4A’s 2015 Labor Hourly Billing Rate Survey Report

The 4A’s 2015 Labor Billing Rate Survey Report, which covers 2014 billing rates, is now available.

There is frustration in the marketing community related to framing appropriate benchmark ranges for the currently predominant form of agency compensation, i.e., labor-based compensation. The 4A’s 2015 Labor Billing Rate Survey Report, which covers actual hourly rates agreed upon between agencies and clients in 2014 provides the industry with labor billing rate information which will allow all industry constituents to satisfy their respective due diligence responsibilities through marketplace-based information.

The 4A’s 2015 Labor Billing Rate Survey Report contains robust, statistically sound labor rate information which provides the agency and advertiser communities with a mechanism for discussing and benchmarking market-based labor rate ranges. The information contained in this report, in concert with the 4A’s “Best Practice Guidance | Agency Compensation: Market-Based Labor Rates,” can help the industry move away from the unproductive conversations about overhead rates and profit margins to a more practical discussion of billing rates. This information affords the industry the opportunity to efficiently and equitably frame labor rates which will in turn allow the parties to focus on the critical tasks of aligning: scope of deliverables, service expectations and the desired scope of benefits.

Overview

Agencies, marketers and industry advisors frequently request information about agency labor billing rates. In order to accommodate these requests and provide a credible framework for understanding labor billing rates, the 4A’s conducted a labor billing rate survey covering 2014 hourly rates agreed upon with clients.

The intent of this survey report is to provide the industry with reliable and statistically relevant hourly labor rates agreed upon with clients. The survey results are an important tool that provides useful hourly billed labor rate information for agencies, advertisers and industry advisors.

Why Is Labor Billing Rate Information Important?

Fees for service, based on agency labor, are the predominant form of compensation in the marketing services industry. Since many agency compensation arrangements are based on labor there is a need for reliable labor rate information. Considerations that led the 4A’s to gather and publish labor rate information include:

  • Agencies are under pressure to justify that the labor rates that they charge are reasonable and competitive.
  • Marketers want to understand the relative range of labor rates and benchmark the rates that they are paying their agencies.
  • Industry stakeholders benefit from transparency and credible benchmarks that facilitate accountability of key components of marketing investment. Industry labor rate ranges, from a reliable source, provide all industry stakeholders with valid and statistically reliable benchmarks.
  • Actual hourly billing rates charged is the most comprehensive, accurate and relevant methodology for benchmarking labor rates. Agency labor rates are derived based on a range of considerations including, but not limited to, agency reputation, pricing policies, services provided, market forces, rate cards, budgets, agency cost, value provided, opportunity cost and negotiated rates. The common denominator for framing labor rate ranges, regardless of how the rates were derived, is by looking at actual rates charged.
  • Actual billing rates provide actionable information without the limitations of cost build up benchmarking which focuses solely on surrogate cost component information (Salaries, Overhead Rates, Profit Mark-ups) that is complex, administratively burdensome and one-dimensional.

The 4A’s 2015 Labor Billing Rate Survey Report provides relevant parameters to help the industry frame labor rates that were utilized in 2014 in the context of three agency size groups and four geographic regions.

The 4A’s 2015 Labor Survey Report

The 4A’s 2015 Labor Billing Rate Survey Report contains information on actual billing rates charged to marketers by 326 agencies in 2014. Rate data is reported for 115 positions within 16 service departments, plus selected blended departmental and agency rates. Rate schedules are reported by size and by geographic region.

A copy of the 4A’s 2015 Labor Billing Rate Survey Report is available for purchase through the 4A’s. The cost is $350 for 4A’s members and $750 for non-members. Complete the form and send it back to us.

If you have questions, contact Helen Miranda (helen@aaaa.org, 212-850-0767).

Download Best Practice Guidance | Agency Compensation: Market-Based Labor Rates

Download 4A’s 2015 Labor Billing Rate Survey Report - Order Form