You Paid WHAT For That?
There’s an Ad Age survey out this week revealing the hourly rates of ad agency people, showing that Top NY Creatives are charging clients $750 an hour. I guess the recession hasn’t crossed over the Hudson yet. Here in the real world, clients have embraced the “procurement process,” in which accountants evaluate the work they’re requesting and assign a rate to each role performed. Then it’s up to the agencies to make the revenue work for them.
It’s a very brushed-and-scrubbed process, conjured up to eliminate exactly what the Ad Age survey reveals: cost is subjective, and a matter of what the market will bear. Back in the day, agencies “marked up” services like media planning, media buying and production. That was the “vigorish,” enabling those firms to give away the creative, or the strategic planning, or the account management at cost. Or for nothing. Making 15% off the top on a $100 million media buy covered up a lot of salaries. And fat. Now the only way to justify huge paychecks is to show clients the value. That makes everybody more accountable.
Surveys show that, at best, senior management for big agencies get billed out for only 2% or 3% of their time on a client. Clients don’t pay for oversight, or operational expertise, nor should they. The fact is breakthrough, differentiated, bold thinking most often comes from fresh, young, not-yet-bored minds, who are unafraid of pissing off agency management, and undeterred by rising unemployment. These aren’t the guys billing out at $750 per.
In case you weren’t paying attention, there’s a sea change taking place in agency compensation. it’s a game for the scrappy now, those willing to work faster, smarter, more aggressively, with thinner margins and less “cush.” And the best work is coming from smaller, more nimble shops who understood “integrated marketing” before it showed up in a textbook. These are the new pioneers–able and willing to eliminate process in order to get straight to the ideas, and then produce them using small, affordable, hungry resources. Less pontificating. More production. Less pomp and circumstance. More show me what you got.
And less suits. More superstars.
