How much does it cost to hire a top San Francisco Ad Agency?
We get this question a lot. And it sure would be nice if you could price an ad campaign like a rump roast or a haircut or a bikini wax, But it really does depend on a number of factors. That said, what a product costs shouldn’t be a secret. So we’re gonna do our best to give you a simple answer.
Ad agencies and digital marketing firms charge clients an hourly rate for each person working on the client’s project. Every person at the ad agency is billed out by the hour. Every agency has a rate sheet you can request. You just need to know you can ask for it. (You know, like animal-style fries at In N’ Out Burger.) Junior account executives might be $125 an hour while a managing director might be $400. Ask for the agency’s blended rate to get their average hourly, which is somewhere between $225 and $300 these days.
That’s what an agency costs. But how much will it cost you? Now, this is where it gets tougher. Tell the agency what you need to accomplish, a general marketing budget, and they’ll give you a Scope of Work outlining the services they’ll provide along with a proposed timeline for deliverables and an estimated cost for each deliverable.
NOTE: There’s no charge for beer, gummies, video games, hipster beard cream, or ironic T-shirts.
Generally speaking, bigger agencies’ hourly rates are higher than smaller independent shops, because they have a lot more overhead. Also, a client spending only on social media ads would pay an agency a lot less than a client doing a multimedia, national campaign. Because the latter requires a lot more time and money to develop, produce and execute.
Ironic T-shirts are included within the hourly rates of ad agency and digital marketing firm fees.
Some agencies, Division of Labor among them, will take on small projects for a flat, package rate. This allows us to engage with startups and companies with smaller budgets. We also break from traditional agency pricing and offer consulting and in-house freelance services.
Couldn’t I do it myself for tons less?
You can. Everything you ask an agency to do, you could do much cheaper on your own. You could go to Facebook or Instagram, pull down their ad campaign tools and start making ads. You could buy a lightbox, photograph your products, pull them into Photoshop to create designs, and write headlines and copy that bring your brand to life. You could write a script and ask your TikTok-making daughter and her friends to shoot a video for you and pay them a fraction of what you’ll pay an ad agency.
Some companies have had tremendous success creating and producing amazing videos and ad campaigns on their own; DollarShaveClub is brilliant, for example. If you have a gregarious founder and can write and produce something on your own, go for it. If it sucks, you can hire an agency later. If it’s great, fuck the agency.
But, generally speaking, the people who know how to create a product, manage a staff and scale a business (clients) have a totally different skill set than the people who know how to market a business (ad agencies).
Dollar Shave Club made their first video on their own and have since built up an amazing internal department.
Why should I Pay an Ad Agency Before I See What Ideas They Have?
This is a great question. Why should you?
Restaurants don’t cook meals for you hoping you’ll like the food and decide to pay them. Lawyers won’t work on your case for six months hoping you like the outcome and decide to pay them. Accountants don’t do your taxes hoping you like the way the math works out and decide to pay them. (This section could go on longer, but you get the idea.)
The fish counter doesn’t work like this.
You’re paying an ad agency for their thinking, their strategic planning, their problem solving, design skills, writing, and most of all, for their ideas. So they can’t do it for free.
But there is another way. Try this; Search “top ad agency San Francisco” or “best digital marketing companies San Francisco” or something else in the Google. Look at what each agency has done for other clients and narrow it down to a few agencies you like. Have a call with each and ask for a credentials presentation.
Then hire two or three agencies for the same small project. Pay each agency for the project. And agree to give the agency you like best a larger project after you’ve worked with each of them. It’s a great way to see what they’re really like and what they’re capable of.
How do I know what our budget should be?
When figuring out your marketing budget, know there are three different things you pay for: Paid Media, Production, Agency Fees
Paid Media is usually the biggest cost. This is how much you pay to a TV network or a streaming service to run your commercial. Or how much you pay Facebook or Instagram to run your promoted video or ads.
Ad agencies develop media strategies, create media plans, buy the media, measure effectiveness, optimize the campaign, give you weekly reports and use their knowledge to secure the best media at the best rates. For that, the agency takes a percentage as a fee; typically between 5% and 18% depending on the media and depending on the agency.
Production costs are what you need to spend to make your campaign. Filming the videos, recording the commercials, photographing things for billboards, coding banners and social media, developing digital and social executions of all shapes and sizes. Agencies oversee production and hire all the production companies needed to get everything made in all the required sizes and formats and then distribute all the assets to the media outlets. Agencies are paid for their time to oversee production and/or they can mark up the production costs.
Agency fees are the hourly costs you pay the agency for their time to do strategy sessions, digital planning, workshops, creative presentations, research, revisions, Zoom calls and late-night panicked phone calls. Plus SEO, SEM, PPC, social channel management, all the meetings, and anything else you might ask the agency staff to do for you.
So that’s how much an ad agency costs. If you made it this far without the costs making you throw up in your mouth, check out DivisionofLabor.com
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The Small Agency Blog is produced by Division of Labor; a top San Francisco ad agency and digital marketing firm that’s been named Small Agency of the Year twice by Ad Age. The award-winning creative shop services clients on a retainer or project basis. They also offer brand consulting services and hourly engagements for startups and smaller brands. Click here for a free consultation.