New study into fees and remuneration points to crisis in creativity
The Marketing Agencies Association's annual fees and remuneration survey published today (Thursday 26th January) reveals that clients have forced down agency fees by almost 20% over the last decade, with creative talent bearing the brunt of the cuts.
Clients have battered down total hourly fees - across creative, account planning and account handling services - from £129.55 to £105.68 between 2002 and 2011. This represents an 18.4% fall.
Scott Knox, managing director of the MAA said, "It's worrying to see that over almost ten years agency fees have dropped dramatically. This is against a backdrop of high levels of inflation and talent becoming more costly. This continual eroding of agency profitability is particularly worrying, especially in the case of creativity, which is the lifeblood of the industry in the UK."
The figures show that creative talent has been the main focus of ever-tightening client budgets, with hourly charge out fees plunging by more than a quarter between 2002 and 2011. Hourly fees for creative talent have fallen from £137.5 in 2002 to £100.85 last year, a 26.6% decline.
Ian Millner, CEO of creative agency iris and Chairman of the MAA said, "The results shine a light on how creativity is valued by clients and priced by agencies. Brilliant creative outputs and results need to take precedence over inputs and units of time".
Account handling fees also dropped 12.6% since 2002, from £116 to £101.33, while planning saw slightly less of a drop, down 5.3% over the same time period.
"One of the worrying trends is the new pressure being placed on the role of account handlers. In some ways this is being driven by the continued rise of digital and project managers. But agencies will need to continue to invest in account handling or they risk missing out on opportunities for growth that comes from the traditional relationship" added Millner.
After almost ten years of continual decline in fees across all three disciplines, there are some signs of improvement year on year. By far the largest increase is in planning, which is up 8.9% on 2010. Creative sees a marginal increase of just 1.6%, from £99.23 in 2010 to £100.85, but account handling fees are down 5.1% on 2010, from £106.77 to £101.33.
Rosie Doggett, procurement consultant to the MAA said, "The increase in planning fees may well be because clients are placing a higher value on solid strategic thinking from their agencies of record. Clients need outstanding ideas and improved accountability during prolonged period of tough trading.''
"Although a slight increase is good to see, we should bear in mind that apart from planning, the other disciplines showed a fall or were below the level of inflation" commented Knox.
Millner added, "This is incredibly useful data for agency leaders. It highlights the need for agencies to get remunerated in a way that recognises that the creative process is not about time. The rise in fees for planning indicates the growing importance of strategy for clients, plus the linear nature of the discipline benefits from the way it is priced by agencies and procurement".
The data was compiled by the data analysis company Data Alive and based on figures supplied by financial directors at MAA member agencies.
