, but [clients might not] because they haven't become marquee names. But it'll be cool when that happens, because we'll know the industry has evolved."