Brand Agency Pricing

Goals

To understand how brand agency pricing is evolving in response to the changing dynamics among clients seeing design as a commodity.

Early Findings

  • A blog post at Workamajic, a creative agency management platform, notes that only around 7% of agencies offer transparent, upfront pricing, and virtually no creative agencies do so.
  • About 4% of creative agencies ask for a budget from their clients upfront.
  • An article at eMarketer looks at the changing relationship between brands and agencies and finds that 33% of brands terminate agency relationships over pricing and 30% want different agency pricing models.
  • Some 85% of corporate in-house agencies still work with outside agencies for certain functions.
  • Some larger agencies are moving to a "more client–focused super–teams or ‘horizontality’ in the wake of big clients jumping ship.
  • Jack Watts, founder of Bastion Collective, states, "The future of the agency model is a hybrid between the integrated services, scale and reach of the big agencies and the personalised service and expertise of the small agencies. That’s what clients want and that’s why we have built Bastion Collective."
  • International consultancy Mirren found that "new revenue generated beyond incremental agency activity represented around 45% of an agency’s business five years ago. Today, that figure is less than 20%." It determined that this shift is largely due to procurement teams during the pitch process, which has driven down prices because procurement is looking for cheap prices rather than creativity.
  • Marketing spend varies wildly based on the industry with education spending the most at 18.5% of company revenue and mining/construction spending the least at 2% of revenue.
  • Another source states that consumer packaged goods companies spend the most at 24% of revenue on marketing with energy companies coming in last at 4%.
  • Spending on traditional (non-digital) advertising was expected decrease by 1.9% in 2019.
  • Google spends 12% of its revenue on marketing, compared to Apple at 6%, Salesforce at 46%, Microsoft at 16%, and Oracle at 22%, though these figures are not specific to brand advertising, necessarily.
  • Some 75% of CPG brands plan on spending more on their packaging going into 2020.

Proposed next steps:

You need to be the project owner to select a next step.