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Digital Agency Rate Card Survey 2011


Econsultancy London

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Econsultancy New York

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New York, NY 10003

United States

Telephone:

+1 212 699 3626

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Copyright © Econsultancy.com Ltd 2011

Published September 2011


All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage

and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2011

Contents

1. About Econsultancy ......................................................... 5

2. About this survey ............................................................. 6

3. Executive Summary and Highlights ................................ 7

3.1.1. Summary table – Average daily rates by job role .................. 10

3.1.2. Summary table – Average daily rates by category of job role ......................................................................................... 12

4. Profile of Responding Agencies ..................................... 14

4.1. Year company founded .............................................................. 14

4.2. Average number of employees ................................................... 15

4.3. Projected 2011 turnover ............................................................. 16

4.4. Geography................................................................................... 17

5. Business Confidence ...................................................... 18

5.1. How optimistic are you for your business over the next 12 months? ......................................................................................18

5.2. Projected year-on-year growth .................................................. 19

5.3. Most effective business development methods ........................ 20

5.4. Opportunities for growth within the digital agency marketplace ................................................................................ 21

5.5. Challenges .................................................................................. 22

6. Charge-out Rates ........................................................... 24

6.1. Analysis by job roles .................................................................. 24

6.1.1. Average day rates for Director / Partner ............................... 24

6.1.2. Average day rates for Commercial / Strategic roles .............. 27

6.1.3. Average day rates for Project / Account Management roles ........................................................................................ 28

6.1.4. Average day rates for Creative roles ...................................... 30

6.1.5. Average day rates for Content, Usability and Accessibility roles ........................................................................................ 32

6.1.6. Average day rates for Technical roles .................................... 34

6.1.7. Average day rates for Media Planning and Buying ............... 36

6.1.8. Average day rates for Online Marketing, eCRM and Market Research .................................................................... 37

6.1.9. Average day rates for Search Engine Marketing ................... 38




6.1.10. Average day rates for Social Media........................................40

6.1.11. Average day rates for Affiliate Marketing, Email Marketing, Web Analytics ..................................................... 41

6.1.12. Average day rates for Testing / Quality Assurance and Training .................................................................................. 42

6.2. Change in day rates ................................................................... 43

6.2.1. Change in average daily charge-out rate since 2009 ............ 43

6.2.2. Expected change in 12 months‟ time ..................................... 45

6.3. Rate card availability ................................................................. 47

6.4. Average discount offered on rate card ...................................... 48

6.5. Reasons for variances in charge-out rates ................................ 49

7. Nature of Work .............................................................. 50

7.1. Retainer versus project work .................................................... 50

7.2. Work done by contractors versus employees ........................... 52

7.3. Fixed fee versus „time & materials‟ ........................................... 54

Digital Agency Rate Card Survey 2011 Page 5



1. About Econsultancy Econsultancy is a global independent community-based publisher, focused on best practice digital marketing and ecommerce, and used by over 240,000 internet professionals every month.

Our hub has 105,000+ members worldwide from clients, agencies and suppliers alike with over 90% member retention rate. We help our members build their internal capabilities via a combination of research reports and how-to guides, training and development, consultancy, face-to-face conferences, forums and professional networking.

For the last ten years, our resources have helped members learn, make better decisions, build business cases, find the best suppliers, accelerate their careers and lead the way in best practice and innovation.

Econsultancy has offices in London, New York and Dubai and we are a leading provider of digital marketing training and consultancy. We are providing consultancy and custom training in the Middle East, and extensively across Europe and Asia. We trained over 3,000 marketers and ran over 200 public training courses in 2010.

Join Econsultancy today to learn what‟s happening in digital marketing – and what works.

Call us to find out more on +44 (0)20 7269 1450 (London) or +1 212 699 3626 (New York). You can also contact us online.

Recent Econsultancy reports

Marketing Automation Buyer’s Guide

http://econsultancy.com/uk/reports/marketing-automation-buyers-guide

Twitter for Business

http://econsultancy.com/uk/reports/twitter-for-business

Internet Marketing Strategy Briefing

http://econsultancy.com/uk/reports/internet-marketing-strategy

Quarterly Digital Intelligence Briefing

http://econsultancy.com/uk/reports/quarterly-digital-intelligence-briefing

Online Video Best Practice Guide

http://econsultancy.com/uk/reports/online-video-best-practice-guide

http://email.econsultancy.com/t/3096704/3346144/231/0/



http://econsultancy.com/uk/reports/marketing-automation-buyers-guide

http://econsultancy.com/uk/reports/twitter-for-business



http://econsultancy.com/uk/reports/quarterly-digital-intelligence-briefing

http://econsultancy.com/uk/reports/online-video-best-practice-guide




2. About this survey The principal objective of this Econsultancy survey is to get a clear idea about what UK digital

agencies charge for different types of skills and levels of seniority, and to understand how and

why rates may vary, for example by size of company and by region.

This year‟s survey follows similar Rate Card Surveys we carried out in 2008, 2005 and 2003,

enabling us to see the extent to which rates have changed over the last few years.

We believe that this report provides real practical value for agencies who want to benchmark their

own fees and understand what the going rate is for different services in the marketplace. As far as

we are aware there is no comparable data available elsewhere.

The report is also intended to be a useful resource for client-side organisations who want to

understand what level of rates they can expect to be charged and how this differs according to

region and specialty.

Some 364 digital agencies participated in the 2011 survey1 from different locations across the

UK.

The term „digital agency‟ covers suppliers across an increasingly broad range of disciplines and

service offerings. Respondents include full-service agencies, media agencies, search engine

marketing agencies and specialists in areas such as affiliate marketing and email. In total, we

asked agencies about their daily rates for over 50 different job roles.

There is no standard taxonomy for agency job roles, but we have done our best to create a sensible

and thorough list. There is obviously some overlap between different job roles.

We have not asked specifically about mobile because we feel mobile is something that permeates

the entire digital spectrum.

Business confidence

The report also contains sections on business confidence and projected revenues which

have once again enabled us to provide top-line data about the health of the industry as well as an

analysis of the foremost opportunities and challenges which are shaping the digital landscape.

Methodology

This report is based on an online survey carried out in June and July 2011. Information about the

survey, including the survey link, was emailed to digital agencies within Econsultancy‟s user base.

Agencies were asked to give rates for an eight-hour day.

1 Econsultancy uses Clicktools for its online surveys.

http://econsultancy.com/reports/rate-card-survey-2008-how-much-do-uk-digital-agencies-charge

http://econsultancy.com/reports/agency-rate-card-survey-2005-how-much-do-uk-new-media-agencies-charge

http://econsultancy.com/reports/rate-card-survey-2003-how-much-do-uk-new-media-agencies-charge




3. Executive Summary and Highlights This is Econsultancy‟s fourth Digital Agency Rate Card Survey, based on information

provided by 364 UK digital agencies.

Key findings:

The digital agency sector is maturing quickly.

– The proportion of agencies surveyed with more than 50 employees has increased from only

5% in 2003 to 18% in 2011. One in nine agencies surveyed now has more than 100

employees.

– Almost half of agencies (48%) expect more than £1m in revenues in 2011, while 10% have a

projected turnover of more than £10m. A further 6% are expecting earnings of £5m-£10m.

– Around a third of agencies (34%) were founded more than 10 years ago.

– The landscape is still very London-centric (41% of agencies are based in the capital),

although the proportion of agencies in the South-East has decreased from 63% in 2008 to

57% this year.

There has been a slight decrease in charge-out rates for the majority of job roles

since three years ago.

– The last survey was carried out in 2008 during the credit crunch, but before the full force of

the recession was felt within the marketplace. Rates have not yet climbed back to the levels

seen before the recession.

– With more traditional agencies moving into the digital space and smaller agencies

becoming more specialised in their service offerings, the market has never been more

competitive.

– Decreases in daily rates are evident across areas including project and account

management, creative, search engine marketing and media planning / buying.

– This may be partly explained by wider availability of people skilled in areas such as media

planning, search engine optimisation (SEO) and paid search (PPC). While these skills are

still highly valued, they and other digital disciplines have become more mainstream and

less exotic as the industry has matured. There is still a skills shortage in some areas, but

anecdotal feedback suggests it is not acute as in previous years.

– Agencies have decreased daily rates for project and account management, which suggests

that clients are willing to pay less for this dimension of work.

– Decreases since 2008 are smallest for technical job roles, suggesting that this is where

talent is hardest to come by. Daily rates for senior technical staff and data analysts have

bucked the general trend by showing slight increases.

– Effective use of data, described widely as “the new oil”, has become an increasingly

important area for clients and agencies alike. Data integration (and analysis) is commonly

cited by agencies as providing a significant opportunity for growth.

The projected average increase in overall daily rates for 2012 is 8%.

– The equivalent figure is slightly higher for the smaller (under £1m turnover) agencies (10%)

but only 4% for the largest agencies which is around the level of inflation.

– Half of all agencies surveyed said that they expect their daily rates to be higher in 12

months‟ time, while 47% said they would stay the same.




The largest agencies charge significantly higher day rates across all job roles,

and there is a premium for London.

– For example, the average daily rate for a director or partner at a „large‟ agency (i.e. with a

projected 2011 turnover of more than £5m) is £1,351. This is double the rate charged by

small agencies (<£1m) and a 52% premium on the overall average (£891).

– The average daily rate for a partner or director in London (£1,030) is 19% higher than for

agencies in the South-East outside the capital and 33% higher than for those outside the

South-East.

– For the £5m+ agencies, the London average (£1,437) is 14% higher than for other South-

East agencies and 20% higher than outside the South-East.

The proportion of agency work done on a retainer basis has increased from 27%

in 2008 to 35% in 2011.

– Agencies now typically have more reliable income streams, with a significant increase in the

amount of work done on a retainer-basis. For the largest agencies, 40% of work is done on

a retainer basis. The trade-off for guaranteed revenue may be more steeply discounted daily

rates.

– The average discount offered on rate cards is 6%.

– The percentage of total billed work done by freelancers and contractors (20%) has been

remarkably consistent since the first Econsultancy Digital Agency Rate Card survey in

2003. Conventional wisdom is that agencies are now more likely to call on specialist

expertise outside their existing staff, but the evidence from this survey suggests otherwise.

– Two thirds (66%) of total billed work is now done on a „time and materials‟ basis rather

than a „fixed fee‟ basis (34%). This is a similar ratio to 2008 when 68% of work was done on

a time and materials basis.

Despite the continued gloom within the wider economic environment, digital

agencies are still confident about the future of their business over the next 12

months.

– It should be noted that this survey was carried out before the significant deterioration of

the financial markets in August 2011.

– On average, digital agencies report that they will grow by 26% year-on-year in 2011. This

compares to an equivalent percentage of 28% in 2008 and 31% in 2005.

– For the largest agencies, average year-on-year growth of 22% is anticipated this year. Given

the modest average rise in daily rates anticipated for larger agencies (+4%), growth will

have to come from new business and a significant scaling up of their operations.

– The proportion of agencies surveyed that are „quite‟ or „very‟ optimistic about the future of

their business over the next 12 months has increased from 90% in 2008 to 94% in 2011.

However, slightly fewer agencies are very optimistic this year (35% compared to 39% in

2008).

While it is increasingly difficult for agencies to maintain and grow their revenue

streams, the digital marketing sector continues to evolve and offer

opportunities.

– Companies continue to invest in digital and emerging channels such as mobile and social

media.

– Investment in digital marketing channels and associated technology is still buoyant, with

some 72% of UK companies planning to increase their digital marketing budgets this year2.

2 Econsultancy/SAS Marketing Budgets 2011 Report, http://econsultancy.com/reports/marketing-budgets

http://econsultancy.com/reports/marketing-budgets




– An analysis of qualitative feedback from agencies suggests that, as the market becomes

more competitive, some agencies are becoming more specialised and focused on key

strategic areas instead of being one-stop digital shops.

– Strategic partnerships with specialists in niche service areas represent one avenue that

agencies will increasingly explore to keep ahead of the competition. As they find it more

challenging to offer the full marketing package under one roof, partnerships seem to be the

natural direction for many within the market.

Digital agencies surveyed tend to use a mixture of online and offline methods to

attract new clients. From a range of business development methods, agencies were asked

to select the five most effective ways of getting new work.

– Recommendations/referrals (85%) are considered to be the most effective way of winning

clients, followed by offline networking (40%), speaking at events (36%) and SEO (32%).

– The most frequently cited opportunities for growth within the digital agency

marketplace are:

Growth of mobile and social media

Data integration and analysis

Providing insights into customer behaviour across multiple channels

Focusing on a few strategic services instead of aiming to cover everything

The most significant challenges agencies face include the following:

– Increased competition and commoditisation

– Staff recruitment and retention

– Declining client budgets

– Increased difficulty attracting clients




3.1.1. Summary table – Average daily rates by job role

Table 1: Average daily rates by job role (in descending order of daily rate)

Rank Job Role 2011 average

daily rate 2008 average

daily rate % change

(since 2008)

1 Director / Partner £891 £919 -3%

2 Senior – Technical / Development Director £794 £783 1%

3 Senior – Consultant / Strategist £794 £808 -2%

4 Senior – Head of Media / Media Director £749 £788 -5%

5 Group Account Director / Regional Account Director

£746 £809 -8%

6 Senior – Creative / Art Director £744 £781 -5%

7 Customer Insight Specialist £730 £699 4%

8 Senior – Social Media Consultant / Practitioner £713 N/A N/A

9 Senior – Account / Project / Operations Director

£702 £723 -3%

10 E-commerce consultant £697 N/A N/A

11 eCRM Consultant £685 £691 -1%

12 Head of Production Services £684 £737 -7%

13 Usability / User Experience Consultant £684 £708 -3%

14 Senior – SEO Consultant / Practitioner £678 £724 -6%

15 Training £692 £689 0%

16 Information Architect £673 £694 -3%

17 Senior – PPC Consultant / Practitioner £659 £683 -4%

18 Mid – Consultant / Strategist £651 £688 -5%

19 Mid – Technology / Development Manager £650 £666 -2%

20 Business Analyst £648 £736 -12%

21 Online Marketing Planner / Strategist / Consultant

£662 £725 -9%

22 Accessibility Consultant £646 £675 -4%

23 3D Modeller £644 £650 -1%

24 Digital Content Strategist £639 N/A N/A

25 User Interface Specialist £634 £650 -2%

26 Storyboarding / Wireframing £627 £643 -2%

27 Video / Audio Producer / Editor £615 £657 -6%

28 Mid – Design / Creative Manager £611 £647 -6%

29 Web Analyst / Metrics Analyst £616 £623 -1%

30 Mid – Account / Project / Operations Manager or Producer

£603 £628 -4%

31 Animator £598 £615 -3%

32 Mid – Social Media Consultant / Practitioner £598 N/A N/A

33 Production Manager £597 £639 -7%

34 Mid – Media Planner / Buyer £596 £630 -5%

35 Database Manager £595 £606 -2%

36 Email Marketing Manager £593 £617 -4%

37 Research / Market Analyst £591 £614 -4%

38 Data Analyst £601 £589 2%

39 Content Management Specialist £584 £642 -9%




Rank Job Role 2011 average


daily rate % change

(since 2008)

40 Mid – SEO Consultant / Practitioner £580 £600 -3%

41 Mid – PPC Consultant / Practitioner £564 £581 -3%

42 Affiliate Manager £561 £551 2%

43 Testing / Quality Assurance £561 £590 -5%

44 Illustrator £559 £593 -6%

45 Copywriter £541 £605 -11%

46 Junior – Programmer / Developer £535 £552 -3%

47 Traffic Manager £515 £576 -11%

48 Junior – Social Media Consultant / Practitioner £493 N/A N/A

49 Junior – Account / Project / Operations Executive or Assistant

£489 £506 -3%

50 Junior – Designer / Creative £494 £527 -6%

51 Junior – SEO Consultant / Practitioner £486 £498 -2%

52 Junior – PPC Consultant / Practitioner £484 £482 0%

53 Junior – Media Planner / Buyer £465 £513 -9%




3.1.2. Summary table – Average daily rates by category of job role

Table 2: Average daily rates by category of job role

Job Role 2011 average


daily rate % change

(since 2008)

Commercial and Strategic Roles

Director / Partner £891 £919 -3%

Senior – Consultant / Strategist £794 £808 -2%

Mid – Consultant / Strategist £651 £688 -5%

Business Analyst £648 £736 -12%

Project and Account Management

Group Account Director / Regional Account Director £746 £809 -8%

Senior – Account / Project / Operations Director £702 £723 -3%

Head of Production Services £684 £737 -7%

Mid – Account / Project / Operations Manager or Producer

£603 £628 -4%

Production Manager £597 £639 -7%

Junior – Account / Project / Operations Executive or Assistant

£489 £506 -3%

Creative

Senior – Creative / Art Director £744 £781 -5%

3D Modeller £644 £650 -1%

User Interface Specialist £634 £650 -2%

Mid – Design / Creative Manager £611 £647 -6%

Animator £598 £615 -3%

Illustrator £559 £593 -6%

Junior – Designer / Creative £494 £527 -6%

Content and Usability

Usability / User Experience Consultant £684 £708 -3%

Information Architect £673 £694 -3%

Accessibility Consultant £646 £675 -4%

Digital Content Strategist £639 N/A N/A

Storyboarding / Wireframing £627 £643 -2%

Video / Audio Producer / Editor £615 £657 -6%

Content Management Specialist £584 £642 -9%

Copywriter £541 £605 -11%

Technical

Senior – Technical / Development Director £794 £783 1%

Mid – Technology / Development Manager £650 £666 -2%

Database Manager £595 £606 -2%

Data Analyst £601 £589 2%

Junior – Programmer / Developer £535 £552 -3%

Media Planning and Buying

Senior – Head of Media / Media Director £749 £788 -5%

Mid – Media Planner / Buyer £596 £630 -5%

Traffic Manager £515 £576 -11%

Junior – Media Planner / Buyer £465 £513 -9%




Job Role 2011 average


daily rate % change

(since 2008)

Online Marketing, eCRM and Market Research

Customer Insight Specialist £730 £699 4%

E-commerce Consultant £697 N/A N/A

eCRM Consultant £685 £691 -1%

Online Marketing Planner / Strategist / Consultant £662 £725 -9%

Research / Market Analyst £591 £614 -4%

Affiliate Marketing, Email Marketing and Web Analytics

Web Analyst / Metrics Analyst £616 £623 -1%

Email Marketing Manager £593 £617 -4%

Affiliate Manager £561 £551 2%

Search Engine Marketing

Senior – SEO Consultant / Practitioner £678 £724 -6%

Senior – PPC Consultant / Practitioner £659 £683 -4%

Mid – SEO Consultant / Practitioner £580 £600 -3%

Mid – PPC Consultant / Practitioner £564 £581 -3%

Junior – SEO Consultant / Practitioner £486 £498 -2%

Junior – PPC Consultant / Practitioner £484 £482 0%

Social Media

Senior – Social Media Consultant / Practitioner £713 N/A N/A

Mid – Social Media Consultant / Practitioner £598 N/A N/A

Junior – Social Media Consultant / Practitioner £493 N/A N/A

Quality Assurance and Testing

Training £692 £689 0%

Testing / Quality Assurance £561 £590 -5%




4. Profile of Responding Agencies

4.1. Year company founded Figure 1 shows how the sample of agencies is split in terms of their longevity in the market.

Around a third (34%) of agencies were founded more than 10 years ago.

Some 42% of digital agencies surveyed have been around for five years or fewer. The growing

focus on emerging channels such as social media, mobile and video has fuelled this increase by

creating more gaps in the market that newly-established agencies can exploit.

Figure 1: Number of years since company founded

Respondents: 364




4.2. Average number of employees The figure below shows the size of agencies surveyed, based on the number of employees. It is

clear that the average agency has significantly grown in size since 2003.

The proportion of digital agencies with more than 50 employees has increased from only 5% in

2003 to 18% in 2011. One in nine agencies surveyed now has more than 100 employees.

Just under half of agencies (47%) now have 10 or fewer employees, significantly down from 71%

in 2003.

Figure 2: Number of employees

Respondents: 364




4.3. Projected 2011 turnover The vast majority of agencies surveyed (84%) expect to earn up to £5m in 2011, with just over half

(52%) expecting to have revenues of less than £1m.

At the top end of the spectrum, 10% of agencies report a projected turnover of more than £10m.

Figure 3: Projected 2011 turnover

Respondents: 357




4.4. Geography Figure 4 shows the geographical distribution of agencies surveyed. As was the case last year,

London is home to more agencies than any other regions – 41% of companies surveyed are based

in the capital.

The combined proportion of agencies located in London and the South East has slightly decreased

since 2008, from 63% to 57% in 2011, with more agencies based in the South West (+4%) and

North West (+2%).

Just under a fifth of agencies (16%) are based in the South East (excluding London), with the rest

spread across other regions.

Figure 4: Region

Respondents: 364




5. Business Confidence

5.1. How optimistic are you for your business over the

next 12 months? While the proportion of agencies surveyed that are „quite‟ or „very‟ optimistic about the future of

their business over the next 12 months has increased from 90% in 2008 to 94% in 2011, slightly

fewer agencies are „very optimistic‟ this year (35% compared to 39% three years ago). This may to

a large extent reflect the continued uncertainty within the wider economic environment.

It is encouraging to note that the proportion of agencies who are „not very optimistic‟ has

decreased from 9% to 6%. Even in the light of the current economic conditions and increased

competition, digital agencies are feeling relatively optimistic about the year ahead. The economic

downturn, coupled with an increased understanding of digital and improved measurability, has

only accelerated the move of marketing budgets into digital.

However, this shift in expenditure may not counteract the numerous challenges digital agencies

face, such as increasing competition and recruitment difficulties. Digital channels still make up a

minority of marketing budgets for many organisations and agencies need to continuously invest

in educating their clients, improve performance and become more innovative in order to expand

their share of the market.

It is important to note that this survey was carried out before the significant deterioration of the

financial markets in August 2011.

Figure 5: How optimistic are you for your business over the next 12 months?

Respondents: 299




5.2. Projected year-on-year growth On average, digital agencies report that they will experience 26% year-on-year growth in 2011,

slightly lower than in 2008 and 2005, when the equivalent figure was 28% and 31%, respectively.

Large agencies (with a projected turnover of more than £5m) estimate year-on-year growth to be

22% on average, slightly lower than the overall average.

Encouragingly, there hasn‟t been a significant decline in the proportion of agency respondents

estimating that their revenue will increase – 80% in 2008 compared to 79% this year.

Figure 6: What is your projected year-on-year growth for 2011?

Respondents: 292




5.3. Most effective business development methods The vast majority of agencies surveyed (85%) consider recommendations/referrals to be the most

effective method of getting new clients.

Offline networking (40%), speaking at events (36%) and natural search (32%) are the next most

effective business development methods. Online display advertising and print advertising are

considered to be the least effective methods, being mentioned by only 3% and 1% of agencies,

respectively.

Overall, digital agencies surveyed tend to use a mixture of online and offline methods to attract

new clients, with a large proportion focusing on offline events, online networking and SEO.

Figure 7: What are the most effective business development methods or ways of

getting new clients?

Respondents: 292

Note: Respondents could select up to five options.




5.4. Opportunities for growth within the digital agency

marketplace When asked to identify the greatest opportunities for growth for their business, around half of

agencies said that emerging channels such as mobile and social media represent two of the

most important areas that can foster development.

Some agencies also mentioned the importance of educating clients about the benefits of these

channels in order to maximise their returns.

Voice of the agency: mobile and social media

“Mobile, social media and integrated campaigns.”

“Mobile, social media campaigns, farming existing clients through better relationship management.”

“New areas of development/growth i.e. mobile and social.”

“Mobile, social and multichannel expertise.”

“Recognition of the importance of mobile and the rise of strategic thinking around the space.”

“Better understanding of channels by clients, new tech advances such as mobile, emerging behavioural shifts.”

“Extension of services into mobile, digital marketing and international markets, plus increasing focus on digital

strategy and usability for finance sector.”

“Persuading clients to think of social as a discursive medium rather than a broadcast one so they can start to

accrue the real benefits of it.”

The importance of understanding customer behaviour across multiple channels, integration of

online and offline data and focusing on a few strategic services instead of aiming to cover

everything were key themes in the responses.

Voice of the agency: other opportunities for growth

“Integration of online and offline into one coherent marketing strategy for clients.”

“Organisations are starting to understand that data and its measurement are vital to success.”

“Strategic business focused services focusing on data analysis and insight.”

“More clients looking to implement conversion rate optimisation strategies and more demand for user testing

and expert evaluations to get a much greater understanding of customer behaviour.”

“A better understanding of what we do as a digital engagement agency. The term engagement is becoming better

understood as something that is beneficial to a marketing programme.”

“Being well resourced to support large, corporate clients. As clients‟ head counts are cut in marketing and IT, we

are finding that they are outsourcing this work to us.”

“Seeing shift from digital being part of the roster to taking a leading role in campaign development. To this end

we have hired a planner to allow us to compete with media buyers and integrated agencies.”

“Concentrating on the things we are best at and providing those services to our clients, instead of trying to offer a

bit of everything.”

“Getting our name out through testimonials / building on our excellent client base through solid referrals. We

choose our clients with care, and this curation is part of our quality relationship.”

“New and smaller businesses – small accounts but cheaper to acquire. Some larger, established clients starting to

„get it‟ and realising the limitations of their in-house efforts.”




5.5. Challenges Survey respondents were asked to identify the biggest challenges they face. Analysis of verbatim

answers revealed that the most commonly cited challenges are:

Increased competition and commoditisation

Staff recruitment and retention

Declining client budgets

More difficult to attract new clients

The vast majority of agencies say that increased competition is the main challenge they‟re

currently facing, driving down prices significantly across the board. An interesting trend

reported by several small and mid-size agencies is the increased focus of large agencies on smaller

projects, meaning that pitch processes have never been more competitive than they are now.

One of the main reasons behind this shift is that larger companies have started to understand the

role of digital in the overall marketing mix and may prefer in-house resources rather than

outsourced.

Voice of the agency: increased competition and commoditisation

“Understanding that what we did last year is not enough to keep up with the pace – the need to keep innovating

– just to maintain our current position.”

“Traditional digital agencies looking to move more in to the usability and customer experience field.”

“Other digital agencies undercutting or doing work for free and therefore devaluing the total digital market.”

“Increased competition driving down prices.”

“Competing against „cheap alternatives‟.”

“Converting opportunities into business, lengthening time from initial enquiry to winning business.”

“Cautious investment by consumers and cheap alternatives.”

“Clients who do not understand what they are actually buying and are suckered in with price competition from

low quality suppliers.”

“As a mid-size agency outside London, there is commoditisation of smaller projects, meaning we can‟t compete.

Also larger agencies are going for much smaller projects and can invest a lot more in pitches.”

“Competing with bigger agencies (as they pitch for smaller jobs).”

“Too many unskilled people jumping on the bandwagon and confusing and undermining the market.”

“Commoditisation and a lack of education on part of buyers. If you want average, you pay average.”

A skills shortage has remained an overarching issue in the digital marketing industry and

recruiting staff with the appropriate skills and experience is still a major challenge for

most agencies.

Voice of the agency: staff recruitment and retention

“Attraction and retention of talent.”

“The peaks and troughs of digital business mean that we rely heavily on contractors for fulfilment. Increased

contractor costs are a risk and because most of the „staff‟ are contractors it can be difficult in terms of continuity

on longer term projects.”




Voice of the agency: staff recruitment and retention

“Scaling up quickly, finding the right talent, gaining new clients whilst at the same time maintaining high quality

of service to existing clients.”

“Recruiting enough high quality staff to keep up with customer requests and new business wins.”

“Human resources – not enough skilled technical personnel available and not enough skilled digital account and

project management personnel available.”

“Continuing to recruit the right talent to grow whilst maintaining creativity, innovation and quality.”

“Finding good people who can deliver quality in line with our growth.”

“Finding new recruits with appropriate skills and experience.”

Although traditional advertising budgets are increasingly shifting to digital channels, a large

proportion of respondents have indicated an overall decline in client spend, increasing

difficulty getting new clients and over-dependence on a few select/big clients.

Some agencies have also mentioned the growing involvement of procurement in pitches and rate

negotiations, putting further pressure on margins.

Voice of the agency: More difficult to attract new clients / declining client budgets

“Attracting new business opportunities to enable the company to grow.”

“Dependency on highest-spending clients.”

“Over-dependence on key clients.”

“Budget cuts, reductions of marketing staff amongst clients, increasing „pitch‟ mentality.”

“Budgets and amount of work on offer.”

“Difficulties in winning pitches.”

“Lower client budgets, lack of big projects.”

“Projects are getting smaller and taking more time to push through.”

“Recent decrease of „new‟ client enquiries.”

“Clients in the UK remain somewhat sluggish and price sensitive in some sectors.”

“Reduction in client spend.”

“Clients are still pretty price-sensitive.”




6. Charge-out Rates

6.1. Analysis by job roles

6.1.1. Average day rates for Director / Partner

As the chart below shows, the average daily charge-out rate across all digital agencies surveyed for

a director / partner is now £891, a decrease of 3% from £919 in 2008.

For those agencies with a projected 2011 turnover of more than £5m, the average daily rate is now

£1,351. The largest agencies are now charging double the amount smaller ones charge for their

most senior employees‟ time.

Figure 8: Charge-out rates – Director / Partner

Respondents: 299

Note: No trend data available, as the turnover bands used in previous reports were different.

Note

All day rates are for eight-hour working day.

For each role average rates are shown for all agencies (i.e. the overall average) and then for agencies in the

following turnover bands (projected for 2011): £0-£999,999; £1m-£5m; £5m+. See summary tables in Section 3

for all 2011 and 2008 averages.




Figure 9 shows the extent to which London agencies are charging more for their most senior

employees than their counterparts outside the capital across all turnover bands.

On average, the daily rate for a director/partner at a London agency is £1,030, a 19% premium

on what agencies elsewhere in the South East are charging and a 33% premium on those outside

the South East.

While the gap between agencies based in London and those elsewhere in the South East has been

gradually closing in the last three years (26% premium in 2008 compared to 19% this year), the

gap between the South East (London in particular) and the rest of the UK has widened.

On average, the premium South East agencies (excluding London) are charging compared to the

rest of the UK are charging has increased from 4% to 11% over the last three years. The increase in

premium for London agencies versus those based outside the South East is up to 33% from 31% in

2008.

Table 3 on the next page shows a more granular regional breakdown. The highest daily rates for

director/partner after London are to be found in Wales3 (£900), the South East (£865) and

Northern Ireland (£845). It is noteworthy that the largest agencies (£5m+) in the Midlands are

charging even more than those in London (£1,500 compared to £1,437).

Figure 9: Charge-out rates – Director / Partner

Respondents: 299

3 Note small sample sizes for some regions.




Table 3: Average day rates for Director / Partner – detailed regional breakdown

Region Number of

respondents All £0-£999,999 £1m-£5m £5m+

London 148 £1,030 £739 £1,111 £1,437

Wales 3 £900 £900 N/A N/A

South East 58 £865 £777 £906 £1,260

Northern Ireland 23 £845 £582 £1,163 £1,200

East Anglia 22 £819 £550 £1,100 £1,080

North West 35 £813 £674 £1,036 £1,200

North East 14 £760 £500 £1,200 £1,308

Midlands 36 £738 £612 £864 £1,500

South West 14 £725 £700 £600 £1,100

West 4 £700 £600 £733 N/A

Other 7 £500 £500 N/A N/A

Note: Small sample sizes for some regions.




6.1.2. Average day rates for Commercial / Strategic roles

The decrease since 2008 in average daily charge-out rates for business analyst (-12%) has been

much higher than for senior consultant/strategist (-2%) and mid-level

consultant/strategist (-5%).

Figure 10 below shows that the average daily rate for a senior strategist is now £794, but this

goes up to more than £1,000 for the largest agencies (35% premium).

Figure 10: Charge-out rates – Commercial / Strategic roles

Respondents: 270




6.1.3. Average day rates for Project / Account Management roles

Figure 11 and Figure 12 show average daily rates for a number of project and account

management roles, covering different levels of seniority.

The average charge-out rate for the most senior role, group account director/regional

account director, is £746, the largest decrease since 2008 in this category (-8%).

Figure 11: Charge-out rates – Project and Account Management roles

Respondents: 213




Figure 12: Charge-out rates – Project and Account Management roles

Respondents: 181




6.1.4. Average day rates for Creative roles

The average daily rates for creative roles shown in Figure 13 and Figure 14 have decreased by

between 1% and 6%, with rates for mid and junior-level design/creative, and illustrator,

having declined the most in this category since 2008 (-6%).

Figure 13: Charge-out rates – Creative roles

Respondents: 226




Figure 14: Charge-out rates – Creative roles

Respondents: 184




6.1.5. Average day rates for Content, Usability and Accessibility

roles

Of the roles shown in the following two charts, usability/user experience consultants and

information architects command the highest rates - £684 and £673 per day respectively.

The rates for copywriter and content management specialist have gone down by 11% and

9% respectively, two of the most significant decreases among all job roles.

As Figure 15 shows, large agencies (with a projected turnover of more than £5m) charge more

than £800 for digital content strategists (a premium of 29% over the average charge-out rate

for this role).

Rather than investing as heavily in „bought media‟, brands are increasingly shifting budgets to

„owned media‟ (e.g. websites, e-newsletters etc.) and „earned media’ (encouraging engagement via

social media, ratings/reviews etc.). This requires significant investment in content to be effective,

with clients and agencies changing how teams and roles are structured accordingly.

Figure 15: Charge-out rates – Content, Usability and Accessibility roles

Respondents: 174




Figure 16: Charge-out rates – Content, Usability and Accessibility roles

Respondents: 192




6.1.6. Average day rates for Technical roles

Technical/development directors are still highly valued across the industry, with average

daily rates just under £800 and the largest agencies charging over £1,000 per day [Figure 17].

Decreases since 2008 are smallest for technical job roles, suggesting that this is where talent is

hardest to come by.

Figure 17: Charge-out rates – Technical roles

Respondents: 220




Database Managers and Data Analysts

As was the case last year, database managers are charged out for slightly less than mid-level

technical staff and data analysts are valued more than junior programmers/developers.

Daily rates for data analysts have increased by 2% over the last three years, being among the

four roles that have become more valued since 2008.

Figure 18: Charge-out rates – Technical roles

Respondents: 133




6.1.7. Average day rates for Media Planning and Buying

Within the media planning and buying category, daily charge-out rates for traffic managers

have gone down by 11%, one of the biggest drops this year.

The daily rates for head of media/media director and mid - media planner/buyer have

both declined by 5%, with largest agencies charging £1,045 and £740 respectively.

As with many other areas discussed in this report, there is a significant difference between senior

and junior roles in terms of daily rates – large agencies charge for senior staff almost twice as

what they charge for junior roles (£1,045 compared to £563).

Figure 19: Charge-out rates – Media Planning and Buying roles

Respondents: 95




6.1.8. Average day rates for Online Marketing, eCRM and Market

Research

Of the online marketing, eCRM and market research roles shown in Figure 20, the most valued

are customer insight specialist and e-commerce consultant which, on average, are

charged out at £730 and £697, respectively. The daily rate for customer insight specialist has

gone up by 4% since 2008, making this role the biggest climber since 2008.

The rate for online marketing planner/strategist/consultant has gone down by 9% since

2008, one of the most significant decreases.

Figure 20: Charge-out rates – Online Marketing, eCRM and Market Research

roles

Respondents: 155




6.1.9. Average day rates for Search Engine Marketing

Similarly to 2008 results, average daily rates for search engine optimisation specialists are

slightly higher than for PPC, according to Figure 21 and Figure 22.

Day rates for each of these search engine marketing roles have gone down by at least 2%, junior

PPC consultant being the only role that commands approximately the same amount as three

years ago (£484 versus £482 in 2008).

Figure 21: Charge-out rates – SEO

Respondents: 147




Figure 22: Charge-out rates – PPC

Respondents: 115




6.1.10. Average day rates for Social Media

The overall average charge-out rate for senior social media consultants/practitioners is

£713, with the largest agencies charging over £900 per day.

Figure 23: Charge-out rates – Social Media roles

Respondents: 136




6.1.11. Average day rates for Affiliate Marketing, Email Marketing,

Web Analytics

Out of the three roles shown in Figure 24, charge-out rates for web analysts / metrics

analysts are the highest at £616.

The Online Measurement and Strategy Report 20114 revealed that almost a fifth of web

analytics expenditure (19%) is spent on consulting and services. Moreover, the proportion of

companies planning to increase budget for consulting and services now stands at 37%, up from

30% in 2010.

Figure 24: Charge-out rates – Affiliate Marketing, Email Marketing and Web

Analytics roles

Respondents: 148

4 http://econsultancy.com/reports/online-measurement-and-strategy-report

http://econsultancy.com/reports/online-measurement-and-strategy-report




6.1.12. Average day rates for Testing / Quality Assurance and

Training

The average charge-out rate for testing/quality assurance is £561, with the largest agencies

charging £685 a day.

The average daily rate for training roles is £692, staying largely the same since 2008. Agencies

with a projected turnover of more than £5m charge £889 for training roles.

Figure 25: Charge-out rates – Testing / Quality Assurance and Training roles

Respondents: 170




6.2. Change in day rates

6.2.1. Change in average daily charge-out rate since 2009

The average digital agency daily charge-out rate has increased by 9% in the last two years (since

2009).

This chart is apparently contradicted by findings which show lower average day rates than in

2008 across the majority of job roles.

This average is derived from a specific question about the percentage change since 2009 rather

than by calculating an average for all the day rate changes for every job role since our last survey.

The most significant increases have come from the smallest agencies (those with a 2011 projected

turnover of less than £1m). The average increase for these agencies in the last two years is 13%.

This compares to an average increase of 6% for mid-tier agencies (£1m-£5m) and agencies with a

projected turnover of over £5m.

Figure 26: In the last two years, what percentage change has there been to your

average charge-out rate?

Respondents: 298




As Figure 27 shows, four out of ten agencies said that their average charge-out rates have

remained the same since 2008, with under half (46%) reporting increases of up to 40%.

Just over half of respondents (51%) said that their average charge-out rates have increased within

the last two years, with over a quarter reporting increases of 10% and 16% saying their rates have

increased by 20%5.

These results show that for the majority of agencies, daily rates haven‟t really increased since

2009.

Figure 27: In the last two years, what percentage change has there been to your

average charge-out rate?

Respondents: 298

5 Respondents were shown a drop-down box with percentage changes in 10% increments from -100% to +100% or more. These percentage bands have been aggregated into groups.




6.2.2. Expected change in 12 months‟ time

On average, the projected average increase in daily rates for all agencies in 12 months‟ time is 8%.

Figure 28 shows that the smallest agencies (with a projected turnover of less than £1m) are

expecting above-average increases to their daily rates (10%), while the largest agencies expect the

smallest increases (4%).

Figure 28: How do you expect the average charge-out rate to have changed in 12

months‟ time?

Respondents: 296

Half of all agencies surveyed said that they expect their daily rates to be higher in 12 months‟ time

[Figure 29]. Around a third of respondents said that there would be a 10% increase and 11% said

they expect a 20% increase.

Just under half of agencies anticipate that their daily rates would be the same in 12 months‟ time.

For comparison, when we carried out this research in 2008, 59% of agencies expected that their

charge-out rates would be higher by 2009 and 39% said they would stay the same.




Figure 29: How do you expect the average charge-out rate to have changed in 12

months‟ time?

Respondents: 296




6.3. Rate card availability The availability of rate cards, both for internal use by agencies and for clients, has been gradually

increasing over the last three years.

Just over three-quarters of agencies (77%) now make sure that a standard rate card is available

internally, just a 1% increase over 2008.

Similarly, the proportion of agencies with rate cards available for external consumption has

increased by 1% since 2008.

Figure 30: Rate card availability

Respondents: 300




6.4. Average discount offered on rate card As Figure 31 shows, more than two thirds of agencies are prepared to offer a discount of up to

20% on their standard daily rates, while 30% say they don‟t offer any discount on the rate card.

The average discount offered on rate cards is 6%.

The proportion of agencies saying they offer a discount of up to 20% has stayed the same since

2008. However, the proportion of respondents that are prepared to offer a discount of between 11

and 20% has decreased from 29% in 2008 to less than a quarter (24%) this year.

Just under three-quarters of agencies (72%) are not offering any discount or they‟re offering a

discount of up to 10%.

Figure 31: What is the average discount offered on the rate card?

Respondents: 289




6.5. Reasons for variances in charge-out rates The top reason given for variances in daily charge-out rates is the volume of work carried out for

the client and this has slightly increased in importance since 2008, from 46% to 49%.

The historical relationship with the client and the varying amounts clients will pay are deemed

to be the most important reasons behind rate card variances for 25% and 24% of agency

respondents respectively.

Figure 32: What are the most important reasons behind variances in your charge-

out rates?

Respondents: 292




7. Nature of Work

7.1. Retainer versus project work The proportion of work carried out by agencies which is done on a retainer basis has significantly

increased over the last three years, from 27% in 2008 to 35% now [Figure 33].

Surprisingly, smaller agencies do a greater proportion of their work as part of a retainer than

larger agencies [Figure 34]. The difference between agencies with a projected turnover of less

than £1m and those earning more than £5m is significant – 68% compared to 60%.

Figure 33: What is the approximate percentage of your total billed work done as

part of ongoing “retainer” arrangements as opposed to project work?

Respondents 2011: 298




Figure 34: What is the approximate percentage of your total billed work done as

part of ongoing “retainer” arrangements as opposed to project work?

Respondents: 298




7.2. Work done by contractors versus employees The proportion of work done by contractors/freelancers versus employees (20%) has stayed

pretty much the same since 2003, with a slight variation in 2005 (down by 1%).

As Figure 36 shows, agencies with a projected turnover of less than £1m (27%) and the largest

agencies (17%) are the most reliant on freelancers and contractors, while mid-tier agencies are

more reliant on employees.

Figure 35: What is the approximate percentage of total billed work done by

freelancers and contractors as opposed to employees?

Respondents: 300




Figure 36: What is the approximate percentage of total billed work done by

freelancers and contractors as opposed to employees?

Respondents: 300




7.3. Fixed fee versus „time & materials‟ The proportion of work done on a time and materials basis rather than a fixed fee basis has

slightly declined since 2008, from 68% to 66% this year. Most clients prefer to work on a fixed

budget, explaining why most work done by agencies is billed for a fixed fee.

Smaller agencies (70%) and agencies with a projected turnover of more than £5m (64%) are more

likely to bill their work on a time and materials basis, compared to mid-tier ones (60%) [Figure

38].

Figure 37: What is the approximate percentage of total billed work done for a

fixed fee versus „time and materials‟?

Respondents: 287




Figure 38: What is the approximate percentage of total billed work done for a

fixed fee versus „time and materials‟?

Respondents: 287

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