Woolley Marketing: Is your agency a cost or value to the business?
In his regular column for Mumbrella, Trinity P3 founder and global CEO Darren Woolley crunches the numbers.
For an industry segment responsible for creating demand and preference and for maintaining margin while driving sales, we seem obsessed with cost.
Sure, many marketers value their agencies. They value the agency team. They value their commitment and hard work. They value their long hours – right up to the point where they come to pay for them. Then they pay them as a cost. Not just in the language of ‘agency costs’ but in the fundamental way most advertisers have paid their agencies for the past two decades.
Hourly rates, retainers, and project fees: the dominant remuneration model in the market is based on the service being a cost. Take the individual’s salary, divide it by the number of billable hours for the year, multiply it by the overhead cost and then multiply the sum by the profit factor and that is the hourly rate. Even the agencies refer to it as a cost recovery approach. It ensures their largest cost – their payroll – is recovered by the advertiser fees they are collecting along the way.
