Creative Agency Percentage Compensation

Goals

To understand the average percentage creative agencies charge as fee against the total media spend of the brand in order to share the data internally.

Early Findings

  • Our preliminary research suggests that there hasn't been any recent study or survey into the average percentage of a brand's media spend creative agencies charge as fees against the total media spend of the brand.
  • Our research revealed several reports and articles stating that creative agencies generally charge 15% of the brand's media spend as fees, but none of the report was an actual study, survey, or research. However, 10% is also common, while up to 25% is also possible.
  • The 15% agency fee was first introduced in 1869 when N.W. Ayer and Son, an ad creative agency, negotiated a deal with the media, and it has remained in place for over a hundred years and is still adopted by some agencies today.
  • Despite the fact that many agencies have replaced the 15% agency fee with fixed rates, specific fees, and other similar payment structure, the benchmark income for most creative agencies is still 15% of media spend of their clients' total media spend, regardless of how the agency's fee is structured.
  • Programmatic advertising is recently gaining ground and a recent Association of National Advertisers study on agency compensation found that "there is a bit of a resurgence of 15% deals in the programmatic space" as brands are pushing for a simpler agency fee structure.

Proposed next steps:

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