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Save Money When Hiring Ad Agencies

October 6th, 2009 by Bob Bly

If you want to save money when hiring ad agencies, use a small agency (50 or fewer employees) instead of a big agency (over 500 employees).

According to an article in Avertising Age (10/5/09, p. 26), chief creative directors at big agencies bill at $964 an hour — almost 4X more than the $271 an hour chief creative directors at small agencies bill on average.

Somehow, I don’t think that the creative director at the big agency is 4X more creative than her counterpart at the small ad agency.

And I seriously doubt the big agency’s campaigns generate 4X the sales of the small agency’s work…..

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This entry was posted on Tuesday, October 6th, 2009 at 6:24 am and is filed under Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

174 responses about “Save Money When Hiring Ad Agencies”

  1. Byrne said:

    It actually makes sense for the very best folks to be, say, 10% better than the next best person, and 500% more expensive. Think of it this way: when Coca-Cola comes up with a new campaign, what fraction of the cost is represented by the creative directory’s salary? .1%? .05%? If that goes from .1% to .5%, and the returns for the campaign as a whole go up 5%, that’s a gigantic return on the extra investment.

    This is also why hedge fund managers tend to be so overpaid, compared to smaller asset managers. Sure, you can economize by by hiring someone for $100K instead of $150K to manage a $5 million account — but when it’s $5 billion, it turns pretty much any skill premium into a rounding error.

  2. Brian Crook said:

    Well, someone has to pay for the fancy office and other perks! 🙂

  3. Spencer said:

    Yeah, come on, Coke, I’ll direct your campaign for $50/hr. You like clip art, right?

  4. Bob Bly said:

    Spencer: I have worked with big agency and small agency people for 30 years. I can assure you that the big agencies have no monopoly on talent, and that many smaller agencies and specialists do a BETTER job than the Madison Avenue giants — often at significantly lower cost.

  5. Ken said:

    I know with our small agency, we use freelancers for web design, graphic design, etc; who have worked in a corporate setting so we can provide the same level of quality minus the ridiculous prices.
    It seems that many small agencies also adhere to a more direct response type style of marketing which doesn’t hurt results either.

  6. FFcommunicator said:

    Or, don’t use an advertising agency at all. They’re all about smoke and mirrors no matter what size they are. http://www.famefoundry.com/935/put-away-the-smoke-and-mirrors

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  8. Dr. Andrew Linick said:

    The Copywriter’s Council of America (comprised of the top freelance direct response advertising copywriters, marketing/pr communications specialists, graphic artists and talent from A—Z) has been backing up small to large agencies since 1968. Agencies outsource to CCA because we have the best creative freelance talent on the planet and we can deliver bankable, measurable results within their budgets.

    We found, the larger the agency, the more they would mark up our fees. While some bigger agencies found it necessary to place a 10X mark up, smaller shops were happy to double it or mark it up by 50%. Unless you have a few million dollars to ‘invest’ with a major dr agency, it’s best to go to a boutique shop who will give you the attention you deserve at a price you can afford.

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  13. Direct Marketing Services said:

    Well said,

    When you go for a bigger company, you might have to pay a huge amount for all the workers down there. Instead we can better opt for a smaller agency.

  14. Bob Gaines Creative Services said:

    Go for the best freelance consulting services available. Before I accept any assignment selling a product I analyze its marketability based on a P&L calculation. I always use minimum response as a determining factor. When dealing direct with a client, my fee is usually one third of what an agency charges (NOTE: I am a favored copy source for some of the more renowned agencies specializing in Direct Marketing. Therefore, never resort to an agency before checking recommendations for top freelance talent. If they are willing to accept the job, obtain their estimate and then compare it to what an agency would require. Then prepare for a SHOCK.
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