How much does working with a marketing or advertising agency cost?

Marketing and advertising agencies are known for being tight-lipped about their prices. This could be because they don’t want their competitors to catch wind, or pricing is too complex to easily define, or they’re nervous about scaring off prospects. Nevertheless, in this blog, we will discuss the most common agency fees and costs.

Discovery/Onboarding fees: $10k to $20k

Onboarding is the time that the marketing agency or consultancy spends getting up to speed with your business. For production agencies, this will usually cost a lot less since they don’t necessarily need to understand how your business works to get the job done. For example, if you want someone to design your business cards, extensive onboarding isn’t necessary. However, if you work with a strategy agency or consultancy, discovery is a big part of making sure the partnership gets started off on the right foot.

All in all, onboarding usually costs between $10k for a local-retail-size business and $20k+ for a national or international company. Not every agency will charge you for an onboarding fee, but they might make up the time spent learning your business in their hourly rate or in another type of miscellaneous fee.

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Technology fees: $200 to $25k+

Like onboarding, technology might be budgeted as an additional fee or simply included in the hourly cost of the agency. When it comes to technology fees, there are two types: cost of the technology to do the work and licensing fees.

In the first instance, agencies will ask that you pay the fee for the technology they use to do their job. An easy example would be paying for Adobe Photoshop for a designer to create a digital ad. Another example might be paying the cost of a reporting dashboard software such as Domo or Tableau.

Licensing fees are the second type of technology fees and relate to the martech your business uses. The easiest example would be your CRM or marketing automation system. If the agency you’re working with licenses the software on your behalf, they might take a cut because they’re handling the service of that software. Technology fees can range from as little as $200 a year to $20k+.

Media fees: 3% to 15% of spend

Not all will, but most media and advertising agencies take a cut of your media spend (around 3% to 15%), especially if they’re playing the bank and their card is on file with the media platform. So, if you’re spending 1 million dollars on media, they may take up to $150k of that spend.

Additionally, you might get charged for platform fees, which come from the advertising platforms themselves and are passed on to you.

Services markup: 10% to 20% of cost

If you work with an agency and you have materials that need to be printed, the agency might outsource them to a printing partner. They would, in turn, mark up that service between 10% and 20% to cover their role in vetting, organizing, and managing the vendor.


Travel costs

When a marketing or advertising agency or consultancy has to travel—whether that’s for a meeting, a trade show, or a photoshoot—that cost will be budgeted either as a separate travel cost or within their hourly rate. Agencies and consultancies do not make money on travel costs—any hard costs like food, airline tickets, or sleeping accommodations are simply passed through without any kind of markup.

Project costs and pricing

Once you get through all the other fees, the actual cost of the project will be the meat and potatoes of the budget. There are a few different ways that agencies bill their services. These include hourly billing, fixed pricing, retainership, and performance-based pricing. Hourly billing is where the client is charged a set hourly rate for the number of hours the agency works on the project. Fixed pricing is where the agency and client agree on a set price for the project as a whole, regardless of how long it takes to complete. Retainer ship is where the client pays a set fee for ongoing access to the agency’s services. Performance-based pricing is where the agency is paid based on the results they achieve, such as increased sales or website traffic. Ultimately, the pricing structure will depend on the agency and the project’s specific requirements.

In conclusion, working with a marketing or advertising agency can be a complex process, and it’s important to have a clear understanding of the fees involved. While agencies may not always be forthcoming with pricing information, it’s essential to have an open and honest conversation about costs before entering into a partnership.

As we’ve discussed, agency fees can vary widely depending on the type of services required, the size of the project, and the agency’s location and experience. From onboarding and technology fees to media fees and services markups, it’s important to carefully review and understand each cost associated with working with an agency.

By having a solid understanding of agency fees, businesses can ensure that they’re getting the best possible value for their marketing and advertising budgets. Ultimately, working with an agency can be a smart investment, providing access to expert knowledge, innovative strategies, and valuable resources that can help businesses grow and succeed in today’s competitive marketplace.

So, if you’re considering working with a marketing or advertising agency, take the time to do your research, ask plenty of questions, and make sure you have a clear understanding of the fees involved. With the right marketing agency partner, you can achieve your marketing and advertising goals, drive growth and revenue, and position your business for long-term success.

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