Agency Hourly Labor Billing Rate Report

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.