agency rate card survey 2008

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E-consultancy Digital Agency Rate Card Survey 2008

Copyright E-consultancy.com ltd 2008 strictly not for distribution to non-subscribers without written permission

Other E-consultancy Survey Reports:

Online Lead Generation (B2C) Report 2008http://www.e-consultancy.com/publications/online-lead-generation-2008 Online Measurement and Strategy Report 2008http://www.e-consultancy.com/publications/online-measurement-and-strategy-report-2008/ UK Search Engine Marketing Report 2008

http://www.e-consultancy.com/publications/search-engine-marketing-report-2008/ Email Marketing Census 2008 http://www.e-consultancy.com/publications/email-marketing-census-2008/

Digital Agency Rate CardSurvey 2008 July, 2008

Copyright E-consultancy.com ltd 2008 not for distribution to non-subscribers without written permission
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Comments? Call +44 (0)20 7681 4052 or email [email protected]

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Table of Contents 1. About E-consultancy .............................................................................. 2 2. About this survey ................................................................................... 2 3. Executive Summary and Highlights ...................................................... 4

3.1 Profile of Responding Agencies ............................................................................................ 5 3.2 Business Confidence ............................................................................................................. 5 3.3 Charge-out Rates ................................................................................................................... 6 3.3.1 Summary Table - Average Daily Charge Out Rates by Job Role ......................................7 3.3.2 Summary Table - Average Daily Rates by Category of Job Role ..................................... 8

4. Profile of Responding Agencies ........................................................... 10 4.1 Year Company Founded ...................................................................................................... 10 4.2 Average Number of Employees ........................................................................................... 11 4.3 Projected 2008 Turnover..................................................................................................... 12 4.4 Geography ............................................................................................................................. 13

5. Business Confidence ............................................................................ 14 5.1 How optimistic are you for your business over the next 12 months? ................................ 14 5.2 Projected year-on-year growth ............................................................................................ 15 5.3 Opportunities for growth within the digital agency marketplace ..................................... 16 5.4 Challenges ............................................................................................................................. 17

6. Charge Out Rates ................................................................................. 19 6.1 Analysis by Job Role ............................................................................................................. 19

6.1.1 Average Day Rates for Director / Partner ................................................................................... 19 6.1.2 Average Day Rates for Commercial / Strategic Roles................................................................ 22 6.1.3 Average Day Rates for Project / Account Management Roles .................................................. 23 6.1.4 Average Day Rates for Creative Roles ........................................................................................ 24 6.1.5 Average Day Rates for Content, Usability and Accessibility Roles ........................................... 25

6.1.6 Average Day Rates for Technical Roles ...................................................................................... 26 6.1.7 Average Day Rates for Media Planning and Buying .................................................................. 28 6.1.8 Average Day Rates for Online Marketing, eCRM and Market Research .................................. 29 6.1.9 Average Day Rates for Affiliate Marketing, Email Marketing, Web Analytics .........................30 6.1.10 Average Day Rates for Search Engine Marketing .................................................................... 31 6.1.11 Average Day Rates for Testing/Quality Assurance and Training ............................................ 32

6.2 Change in Day Rates ........................................................................................................... 33 6.2.1 Change in average daily charge-out rate since 2006 ................................................................. 33 6.2.2 Expected change in 12 Months Time ......................................................................................... 35

6.3 Maintaining or Increasing Charge-Out Rates ................................................................... 37 6.4 Rate Card Availability ......................................................................................................... 38 6.5 Average Discount Offered on Rate Card ............................................................................ 39 6.6 Reasons for Variances in Charge-Out Rates...................................................................... 40 6.7 Method of Time Tracking..................................................................................................... 41

7. Nature of Work .................................................................................... 42 7.1 Retainer versus Project Work ............................................................................................. 42 7.2 Work done by Contractors versus Employees ................................................................... 43 7.3 Fixed fee versus Time & Materials .................................................................................... 44

8. Contact ................................................................................................. 45
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1. About E-consultancy E-consultancy.com, an online publisher of best practice internet marketing reports , research and how-to guides, was named Publisher of the Year at the 2006 AOP

Awards. Since moving to a paid content model, it has amassed thousands of payingsubscribers, 70,000 registered users and 145,000+ unique user sessions per month.Subscribers pay from 195 per year to access exclusive and practical content. E-consultancy has more than 100 events lined up for 2008, including roundtablesand Supplier Showcases , where six suppliers pitch to an audience of pre-qualifiedbuyers in a Central London venue. E-consultancy also provides a range of public and in-house training programmesincluding courses. If you would like to know more about our training options thenplease visit our website or contact Craig Hanna on +44 207 681 4078 or email him at

[email protected] . http://www.e-consultancy.com/about/

2. About this survey The principal objective of this E-consultancy survey is to get a clear idea about whatUK digital agencies charge for different types of skills and levels of seniority, andto understand how and why rates may vary, for example by size of company and by region.

This years survey follows similar Rate Card Surveys we carried out in 2005 and2003, enabling us to see the extent to which rates have changed over the last few years. We believe that this report provides real practical value for agencies who want tobenchmark their own fees and understand what the going rate is for different servicesin the marketplace. As far as we are aware there is no comparable data availableelsewhere. The report is also intended to be a useful resource for client-side organisations whowant to understand what level of rates they can expect to be charged and how thisdiffers according to region and specialty. Some 328 digital agencies participated in this 2008 survey from differentlocations across the UK. The term digital agency covers suppliers across an increasingly broad range of disciplines and service offerings. Respondents include full-service agencies, mediaagencies, search engine marketing agencies and specialists in areas such as affiliatemarketing and email. In total, we asked agencies about their daily rates for around 50different job roles.
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There is no standard taxonomy for agency job roles, but we have done our best tocreate a sensible and thorough list. There is obviously some overlap between differentjob roles. Business confidence The report also contains sections on business confidence and projectedrevenues which have once again enabled us to provide top-line data about thehealth of the industry as well as an analysis of the foremost opportunities andchallenges which are shaping the digital landscape. If you have any questions, please contact Linus Gregoriadis, E- consultancys head of research, at [email protected] or call +44 (0)20 7681 4052. Methodology This report is based on an online survey carried out in April 2008. Information aboutthe survey, including the survey link, was emailed to digital agencies within E-consultancys user base. E -consultancy uses Clicktools for its online surveys.
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3. Executive Summary and Highlights E-consultancys Digital Agency Rate Card Survey 2008 is based on information

provided by 328 UK digital agencies. Digital agencies report that daily charge-out rates have gone up by an average

of 17% in the last two years (since 2006). The biggest increases have comefrom the smallest agencies (i.e. those with a projected 2008 turnover of lessthan 300,000).

The projected average increase in daily rates over the next 12 months is 9%.

Some 59% of those agencies surveyed expect their daily rate to be higher in 12months time. A third of agencies said that there would be a 10% increase, 17%said there would be a 20% increase and 4% said there would be a 30%increase.

On average, digital agencies project that they will grow their turnover by 28%

year-on-year in 2008. This compares to 31% year-on-year growth in 2005when E-consultancy last carried out this survey.

The research has also found that four in five agencies (80%) estimate that their 2008revenue will outstrip their turnover for 2007. This constitutes more evidence of thecontinued good health of the digital marketing industry despite the continued gloomwithin the wider economic environment. The equivalent figure in 2005 was 83%.

More encouraging news for this sector is that 90% of agencies surveyed said that they were quite or very optimistic about the future of their business over the next 12months.

However, this compares to an equivalent figure of 96% in 2005 when 55% said they were quite optimistic (compared to 51% this year) and 41% said that they were very optimistic (compared to 39% this year). The proportion of agencies who say they are not very optimistic has increased from3% to 9%. This may to a large extent reflect the credit crunch and the continued

uncertainty surrounding the economy. It also reflects the fact that running agencies profitably is becoming more challenging.For many job roles, the rate of increase in daily rates has actually stayed the same ordecreased in real terms (i.e. when inflation is taken into account). Coupled withincreased competition in the marketplace, the trend towards paying higher salariesmeans that margins are inevitably being squeezed. The issue of staff recruitment and retention continues to be seen as the biggestchallenge for digital agencies. There is still a chronic shortage of suitably qualifiedprofessionals in a number of specialties which is reflected by higher salaries. This is

good for individuals but not necessarily for the agency bottom line.


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Other Survey Highlights include:

3.1 Profile of Responding Agencies

Almost 30% of agencies were founded more than ten years ago, demonstratingthe increasing maturity of the digital marketplace.

Just over a third of digital agencies surveyed (35%) have been around for five

years or fewer. The number of new agencies setting up has been decliningsince around 2004.

The proportion of agencies with more than 50 employees has increased from

only 6% in 2005 to 17% in 2008. One in 11 agencies surveyed now has morethan 100 employees. Less than half of those surveyed (44%) now have 10 or

fewer employees, compared to an equivalent figure of 63% in 2005 and 71% in2003.

The proportion of agencies expecting to earn more than 3 million in revenuethis year has increased dramatically from 10% in 2005 to 24% in 2008.

Only 17% of digital agencies expect to have revenues of less than 150,000 this

year, compared to 28% in 2005 and 41% five years ago when the industry wasmuch more embryonic.

The combined proportion (63%) of those agencies located in London and the

South-east is similar to 2005 when the equivalent figure was 64%.

3.2 Business Confidence

The percentage of agencies expecting growth of 100% or more has decreasedfrom 11% in 2005 to 5%. This reflects the maturation of the digital marketingsector and growth of agencies to a level where it is much harder to keepdoubling in size during a single year.

The most frequently cited opportunities listed by agencies are, in this order:

1) Up-selling and cross-selling of services2) Opportunities from emerging markets3) Increased exposure to blue chip clients4) Increased spending by current clients5) Opportunities afforded by social media

The most frequently cited challenges listed by agencies are, in this order:1) Staff recruitment and retention2) Recession / credit crunch3) Reduction in client spend4) Increasing competition

5)

Demonstrating ROI


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3.3 Charge-out Rates

Survey respondents were asked to rank the effectiveness of a number of waysof maintaining or increasing charge- out rates. Overall, increasingspecialisation of skills and improving the perceived value of the skills are

regarded as the best approaches. The availability of rate cards, both for internal use by agencies and for clients,

has substantially increased relative to 2005.

Two thirds of agencies are prepared to offer a discount of up to 20% on theirstandard daily rates.


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3.3.1 Summary Table - Average Daily Charge Out Rates by Job Role(In descending order of daily rate) Rank Job Role 2008 average

daily rate2005

averagedaily rate

%increase

(since2005)

1 Director/Partner 919 798 15%2 Group Account Director/Regional AD 809 759 7%3 Senior Consultant/Strategist 808 783 3%4 Senior Head of Media/Media Director 788 782 1%5 Senior Technical/Development

Director783 724 8%

6 Senior Creative/Art Director 781 664 18%7 Strategic Brand Planner 755 680 11%8 Head of Production Services 737 664 11%9 Business Analyst 736 658 12%10 Online Marketing Planner 725 693 5%11 Senior SEO Consultant 724 618 17%12 Senior Account/Project/Operations

Director723 678 7%

13 Usability/User Experience Consultant 708 631 12%14 Information Architect 694 610 14%15 Customer Insight Specialist 699 687 2%16 eCRM Consultant 691 705 -2%17 Training 689 597 15%18 Mid-Consultant/Strategist 688 678 1%19 Senior PPC Consultant 683 608 12%20 Accessibility Consultant 675 605 12%21 Mid Technical/Development manager 666 611 9%22 Audio/Video producer/editor 657 526 25%

23 User Interface Specialist 650 591 10%24 3D Modeller 650 583 11%25 Mid-Design/Creative Manager 647 569 14%26 Storyboarding/Wire-framing 643 565 14%27 Content Management Specialist 642 572 12%28 Production Manager 639 573 12%29 Mid Media Planner/Buyer 630 621 1%30 Mid-Account/Project/Ops Mgr/

Producer628 605 4%

31 Web/Metrics Analyst 623 581 7%32 Email Marketing Manager 617 554 11%33 Animator 615 562 9%34 Research/Market Analyst 614 613 0%35 Database Manager 606 580 4%36 Copywriter 605 532 14%37 Mid SEO Consultant 600 533 13%38 Illustrator 593 527 13%39 Data Analyst 589 543 8%40 Testing/QA 590 533 11%41 Mid PPC Consultant 581 517 12%42 Traffic Manager 576 497 16%43 Junior Programmer/Developer 552 495 12%44 Affiliate Manager 551 571 -4%45 Junior - Designer/Creative 527 459 15%46 Junior Media Planner /Buyer 513 483 6%47 Junior-Account/Project/Ops Executive 506 483 5%48 Junior SEO Consultant 498 439 13%49 Junior PPC Consultant 482 411 17%


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3.3.2 Summary Table - Average Daily Rates by Category of Job Role

Job Role 2008 averagedaily rate

2005 averagedaily rate

% increase(since 2005)

Commercial and Strategic RolesDirector/Partner 919 798 15%Senior Consultant/Strategist 808 783 3%Strategic Brand Planner 755 680 11%Business Analyst 736 658 12%Mid-Consultant/Strategist 688 678 1% Project and Account ManagementGroup AccountDirector/Regional AD

809 759 7%

Head of Production Services 737 664 11%Senior

Account/Project/OperationsDirector

723 678 7%

Production Manager 639 573 12%Mid-Account/Project/Ops Mgr/Producer

628 605 4%

Junior-Account/Project/OpsExecutive

506 483 5%

CreativeSenior Creative/Art Director 781 664 18%User Interface Specialist 650 591 10%3D Modeller 650 583 11%Mid-Design/Creative Manager 647 569 14%Animator 615 562 9%Illustrator 593 527 13%Junior - Designer/Creative 527 459 15% Content and Usability Usability / User ExperienceConsultant

708 631 12%

Information Architect 694 610 14%Accessibility Consultant 675 605 12%Audio/Video producer/editor 657 526 25%Storyboarding/Wireframing 643 565 14%Content Management Specialist 642 572 12%Copywriter 605 532 14% Technical

Senior Technical/DevelopmentDirector

783 724 8%

Mid Technical/Developmentmanager

666 611 9%

Database Manager 606 580 4%Data Analyst 589 543 8%Junior Programmer/Developer 552 495 12%


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Job Role 2008 average

daily rate2005 average

daily rate% increase (since

2005) Media Planning & BuyingSenior Head of Media/MediaDirector

788 782 1%

Mid Media Planner/Buyer 630 621 1%Junior Media Planner /Buyer 513 483 6%Traffic Manager 576 497 16% Online Marketing, eCRM, and Market Research Online Marketing Planner 725 693 5%Customer Insight Specialist 699 687 2%eCRM Consultant 691 705 -2%Research/Market Analyst 614 613 0% Affiliate marketing, Email marketing & Web Analytics

Web/Metrics Analyst 623 581 7%Email Marketing Manager 617 554 11%Affiliate Manager 551 571 -4% Search Engine MarketingSenior SEO Consultant 724 618 17%Senior PPC Consultant 683 608 12%Mid SEO Consultant 600 533 13%Mid PPC Consultant 581 517 12%Junior SEO Consultant 498 439 13%Junior PPC Consultant 482 411 17%

Quality Assurance & TestingTraining 689 597 15%Testing/QA 590 533 11%


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4. Profile of Responding Agencies

4.1 Year Company Founded Figure 1 shows how the sample of agencies is split in terms of their longevity in themarket. Almost 30% of agencies were founded more than ten years ago, pointing to a strongbedrock of agencies who have come through the lean years and shown theircontinued ability to flourish in the digital marketplace. Just over a third of digital agencies surveyed (35%) have been around for five years orfewer. The number of new agencies setting up has been generally declining sincearound 2004, probably because there are fewer gaps in the market for new agenciesto exploit.

Figure 1

Base All Agencies Responding (328)


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4.2 Average Number of Employees Figure 2 shows the size of the average agency, according to the number of employees.The comparison with 2005 data (in red) shows clearly that the average agency hassignificantly grown in size since 2005 1. The proportion of agencies with more than 50 employers has increased from only 6%in 2005 to 17% in 2008. One in 11 agencies surveyed now has more than 100employees. As well as organic growth in many cases, this reflects a high level of consolidation inthe sector, with numerous mergers and acquisitions taking place as the major playershave jostled for position and, in many instances, integrated smaller, specialistagencies. Less than half of those surveyed (44%) now have 10 or fewer employees, compared toan equivalent figure of 63% in 2005 and 71% in 2003.

Figure 2

Base All Agencies Responding (2008 = 324; 2005 = 328)

1 When E-consultancy carried out its last rate card survey.


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4.3 Projected 2008 Turnover

The consolidation and growth of this sector is even more apparent in Figure 3 whichshows projected turnover for 2008. The proportion of agencies expecting to earnmore than 3 million in revenue in the current year has increased dramatically from10% in 2005 to 24% in 2008. The increase is also clearly apparent in the 1.5m-3m bracket, with the number of agencies in this turnover band more than doubling from 7% in 2005 to 16% in 2008. Only 17% of agencies expect to have revenues of less than 150,000 this year,compared to 28% in 2005 and 41% five years ago when the industry was much moreembryonic. At the top end of the scale, it should be noted that these companies include mediaagencies where the turnover includes the cost of all media bought by the agency onbehalf of their clients. This means that their turnover can look artificially highcompared to agencies whose turnover comes only from billed fees.

Figure 3



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4.4 Geography

The chart below shows the geographical distribution of agencies surveyed.Unsurprisingly, London is home to more agencies than any other region, with 42% of participating companies based in the capital [Figure 4]. The combined proportion of those agencies located in London and the South-east(63%) is similar to 2005 when the equivalent figure was 64%. A fifth of agencies (21%) are based in the South- east (outside London), with a longtail of agencies spread across other regions. Excluding London and the South-east,the North-west is biggest hub for digital agencies, with 8% of respondingorganisations based in this region. Manchester and Leeds in particular are home to anumber of well-established digital agencies.

Figure 4



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5. Business Confidence

5.1 How optimistic are you for your business over the next 12 months?

Despite growing fears over the economic downturn, the encouraging news for thissector is that 90% of agencies surveyed said that they were quite or veryoptimistic about the future of their business over the next 12 months. This is a very positive picture although the equivalent figure in 2005 was 96%, when55% said they were quite optimistic (compared to 51% this year) and 41% said thatthey were very optimistic (compared to 39% now). The proportion of agencies who say they a re not very optimistic has increased from3% to 9%. This may reflect the credit crunch and the continued uncertainty surrounding the economy, combined with factors such as salary inflation. Many analysts believe that the digital marketplace may be shielded from the impactof a downturn or recession, as companies shift advertising budgets away fromtraditional media channels into the more measurable digital sphere. However, the significant increase in the proportion of agency respondents who arenot very optimistic suggests that some clients may already be cutting back theirinvestment slightly, or threatening to do so. But there are also other challenges beingfaced by agencies, such as increasing competition and recruitment difficulties.

Figure 5



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5.2 Projected year-on-year growth On average, digital agencies report that they will experience 28% year-on-year growthin 2008. This compares to 31% year-on-year growth in 2005. Four in five agencies (84%) estimate that their 2008 revenue will outstrip theirincome for 2007. The equivalent figure in 2005 was 83%. The percentage of agencies expecting growth of 100% or more has decreased from11% in 2005 to just 5%. This reflects the maturation of the digital marketing sectorand growth of agencies to a level where it is much harder to keep doubling in sizeduring a single year.

Figure 6



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Voice of the Agency: Greatest opportunities for growth What are the greatest opportunities for growth for your business?

Cross -selling and up-selling of services, to be perceived as consultants addingvalue. Growth in digital video online offers potential for cross -selling skills. Emerging countries, specifically Eastern Europe. Specialisation of our service offering, and ability to acquire blue chip clients. Greater contracts from existing clients. Full service sell - design and build and online marketing, and expanding resource to cope w ith inbound opportunities. Growth of key skills and extending our offering to offer more strategic services.International growth. Increasing client focus on delivery of measurable value/ROI will translate into an increasing spend on digital marketing over traditional. Wewill be focusing on delivering measurable business benefit to our customers as well as outstanding creative (and technical) solutions. New media and social media marketing; corporate blog coaching; mediaworkshops.

5.3 Opportunities for growth within the digital agency marketplace We asked respondents What are the greatest opportunities for growth for your business? An analysis of company verbatim answers shows that the most commonly cited opportunities were: (In order of frequency of citation)

1) Up-selling and cross-selling of services2) Opportunities from emerging markets3) Increased exposure to blue chip clients4) Increased spending by current clients5) Opportunities afforded by social media

Respondents cited a wide variety of opportunities for growth, but up-selling andcross-selling of services was mentioned much more than any other factor. Other opportunities also included growth through expanding into new geographical regions and attracting more work both from existing clients andnew business from blue-chips. Social media 2 and, more generally, expanding intonew service areas , were also cited by a number of companies.

2 Readers may be interested in the following, free E-consultancy report about Social Media

http://www.e-consultancy.com/publications/social-media-roundtable-briefing-june-2008/
mailto:[email protected]:[email protected]:[email protected]://www.e-consultancy.com/publications/social-media-roundtable-briefing-june-2008/http://www.e-consultancy.com/publications/social-media-roundtable-briefing-june-2008/http://www.e-consultancy.com/publications/social-media-roundtable-briefing-june-2008/http://www.e-consultancy.com/publications/social-media-roundtable-briefing-june-2008/mailto:[email protected]


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Voice of the Agency: Staff Recruitment and Retention What are the biggest challenges that your business faces? Difficulty in finding skilled staff, particularly strategists and programmers. It is difficult to recruit experienced creatives generally but rich media specialists

are in particularly short supply. Pitch work, as ever, impacts the bottom line aswell as a sense of being involved to simply make up numbers in some cases. Staff , Staff, Staff! Absolutely the single biggest issue we have ever faced,recruiting quality permanent members of staff, particularly on the development side. Finding good skills and often poor (but slowly improving) client-sideunderstanding of skills needs and production processes, sometimes lowrecognition of skills shortages, and hence reluctance to accept that good skills cost money.

5.4 Challenges We also asked agency respondents What are the biggest challenges your businessfa ces? The most commonly cited challenges were: (In order of frequency of citation)

1) Staff recruitment and retention2) Recession / credit crunch3) Reduction in client spend4) Increasing competition5) The challenge of demonstrating ROI

Given that there is a skills shortage in digital marketing as a whole, it is perhapsunsurprising that the biggest challenge faced by the majority of responding agenciesis recruiting staff with appropriate skills.

A significant portion of respondents also cited the credit crunch and associated economic uncertainty as a threat to their business. Some analysts have predicted thata downturn or recession will lead to a shift in advertising budgets from traditionalchannels to online, which could help to insulate the industry from any serious threatthat the credit crunch poses. Despite this, some respondents have reported an overall reduction in clientspend .


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Voice of the Agency: Fear of Recession and Reduction in Client Spend What are the biggest challenges that your business faces? Credit crunch, and firms / consumers tightening their spending over theforeseeable future. Talk of a recession is a slight concern but the accountabilit y of search marketingmeans we expect investment in search to continue even if a recession takes hold. General economic difficulties resulting in less spending by clients, and less newclients looking to spend.

The credit crunch poses it own challeng es but we hope this won t cause too manyissues. Impact of credit crunch/global economy - particularly on financial sector clientsthis year and forecast [impact on] other client sectors from 2009. Possibly t he credit crunch having a knock-on effect on the economy. Also, themarket is becoming very competitive with more companies.

Voice of the Agency: Increasing competition and Demonstrating ROI What are the biggest challenges that your business faces? Understanding of online ROI and benefits within our market sector and increasing competition. Demonstrating ROI of online - particularly newer areas such as social mediamarketing.

Continuing differentiation with cheaper competitors and ensuring clients focus onthe majors. Managing client s online marketing expectations reasonably (and profitably!). Increased competition is an on -going battle as barriers to entry are so low, newstart- ups are inevitable and [they] often start by trading on price.

Respondents also cited increasing competition , due to low barriers to entry, aswell as difficulty in demonstrating ROI . Social media is often particularly difficult to measure in terms of return on investment.

Other factors also included lack of client knowledge , unrealistic salary expectations , and over-dependence on a few select clients . Somerespondents felt that the lack of client knowledge contributed to many projects being

won on the basis of budget alone, without clients taking into account the quality of the agency involved.


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6. Charge Out Rates

6.1 Analysis by Job Role

NB: For each role average rates are shown for all agencies (i.e. the overall average)and then for agencies in the following turnover bands: 0-300k, 300k-1.5m,1.5m+. See summary tables in Section 3 for all 2008 and 2005 averages.

6.1.1 Average Day Rates for Director / Partner The average daily charge-out rate across all agencies surveyed for a director /partner is now 919, an increase of 15% from 798 since 2005.

For those agencies with an expected 2008 turnover of more than 1.5 million, theaverage daily rate is now 1,158 [ Figure 7 ]. For comparison, the 2005 average for the largest agencies was 1,015. It should benoted that, for the previous survey report, we included any agency with a turnover of more than 500,000 in the largest turnover band. The largest agencies are now charging 75% more than the smallest agencies for theirmost senior employees time . The gap has closed slightly since 2005 when there wasan 86% difference.

Figure 7



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Average Day Rates for Director / Partner London, South-East and nonSouth-East Figure 8 shows that there is a significant weighting in terms of what London agenciesare charging for their most senior employees compared to their counterparts outsidethe capital. On average, the daily rate for a director / partner at a London agency is 1,054, a26% premium on what agencies elsewhere in the South-east are charging and a 31%premium on agencies outside the South-east. London agencies, of course, generally have higher costs for staff, offices and othergeneral overheads. The average daily charge-out rate for a partner at a large Londonagency is just under 1,300. This London weighting is apparent across all the turnover size bands. Figure 9 shows a more granular regional breakdown. After London, the highest daily rates are to be found in the North-west and South-west (an average of 942 and 941respectively). In the North-west, the average for the largest agencies (1,363) is even higher thanfor London.


Figure 8



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Average Day Rates for Director / Partner Detailed Regional Breakdown

Figure 9

Base Shown in brackets for each region

Region All 0 - 300k 300k - 1.5m 1.5m+London (135) 1,054 739 925 1,286North West (25) 942 680 600 1,363South West (18) 941 700 1,000 1,029North East (21) 879 600 760 975Midlands (15) 823 725 775 940South East (67) 802 642 821 1,017Northern Ireland (2) 800 N/A N/A 800Scotland (16) 700 533 800 1,000East Anglia (14) 680 525 733 833Wales (6) 600 100 800 700Other (5) 800 1,000 600 800


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6.1.3 Average Day Rates for Project / Account Management Roles Figure 11 and Figure 12 show the average daily rates for a number of project andaccount management roles, covering different levels of seniority from groupaccount director / regional account director to junior account / projectexecutive .

Figure 11


Group account directors , on average, command a daily rate of 809, rising to929 for the largest agencies [ Figure 12 ]. The rate charged for productionmanager is similar to mid-account project / operations manager .

Figure 12

Base Agencies Responding (328)


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6.1.4 Average Day Rates for Creative Roles The day rate for senior creative / art director has gone up by 17% since 2005,which makes this role one of the biggest climbers since 2005. The best creative talentis in very short supply and therefore charged out accordingly. The day rate for senior creative / art director is now 781 on average, rising to 914for the larger agencies. The day rates for mid design / creative manager andfor junior - designer / creative have gone up by 14% and 15% respectively.The average day rates for user interface specialist, illustrator, animator and 3D Modeller have all gone up by around 10%.

Figure 13


Figure 14



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6.1.5 Average Day Rates for Content, Usability and Accessibility Roles

Of the content, usability and accessibility roles shown in Figure 15 and Figure 16 , themost valued are information architect and user experience consultant which,on average, are charged out at 694 and 708 per day respectively. The rate for copywriter has gone up by 14% since 2005 but this speciality is still notperceived as being as valuable as others in this category, probably because this is askill which is slightly less scarce than others shown in these charts. The importance of rich media is growing exponentially, and this is reflected by a 25% rise in the averagedaily rate for audio / video / producer / editor .

Figure 15


Figure 16



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6.1.6 Average Day Rates for Technical Roles Senior technical agency employees continue to be highly valued across theindustry, with charge-out rates to reflect this. The average day rate for a seniortechnical/ development director is 783, an increase of 8% since 2005. Theaverage charged by the bigger agencies is now 942 [ Figure 17 ]. In the 2005 version of the report, we suggested that there could be downwardpressure on charge-out rates for junior and mid-range technical roles, with non-strategic technical work increasingly being outsourced to countries whereprogramming skills can be bought much more cheaply. However, there is no evidence of such a trend. The average daily rates for mid-technology / development manager and junior programmer / developer have gone up by 9% and 12% respectively since 2005.


Figure 17



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Database Managers and Data Analysts Database Managers are charged out for slightly less than mid-range technicalstaff. Data Analysts are valued at less than database managers but more than juniortechnical staff/programmers.

Figure 18



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6.1.7 Average Day Rates for Media Planning and Buying

Within this media planning and buying section, the biggest level of inflation is fortraffic managers , whose daily charge-out rate has gone up by 16%. The daily rates for senior - head of media / media director and mid - mediaplanner / buyers are now 788 and 630 respectively. Surprisingly, the former isvirtually the same as 2005 while the latter has only gone up by 3%. It is notable that these rates have actually decreased in real terms. It may be becauseof increased competition among agencies for this work.

Figure 19


As with other areas of digital marketing, there is a vast gulf in charge-out ratesbetween senior and junior staff because of the value associated with the best andmost experienced people.


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6.1.8 Average Day Rates for Online Marketing, eCRM and MarketResearch

Online marketing strategists/consultants , eCRM consultants and customer insight specialists are all charged out, on average, for around 700 perday. The rates for all the job roles in Figure 20 are similar to 2005 which shows that they are still highly valued but have not been subject to the same inflation as some areas.

Figure 20



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6.1.10 Average Day Rates for Search Engine Marketing Average daily rates for search engine optimisation (SEO) specialists are slightly higher than for PPC, according to Figure 22 and Figure 23 . The average daily rate for senior SEO consultant has gone up by 17% since 2005,which underlines the value associated with natural search knowledge. The rate forsenior paid search/per-per-click (PPC) consultant has gone up by 12%. Day rates for each of these search roles have gone up by at least 10% since 2005,highlighting the continued importance of both SEO and PPC.

Figure 22


Figure 23



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6.1.11 Average Day Rates for Testing/Quality Assurance and Training The overall average charge-out rate for quality assurance/testing is 590. Thelargest agencies, on average, charge 627 a day. The overall average charge-out rate for training is 689, and 760 for the 1.5million+ agencies. The 15% rise in training day rates since 2005 is not surprising,given the skills shortages across the industry and thirst for knowledge as companiesrealise that they need to bridge the skills gap.

Figure 24



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6.2 Change in Day Rates

6.2.1 Change in average daily charge-out rate since 2006 The average digital agency daily charge- out rate has gone up by 17% in the last twoyears (i.e. since 2006). This average is derived from a specific question about the percentage change since2006, rather than by taking an average for all the day rate changes for every job rolesince our last survey. The biggest increases have come from the smallest agencies (i.e. those with anexpected 2008 turnover of less than 300,000). For these agencies, the averageincrease since 2006 has been 21%. This compares to an increase of 18% for mid-tier agencies (those with a turnover of between 300,000 and 1.5 million) and 13% for the 1.5 million+ agencies.

Figure 25



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Figure 26 4 shows that almost 30% of agencies said that their average charge-out ratehas stayed the same since 2006. Just 6% of respondents say that the average charge-out rate has decreased since 2006.

Figure 26


Almost 67% of respondents said that their average charge-out rate had increasedwithin the last two years, with 58% saying it was either 10%, 20%, 30% or 40%

higher5. Of these, a quarter said their daily rates had increased by 10%, and a fifthsaid their rates had increased by 20%.

It is clear that for many agencies daily rates have not really gone up since 2006,which shows that these companies face a real challenge in trying to improve theirfinancial performance.

4 Respondents were shown a drop-down box with percentage changes in 10% increments from -100% to +100%.

These percentage bands have been aggregated into groups.


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6.2.2 Expected c hange in 12 Months Time On average, the projected average increase for all agencies in 12 months time is 9%.This shows that agencies are planning to increase their charge-out rates well abovethe rate of inflation in spite of some fears around the economic climate andincreasing competition. The increasing cost of recruiting and retaining staff is likely to be a major factorbehind the increase in daily rates charges by agencies, as well as the knowledge thatclients will pay for the best people and skills. Figure 27 shows that the smallest tier of agencies (below 300,000 turnover) areplanning above-average increases to their daily rates. This may be because the smaller agencies often have specialist skills and realise thatthey can increase their rates accordingly.

Figure 27



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Some 59% of all agencies surveyed said that they expect their daily rate to be higherin 12 months time [ Figure 28 ]. A third of agencies said that there would be a 10%increase, just under a fifth said there would be a 20% increase and 4% said therewould be a 30% increase 6. A small minority (6%) of respondents said that they expect the charge-out rate to belower, whilst 36% of all agencies surveyed anticipated that the daily rate wouldremain the same. Given inflation, this actually reflects a decrease in real terms. For comparison, when E-consultancy carried out this research in 2005, 52% of agencies anticipated that their charge out rates would be higher by 2006.

Figure 28


6

Respondents were shown a drop-down box with percentage changes in 10% increments from -100% to +100%.These percentage bands have been aggregated into groups.


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6.3 Maintaining or Increasing Charge-Out Rates Survey respondents were asked to rank the effectiveness of a number of ways of maintaining or increasing charge-out rates [ Figure 29 ]. Overall, increasing specialisation of skills is regarded as the best approach, with38% of respondents ranking this as the most effective. This was closely followed by improving the perceived value of skills , ranked asthe best by 37% of respondents. What is the most effective way to maintain or increase charge-out rates?

Figure 29

Maintaining and increasing charge-out rates:Effectiveness of different approaches

Percentage of agencies regardingmost important

Increasing specialisation of skills 38%Improving the perceived value of skills 37%Having more solid and recognisedbenchmark industry rates

12%

Refusing to reduce discount rate 6% A significant number of respondents cited other factors as being important. Otherways to maintain or increase charge-out rates include:

Improving client understanding of the production process and explaining theadded value more clearly.

Greater transparency with the client regarding overheads, employment costs

and agency margin.

Delivering excellent results to the client and demonstrating tangible businessbenefits.


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6.4 Rate Card Availability The availability of rate cards, both for internal use by agencies and for clients, hassubstantially increased relative to 2005. Three-quarters of agencies (76%) now make sure that a standard rate card is availableinternally compared to 64% three years ago. Similarly, many more agencies now have rate cards which are available for externalconsumption (54% compared to 44% in 2005). This trend again reflects the maturation of the industry as agencies attempt tointroduce more transparency around charge-out rates both internally and for clients.

Figure 30

2008 2005

Proportion of agencieswith standard rate cardavailable internally

76%

64%

Proportion of agencieswith standard rate cardwhich is available toclients

54%

44%


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6.5 Average Discount Offered on Rate Card

Figure 31 shows that two thirds of agencies are prepared to offer a discount of up to20% on their standard daily rates. Around a 30% say that they dont offer any discounts.

Figure 31


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6.7 Method of Time Tracking Slightly more agencies are now using software to track their projects (52% comparedto 46% in 2005 and 41% in 2003). Just 8% of agencies currently dont use any tracking at all.

Figure 33


6.7.1 Software Packages Of those agencies using software packages, the most frequently cited resources wereMicrosoft Excel, Basecamp and bespoke software designed in-house. Basecamp was mentioned by 15 respondents, and Microsoft Excel by 11 respondents.15 respondents said that they used bespoke/internally built software packages. Other software packages included Concept, Harvest, Paprika, Synergist and Traffic.


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7. Nature of Work

7.1 Retainer versus Project Work The proportion of work carried out by agencies which is done on a retainer basis has not changed much since 2005 (27% now compared to 26% in 2005). It issurprising that agencies have not been able to establish a higher percentage of retainer work, and possibly disappointing in some cases because of the security thisreliable source of income can give a business.

Figure 34 Approximate percentage of total billed work done as part of ongoingretainer arrangements as o pposed to project work

NB: The average percentages are shown for all agencies (the bottom right quadrant)and also for agencies in these turnover bands: 0-300k, 300k-1.5m, 1.5m+.



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7 .3 Fixed fee versus Time & Materials The percentage of work done on a time and materials basis rather than a fixedfee basis is also similar to 2005 (36% compared to 35%). Most work is still done on afixed fee basis because clients generally prefer to work on a fixed budget. The on-going challenge for agencies is to ensure that they have a detailedunderstanding of time and resources expended on fixed-fee projects so they can priceprojects realistically and understand what kind of work is most profitable.

Figure 36 Approximate percenta ge of work done on a fixed fee basis versus timeand materials



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8. ContactIf you have any questions about this survey please contact: Linus Gregoriadis, Head of Research, E-consultancy Tel: + 44 20 7681 4052 Email : [email protected] Web: http://www.e-consultancy.com
mailto:[email protected]:[email protected]:[email protected]://www.e-consultancy.com/http://www.e-consultancy.com/http://www.e-consultancy.com/mailto:[email protected]

agency rate card survey 2008

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