BENCHMARKING

Is your advertising agency charging you market related rates that exclude hidden costs and mark-ups?

When are rates considered to be market related? Is your advertising agency charging you market related rates that exclude hidden costs and mark-ups?  Are you comparing normalised information/costs when comparing your agency’s fees to that of other agencies?  

Yardstick’s knowledge and in-depth understanding of agencies, market practices and complex fee structures enable us to provide comprehensive advertising agency cost benchmarking information.  Our aim is to ensure that remuneration is fair and equitable by benchmarking advertising agency rates.

What are the benefits?

  • We provide input on all salient terms and conditions of the legal agreement, which affect remuneration levels.
  • We provide recommendations on the most appropriate remuneration models.
  • An analysis of the agency’s resourcing plan is carried out, focusing on FTEs, seniority mix, discipline mix and more.
  • Potential areas of wastage are identified, i.e. unnecessary services, reports, and admin.
  • The overall level of remuneration is optimised.
  • You’ll have access to our extraction rates and ratios.
  • Pre-production and in-house studio costs are carefully managed.

Case studies

Benchmarking

A large multi-national, multi-brand, FMCG company contracted Yardstick to benchmark the profile, service offering, capabilities, practices and expertise of selected experiential agencies operating in South Africa.  The benchmarking project also included a detailed cost analysis and recommendations on how the experiential portfolio should be structured and managed.  This project assisted the company to match the agencies’ benchmark profiles to the regions where it could offer the most effective solutions at the lowest comparative cost.  Based on this, the company could select and appoint the most effective roster of experiential agencies, whilst reducing overall costs.

 

Oftentimes with long standing relationships or in instances where there is a lack of an in-depth understanding of agency remuneration and methodologies, a degree of complacency sets in and both clients and agencies find it easier to simply apply a CPI increase to previous years’ fees, regardless of changes in scope of work and budgets.  An independent remuneration review and benchmarking to ensure fair remuneration aligned to a scope of work may be required.  A large retail client employed the services of Yardstick to assist with the development of a scope of work against which remuneration was aligned and benchmarked.  Savings in excess of 20% in agency remuneration were achieved by aligning the agency’s remuneration to the scope of work and outputs actually required.