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What are reasonable benchmarks for a mid-sized digital ad agency for sales dept budget as a percent of revenue?

dave  green's Profile

Assume an agency between $5MM and $20MM with a very healthy investment in content marketng (so that we have lots of incoming inquiries and lots of name recognition in our target market).

Answers

Anonymous
(Agent) |

I don't know what the trends are for digital ad agencies, but I will answer first so that others will respond. I think you will be looking for someone in the industry to answer or a CPA who has clients in your industry.

Costs invested in a sales function need to result in multiples of sales. Say your costs are 3%, then you would want the sales impact to be analyzed in tangible multiples like 7-10% more closed sales deals or higher, but that doesn't really help you determine a budget rate. Sorry.

The fast answer is contact your CPA, if they have other clients in that industry then they can speak on this topic extemporaneously and give you an answer.

See if you can find some industry ratios like Standard & Poors. If you know some names of public companies that are Ad agencies then you can look up their websites, find the "Investor Relations" link on their website and download their most recent SEC 10K or 10Q and calculate a rough percentage of their selling costs to their sales. The 10K is the SEC annual report. The 10Q is the SEC quarterly filing. If you download the Word.doc version you can search for "Notes to Financial Statements" and scroll down to their "accounting policy" section and their revenue recognition policy will be listed first, and those paragraphs may have some information.

Hopefully some CFOs in your industry will respond.

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