4As Issues Billing Report; Fees Remain Top Compensation Model

Money-AA1The American Association of Advertising Agencies (4As) has completed its latest Labor Billing Rate Survey Report, which covers fees for work billed by agencies to clients in 2011.
But unlike many white papers the organization issues, the Billing Rate Report is not a freebie. It costs $350 for members and $750 for non-members.
“The intent of this report is to provide the industry with reliable and statistically relevant hourly labor rates charged,” stated Tom Finneran, the 4As executive vice president who authored the report. “The survey results are an important tool that provides useful hourly billed labor rate information for agencies, advertisers and industry advisors.”
Just over 250 agencies supplied rate information for the report, which slices and dices the data in a number of different ways. Rates are reported by four different agency sizes and four geographic regions.
Rate data is also reported for over 120 agency positions within 14 different departments.
According to Finneran, fees for service, based on agency labor, remain the predominant form of compensation in the marketing services industry. That’s despite years of debate about pay-for-performance models that some industry executives believe better fulfill client demands for higher returns on their marketing spend investments.
But because agencies are under pressure to show that the labor rates they charge are reasonable and competitive, a report detailing those rates is valuable, Finneran said in an email disseminated to the industry.
Agency rates are derived based on a “range of considerations,” including rate card, budget, agency cost, value provided, opportunity cost and negotiated rates. But the best starting point for agencies and clients to negotiate fees is to look at “actual rates charged” for the most recent available period, he said.

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