1、The agency pricing&packaging reportTable of contents02|Introduction03|State of agencies05|The elevation of social media06|The evolution of agency service oferings08|Package structure and contracts10|Pricing13|Agency challenges 15|Where to focus during times of economic uncertainty18|Building agency

2、resilience is a must in 202319|About this data+About Sprout | | Introduction Circumstances over the last few years accelerated the long-promised digital transformation,creating great challenges and opportunities for both brands and agencies using digital marketing.No digital outlet captures this swi

3、ft shift from“nice to have”to“essential”better than social media.Over the past two years,social media strategy,goals and tactics have evolved and become more sophisticated.Brands increasingly understand the impact social media can have on business outcomes and have fully incorporated social media in

4、to their marketing functions.And as more brands understand the power of social media,agencies need to reevaluate how they work with clients.Agencies need to shift their goals and the services they provide to contribute to their clients bottom line.To understand how agencies are adapting to the chang

5、ing digital landscape,we surveyed 228 agencies about their service oferings,client pricing and packaging and how theyre planning to build agency resilience in 2023 and beyond.We hope you enjoy,Sydney NielsenManager,Customer Marketing02State of agenciesThe only guarantee in#AgencyLife is change.Today

6、,a major challenge agencies grapple with is more brands moving marketing functions in-house.Yet many agencies are finding success,and profit,transitioning away from traditional executional work and moving toward a role more akin to strategic advisor.In 2021,US agencies experienced the fastest growth

7、 in revenue in the past 20 years,and over half of agencies surveyed in The Global Agency Landscape 2022 Report state that 2021 was either their best or one of their best years on record.With these numbers in mind,its no surprise that nearly 80%of agencies we surveyed shared they have an optimistic o

8、utlook for 2023.For the purposes of this report,well refer to agencies with 110 employees as SMB agencies,agencies with 1150 employees as mid-sized agencies and agencies with over 51 employees as enterprise | How are agencies describing themselves?Full service33%Digital marketing29%Social media10%Sp

9、ecialist agency10%Creative7%Advertising5%PR5%The average number of social media clients varies widely by agency.A third of all agencies surveyed average 510 social media clients at one time,28%average 15 clients,24%average 1020 clients and 15%manage more than 20 social media clients at a time.03The

10、agency landscape is as nuanced as a Behrs paint catalog,but here are the broadstroke trends we see within the modern agency | Naturally,agency size dictates the amount of social media clients an agency can service.Nearly 40%of SMB agencies average between 510 clients,and an additional 32%average 15

11、clients.Mid-sized agencies have the highest number of agencies managing more than 9 clients at a time(26%).A quarter of enterprise agencies average 1020 clients,19%average 2040 and 16%average more than 40 clients.The magic number of clients to client-facing teammate ratio.When it comes to the number

12、 of clients each client-facing team member supports,35%of all agencies surveyed say client-facing employees manage 34 clients.But there is a lot of variation here too.Some 19%of agencies manage 56 clients per client-facing team member,19%manage more than 9 clients and 16%manage between 12 clients.Br

13、eaking out the data by agency size and type provides a bit more color.Some 37%of SMB and mid-sized agencies average 34 clients per team member.Mid-sized agencies have the highest number of agencies managing more than 9 clients at a time(26%).Enterprise agencies most commonly manage between 56 client

14、s per team member(34%).And digital marketing agencies are twice as likely to have their client-facing team members manage more than 9 clients(28%)than a full service agency(13%).The industries agencies serve.When asked to specify the top industries agencies served,B2B(30%),Professional Services(30%)

15、,Healthcare&Wellness(23%),Advertising/Marketing(19%)and Non-Profit(17%)were most common.Balancing efficiency and clients per team member are important to any agencys success.In a time when burnout is real and talent is scarce,agency owners need to be thoughtful about how much theyre putting on their

16、 team members plates.Honing in on specific industries or services allows team members to balance more clients,as the learning curve is shorter and they can leverage insights and expertise across clients.Agencies should also consider“grading”clients to gain a deeper understanding of the resources nee

17、ded to manage each account.Identifying which clients are high touch or low touch,which ones are easy or more difficult to work with and the scope of services required for each client will help agencies zero in on best fit clients and effectively manage the teams | 65%Sales strategy48%Product develop

18、ment46%Content strategy44%Customer experience40%Competitive insight32%Market researchMy brand uses social data for.While agencies are making strides to expand their footprint,they may be missing an opportunity to demonstrate the value their agency brings to the table.Organizations continue to find m

19、ore ways to leverage social data.There is a huge opportunity for agencies to provide value to clients beyond their key stakeholders by sharing contextualized social data and insights to departments beyond Marketing,Sales and PR.05The elevation of social mediaVery recently social media teams were str

20、uggling to convince senior leadership that social media was business-critical.Now,not only is there widespread consensus on the value of social media,it has become a refined marketing tool with applications across the organization.Social data presents a valuable opportunity.Since 2020,weve seen a 14

21、%decrease in agencies stating that educating clients on the value of social media is a top agency pain point.With less time spent convincing key stakeholders why and how they should use social media,many agencies are focusing on collecting,analyzing and delivering key social insights to share across

22、 a clients organization.Nearly all agencies surveyed share social insights with their clients Marketing team(93%),followed by Sales(42%)and PR teams(33%).Less than 20%of agencies share social insights with Customer Service and Product Teams,and a mere 9%share social insights with HR| | 06The evoluti

23、on of agency service oferingsSocial media has become a staple service ofering.Maturation within the space has empowered social media professionals to create more sophisticated strategies and directly link their eforts to business impact.More often than not,clients are now looking to agencies to help

24、 tackle specific challenges and keep their brands at the forefront of innovation within the space.With that in mind,it should come as no surprise that the number of social media services has ballooned over the past few years.Social media service oferings have become more specialized,more strategic a

25、nd more scoped than ever to deliver on modern client needs.Service oferings are multiplying.To deliver on changing client needs,the number and specificity of social media services ofered has exploded over the past two years.Clients have become more knowledgeable about what and how social media can i

26、mpact business outcomes.Agencies have followed suit by refining services to clearly define goals,strategies and outputs of each service.In fact,agencies ofer an average of 8 distinct social media services.And this number is likely to go up.A whopping 82%of agencies predict clients predict clients wi

27、ll demand more specialized services over the next five years.Services included in agency social media packages20202022Social listening44%Influencer marketing 49%Reputation management38%Customer care25%Employee advocacy12%Content development94%94%Social media management92%98%Paid social 87%89%Social

28、media analytics 86%94%Social media engagement77%86%Social audits66%Community management61%68%Social media strategy97%95%Services are shifting away from execution and toward strategy.While agencies are still handling plenty of executional work,three of the top five most ofered services lean toward st

29、rategy.The vast majority of agencies ofer social media strategy(97%),content creation and publishing(94%),social media management(92%),paid social(87%)and social media analytics(86%).High-touch services like social media engagement and community management have become less popular since | Agencies i

30、ncreasingly ofer social media as a part of their whole service ofering.Seventy percent of agencies position social media as a part of their whole service ofering and 39%as an optional add-on.Less than 30%only ofer social media.When asked what services outside of social media agencies ofer,marketing

31、strategy(84%),creative and design(84%),email marketing(79%)and content marketing(74%)were most common.Agencies continue to be important partners for creative and design work,but one service that agencies are increasingly dovetailing with social media services is email marketing.Since 2020,agencies r

32、eport an 8%increase in offering both social media and email marketing services(from 71%in 2020 to 79%in 2022).Social and email marketing are natural allies.Integrating social and email marketing can help collect customer data to drive both strategies forward.It can also help agencies capture Voice o

33、f Customer insights to better understand what is captivating to audiences,what they care about and how they think or talk about the clients products or services.Even with the proliferation of social media services,there are still huge opportunities to innovate new service offerings that deliver sign

34、ificant business impact.Social listening and employee advocacy are two service offerings agencies should consider.According to Sprout Social Index,68%of marketers say their company has an employee advocacy program,yet only 12%of agencies are offering this service today.Agencies can quickly capitaliz

35、e on this gap by offering employee advocacy strategy to clients with employee advocacy programs already in | 03Package structure and contractsWhen diving into how agencies have adapted contracts and package structure,we increasingly see agencies demonstrate flexibility.And while the industry at larg

36、e has long been predicting the death of the retainer model,agencies share a diferent reality.Multiple contract types are the new normal.Two-thirds of all agencies surveyed ofer more than one type of contract,the most common being retainer(79%)and project-based(61%).We also see 36%of agencies ofering

37、 campaign based contracts,followed by 33%of agencies who ofer hourly contracts.Of the 33%of agencies that only ofer one type of contract,the vast majority only ofer retainers(72%).And while the popularity of retainers is still going strong,there has been an 8%decrease in agencies ofering retainers s

38、ince 2020.One contributing factor to the retainer model remaining as the“go-to”contract type for many,is that agencies have changed how the retainer model works.Agencies are building more flexibility into their retainer models in order to create contracts that work for both the agency and client dur

39、ing uncertain economic times.“For new engagements,weve moved from a four month trial to a twelve month agreement with the thirty day out clause.This allows us to extend our engagements,promoting longer commitments,but still providing a mechanism by which clients can easily get out of that contract i

40、f they really need to.We also use the contract length and the out clause as a lever when clients push back on price,ofering discounts in return for a longer period in the out-clause.”Karri Carlson Co-founder and VP of Operations at Leadtail08Contract lengths are moving targets.When it comes to contr

41、act length,nearly two-thirds of agencies average contract length is less than 12 months.The most common average contract length for agencies of all sizes is from 612 months(39%),followed by 12+month contracts(36%)| | Since 2020,very short contracts are decreasing in popularity in favor of medium to

42、long-term contracts.Month-to-month and 36 month contracts are down roughly 5%,while contracts greater than 12 months are up 8%in that same period.SMB agencies ofer the highest percentage of short contracts with nearly 20%ofering month-to-month contracts.Only 6%of mid-sized and enterprise agencies of

43、er month-to-month contracts.When it comes to agency type,digital marketing agencies have the highest percentage of month-to-month contracts(18%,)while full service agencies boast the highest percentage of 12+month contracts(39%).Average length of contracts36 months13%612 months39%12+months36%Month-t

44、o-month12%Campaign and project-based work is a great opportunity for clients to“trial run”with agencies.Agencies with defined specialties and competitive differentiators will benefit from these trial runs as many brands seek out expertise to help them with specific campaigns,projects or problems.Lon

45、ger contracts can also be a great option for many agencies,as it empowers agency owners and leaders to build flexibility into contracts without putting their business at | PricingAs the value of social media becomes more apparent,social media services demand a higher price.In fact,according to The 2

46、022 Outlook for Digital Marketing Agencies,nearly a third of agencies state that social media services were their most popular and profitable ofering in 2021.The average going rate for social media services is up.In 2020 only 24%of agencies were charging$1,5003,000 a month.In 2022,a third of agencie

47、s charge between$1,5003,000.And an additional 37%charge more than$3,000 a month,a 15%increase from 2020.The size of the agency plays a large part in the price they demand.The bigger the agency,the more they charge.A quarter of enterprise agencies charge more than$5,000 a month.Compare that with only

48、 18%of mid-sized agencies and 5%of SMB agencies who charge more than$5,000 a month.As agencies scale their business,overhead costs will also grow.Agency owners need to make sure their prices grow with them to maintain a healthy margin and a healthy business.They should be thinking about where their

49、business is heading and their business goals when setting prices to ensure they can remain profitable.While scaling prices is amongst the top agency challenges,agencies with a deep understanding of their ideal customer profile(ICP)and the value their services contribute to their clients business wil

50、l be poised to successfully increase pricing to align with the market.10Average monthly price for social media services$1,501$3,000 33%$501$1,50027%$3,001$5,00025%More than$5,00012%Less than$5005%Monthly | | 11Arguably more important than price is margin.Nearly 40%of agencies charge between 1120%mar

51、gins on their social media services,followed by an additional 28%that charge between 2030%.When it comes to agencies charging the lowest amount of margin,enterprise agencies surprisingly had the highest percentage(25%)charging 010%margin.Looking at agency type,social media agencies have the highest

52、percent(22%)of agencies only charging from 010%margins.Average margins built into agency pricing 1120%38%3050%15%2030%28%010%12%50%+7%Agencies are making the most popular social media services profitable.When asked to share their top three profitable social media services,agencies reveal that social

53、 media strategy(56%),content creation&publishing(52%)and paid social(41%)top the charts.The service that returns the most profit shifts depending on agency size.Sixty-four percent of SMB agencies share that content creation and publishing is their most profitable service offering,while mid-sized age

54、ncies shared that social media strategy is their most profitable service offering(62%).Enterprise agencies gain the most profits from paid social(59%).Of agencies charging the highest margins(3050+%),social media strategy(62%),content creation&publishing(60%)and social media management(40%)are the t

55、op | Most profitable vs.Most popular services Social media strategy Content creation&publishing Paid social Social media managementSocial media analyticsSocial auditsCommunity management Social listening Social media engagement Influencer marketing Most profitable social media servicesCon

56、tent creation&publishing Social media strategy Social media managementPaid social Social media analytics Influencer marketing Social media engagement Community management Social audits Social listeningMost popular social media servicesAgencies must take a hard look at their service offeri

57、ng to identify which services are paying,and which ones arent.Agencies should consider adjusting pricing models,analyze costs invested and resources used to create more of a buffer once low profit services are identified.This will be important to build agency resilience in the long run.Agency challe

58、ngesThe most pressing agency business pain points have changed significantly since 2020.Agencies stating that growing their agency is a top pain point has decreased by 25%.There has also been a 21%decrease in the percentage of agencies struggling to measure and show ROI.These numbers are very encour

59、aging and demonstrate just how much the digital landscape has changed in a short period of time.But,of course,new challenges have emerged.Scope creep and scaling prices are top agency pain points.Record inflation and emerging economic uncertainty put more of an emphasis on the need for agencies to m

60、inimize scope creep and build in mechanisms to scale prices.Even with over 40%of agencies sharing theyve increased pricing and 35%who have changed their pricing model in the past 12 months,scope creep and scaling prices are complex challenges agencies will continue to face in the next 1224 months.“W

61、e were able to triple our average deal size for existing clients by aligning services with what we do best as an agency and charging for the value we bring to our business partners,identifying our ICP and graduating clients out of Chatterkick that werent a fit and empowering our internal team to sel

62、l by removing the founder(me!)from every pricing decision.”| Scope creep64%Acquiring new clients44%Scaling prices46%Measuring ROI34%Growing your business30%Most common agency pain pointsBeth Trejo CEO and Founder of C| Clients budgets still pose the biggest pitching challenge.Agencies are struggling

63、 less and less with educating prospects on the value of social.Since our last survey in 2020,weve seen a roughly 15%decrease in agencies sharing this as a top pain point.Today more than two-thirds of agencies struggle with prospects budgets,as well as agency pricing vs.prospects expectations.As clie

64、nt budgets are reduced,agencies must have a clear understanding of what services can deliver an outsized impact to their clients bottom line.With smaller budgets,clients will focus on how to maximize each dollar and shift their budget to where they can spend the least amount of money for the largest

65、 return.“Clients budgets are tightening up as costs rise,many understand the value of marketing,but have limited budgets.”Anonymous survey participantDuring times of economic uncertainty,agencies go all in on retaining and growing existing clients.But that doesnt mean agencies should forgo scaling p

66、rices or keep a close eye on scope creep to ensure offerings remain profitable.Capitalize on the timing.Economic uncertainty presents a unique opportunity to begin open and direct conversations about budget trends,or part ways with challenging clients.Agencies also need to put into practice a consis

67、tent cadence to walk clients through the tangible and intangible impact their work has on the clients business.Hard data is always great to share,and sharing social insights that could apply to other areas of the business will elevate the agency to the status of indispensable expert.Agency pain poin

68、ts for pitching servicesEducating on social valueIntegrating social strategyLimited profit margin 40%Prospects budgetsProspects expectations67%67%30%25%| Honing in oncore services/specialtiesRetaining clientsAdding newservicesExpanding into new industriesGrowing existing clientsLowering fixed costs

69、Bringing in new clients80%66%64%36%34%32%21%Agency focus during economic uncertaintyWhere to focus during times of economic uncertaintyWhen asking agencies where they focus during times of economic uncertainty,three main themes emerged:double down on client retention and growth,refine agency experti

70、se and lower fixed costs.Client relations are THE#1 priority.When agencies face economic uncertainty,they go all in on client retention,expansion and bringing new clients into the fold.Four in five agencies state that retaining clients is a top focus in times of economic uncertainty and two-thirds f

71、ocus on bringing in new clients and growing existing clients.“We have been in business long enough to know that economic cycles come and go.We have strong relationships with clients and a healthy pipeline along with a diversity of service oferings.”Anonymous survey | Understanding the macro-economic

72、 conditions within a clients industry or vertical will empower agencies to identify where they can provide value and create services accordingly.Agencies that obsessively put themselves in their clients shoes,and understand their clients industry trends and pressures,will be well suited to foster st

73、ronger agency-client relationships.Things like flexible contract types and lengths and refined service offerings can demonstrate an agencys dedication to their clients success.Jack of all trades,master of none is a losing strategy.Clients are coming to agencies with specific needs and looking to age

74、ncies to provide instant expertise.In turn,agencies are expanding their service oferings with specificity in mind.Over half of agencies have added new services in the past 12 months and more than a third have honed in on core services.Those that havent already created new services plan to do so with

75、in the next 1224 months.More than 50%of agencies plan to focus on introducing new services.Agencies are also clear eyed about what types of clients they work with.In the next 1224 months,over a third of agencies are evaluating what types of clients are best fit for their agency.How agencies plan to

76、build resilience within next 1224 monthsIntroduce new services51%Increase prices37%Change client profile35%Expand into new verticals/industries31%Change pricing model25%Specialize in specific verticals/industries22%Expand outside of local clients19%No changes planned8%Agencies conducting a deep anal

77、ysis of ideal customer profile,taking into account services the team is best equipped to execute on and margins made on services,can arm agencies with the data needed to find best fit clients.That same data can empower agencies to identify adjacent verticals to expand into or highlight which vertica

78、ls or industries align with agency strengths.“We are introducing new services to bundle with current as add-ons to retain and attract more clients.”Anonymous survey | Lowering fixed costs is a must.Nearly a third of agencies focused on lowering fixed costs within the past 12 months.While on its face

79、 seems like a no brainer,deciding how to lower costs can be challenging,especially when contemplating reducing tech costs.Technology continues to improve and provide more robust insights and data than ever before.And with more agencies ofering remote work,technology has never been more essential to

80、ensuring teams are collaborating and communicating efectively.But that increase in sophistication often comes with a higher price tag.When technology is on the chopping block,87%of agencies prioritize functionality,80%consider cost and almost half take into consideration contract length and flexibil

81、ity.Nearly two-thirds of agencies have an average client contract length of less than 12 months,but roughly 20%of agencies are not passing tech costs through to clients,leaving agencies on the hook for tech costs even after client contracts are up.Consider leveraging referral programs like Sprouts A

82、gency Partner Program to lower your agencys cost and reduce risk by empowering clients to own their tech contracts.This also presents opportunities to add more value to clients through new services or provide solutions to other departments,such as customer care or human resources.With the right stra

83、tegy in place,referral programs can become great opportunities for generating additional revenue.18Building agency resilience is a must in 2023The challenges agencies face are real and becoming more complex by the day.But agencies are well poised to tackle the challenges ahead.Accustomed to finding

84、the silver lining,agencies are aware of what they need to do to survive and potentially thrive during periods of economic uncertainty.Agencies are taking customer obsession to the next level.Already highly sensitive to the needs and wants of the clients they serve,agencies are going to great lengths

85、 to accommodate and service their clients.They are doing so by becoming the trusted advisors clients can lean on to ensure their shrinking budgets garner the greatest ROI.Specialization,clear competitive diferentiators and niche expertise are the ways forward for the modern agency.A deep and detaile

86、d understanding of the health of the agency business has never been as important,which for many agency leaders may mean stepping back from the day to day work.In todays environment,agency owners and leaders must lend a shrewd eye to all aspects of their agency business.Investing in analyzing the pro

87、fitability of services ofered,ideal client profiles,putting into place systems for mitigating scope creep and building in opportunities to scale prices will ensure agency success.In short,their number one focus must be building agency resilience.“Bad companies are destroyed by crisis,Good companies

88、survive them,Great companies are improved by them.”Andy GroveFormer CEO at IntelLearn more about how the Sprout Social Agency Partner Program can help your agency build | | About the dataThe“Agency Pricing and Packaging Report”is based on a survey of 228 agencies.The survey was conducted online betw

89、een August 25September 30,2022.Graphics are rounded to the nearest percentage and may not add up to exactly 100%.Of the 228 agencies surveyed,28%describe themselves as a Full service agency,29%digital marketing agency,10%Specialist agency,7%Creative agency,5%Advertising agency and 5%PR agency.As for

90、 size,52%of respondents work at SMB agencies,34%mid-sized agencies and 14%enterprise agencies.About SproutSprout Social ofers deep social media listening and analytics,social management,customer care,commerce and advocacy solutions to more than 33,000 brands and agencies worldwide.Sprouts unified pl

91、atform integrates the power of social throughout every aspect of a business and enables social leaders at every level to extract valuable data and insights that drive their business forward.Headquartered in Chicago,Sprout operates across major social media networks,including Twitter,Facebook,Instagram,TikTok,Pinterest,YouTube and LinkedIn.Learn more at |