NEW YORK—July 19, 2017—Today, the 4A’s, the leading trade association representing the advertising agency business, released updated hourly labor billing rate information, revealing that 2016 labor billing rates in the advertising industry are generally higher than those in 2014. The findings of this report include industry-wide guidance on market-based labor rates.
The 4A’s conducts this survey to provide a transparent framework for understanding labor billing rates and to advise its members, marketers and advisors on industry benchmark ranges. The survey reviews actual hourly rates agreed upon between agencies and clients in 2016 and provides labor billing rate information, which will enable industry constituents to satisfy due diligence responsibilities through marketplace-based information. The results of the new Labor Billing Rate Survey reflect hourly rates billed by 366 agency offices reporting on 111 positions within 16 service departments encompassing 34,000 billing rate data inputs.
The 2017 survey found that, for larger New York City-based agencies, the highest reported billing rates are for the positions of chief creative directors ($775 – $849), executive account planning directors ($528 – $541), account service directors ($540 – $598) and executive media directors ($493 – $500).
During the past two years, labor billing rates have increased for technical, analytics, project management and public relations positions. These rate increases were primarily in the mid-single digit range. Further, agency-blended mid-point average hourly rates in 2016 were $155, a two percent increase from the 2014 average of $152.
“One of the most frequent questions we get from members is about information on current market-based labor billing rate ranges; this information is critical for the industry to benchmark billing rates and track how they change over time,” said Tom Finneran, EVP, Agency Management Services, 4A’s. “Agency compensation continues to be a hot topic of discussion, but looking at this report, it is clear that agency billing rates have remained relatively stable. This means that when clients reduce agency compensation, it leads to agencies reducing staff on accounts and scopes of work.”
Highly populated core positions reported modest changes in mid-range average billing rates:
- Account Executive $110 (+3 percent)
- Art Director $142 (+1 percent)
- Copywriter $134 (+2 percent)
- Media Planner $113 (+4 percent)
- Media Buyer $105 (-1 percent)
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 reviewing actual rates charged.
To obtain your copy of the 4A’s 2017 Labor Billing Rate Survey Report, download the order form at http://www.aaaa.org/2017-labor-billing-rate/. The cost is $350 for 4A’s members and $750 for non-members.
The 4A’s Labor Billing Rate Survey was collected from March through June 2017. The data reporting format indicates the number of agreed rates reported, presents the mid billing rate, i.e., average/mean, for each position as well as the benchmark range between +1 standard deviation and -1 standard deviation for each position. Rates are reported for three agency size groups and four geographic regions. The Agency staff positions included in the survey are consistent with job specifications designated in other 4A’s surveys, including the Employee Compensation Survey, and are reflective of currently predominant agency service functions. The survey also collected blended hourly rates billed to clients for selected departments and the overall agency blended rate.
About the 4A’s
The 4A’s, founded in 1917, is the leading authority representing the marketing communications agency business. It provides leadership, advocacy and training that empower agencies to innovate, evolve and grow. It serves 740 member agencies across 1,400 offices that control more than 85 percent of total U.S. advertising spend. The 4A’s is committed to protecting the best interests of its members, their employees and the industry at large. Its Benefits division insures more than 164,000 agency professionals, and the D.C. office advocates for policies that best support a thriving advertising industry. With its best-in-class learning and career development programs, 4A’s and its Foundation fuel a robust diversity pipeline of talent for its members and the marketing and media industry, fostering the next generation of leaders. For more information, please visit www.aaaa.org.