WARC - Agency Fees Tumble in UK

LONDON: Agency fees have declined by almost 20% in the UK during the last ten years, with creatives coming under particular pressure, a study has revealed.

The Marketing Agencies Association, the trade body, drew on data from its membership base of more than 80 shops active in a range of disciplines, to assess how remuneration levels in the sector have changed.

Overall, it reported that the hourly fees commanded across the creative, planning and account handling sectors had fallen from £129.55 in 2002 to £105.68 in 2011, an 18.4% contraction.

The rates charged for creative services witnessed an especially steep decline, off from £137.50 in 2002 to £100.85 in 2011, a slide of 26.5%.

Elsewhere, the fees for account handling also tumbled by 12.6% in the same timeframe, hitting £101.33 at the end of the assessment period, compared with £116 at the beginning.

Planning displayed slightly greater resilience, off by a comparatively modest 5.3%, from £147.50 to £139.67, but the broader trend remained challenging.

"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," Scott Knox, managing director of the MAA, said.

"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."

Taking a shorter-term perspective, planning fees rose by 8.9% in 2011 year on year, whereas creative totals expanded by just 1.6% and account handling rates fell by 5.1%.

Ian Millner, chief executive of iris, the creative agency, and chairman of the MAA, suggested that new models of payment rewarding strong work may be assuming a central role for creative shops.

"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," he said.

"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."

Data sourced from the Marketing Agencies Association; additional content by Warc staff, 26 January 2012