Costs in marketing services companies: how to manage them to maximize profitability

Marketing agencies, whether digital, creative, or integrated, face a constant challenge: control your costs without affecting the quality of service. Unlike manufacturing companies, where costs are tangible, marketing is dominated by intangibles: hours of creativity, use of digital tools and strategic efforts.

1. Types of costs in marketing companies

a) Fixed costs
They do not change depending on the number of projects, for example:

• Permanent staff salaries.
• Office rental.
• Subscriptions to design, CRM, or automation software.

b) Variable costs
They depend on each project or campaign:

• Freelancers' hours.
• Audiovisual production or payment for locations.
• Google Ads, Meta Ads, LinkedIn Ads campaigns.

c) Indirect costs
These are expenses that are necessary for the operation but are not directly assigned to a client:

• Office rental.
• Equipment maintenance.
• Training and general services.

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2. Drivers to distribute indirect costs

To know the real profitability of each project, is key allocate indirect costs using cost drivers. These drivers are objective criteria that represent how a project consumes resources.

Common drivers in marketing agencies:

1. Working hours of operational staff
   • The total number of hours dedicated to each client is calculated.
   • Example: If a project represents 20% of the creative team's hours, it is assigned 20% of indirect costs.
2. Number of people involved
   • Useful if the team works full-time on a specific project.
   • Example: If 3 out of 10 employees work for a single client, this client absorbs 30% of the prorated income.
3. Office space used (in m²)
   • Office rent and services can be distributed according to the area occupied by the staff serving each project.
4. Consumption of tools or software licenses
   • If certain automation, editing, or analytics platforms are used for a particular client, their monthly cost is allocated proportionally.

Practical example of income apportionment:

• Monthly rent: $30,000 MXN
• Area occupied by operational personnel: 70% ($21,000 MXN)
• Client A consumes 25% of the equipment hours → $5,250 MXN is assigned as an indirect rental cost.

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3. Benefits of using cost drivers

• More accurate and profitable sales prices.
• Identification of less profitable clients or projects.
• Internal transparency for decision-making.
• Facilitates activity-based costing (ABC) for agencies that handle multiple services and clients.

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4. Strategies to optimize costs without losing quality

• Automate administrative and reporting tasks.
• Use freelancers or third-party vendors for variable loads.
• Negotiate preferential volume pricing with media and production providers.
• Review profitability per client quarterly to make strategic decisions.

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5. Conclusion

Correctly measuring and allocating costs allows marketing agencies to be more profitable and competitiveWith clear cost drivers, it is possible to:

• Know the real cost of each project.
• Define sales prices based on data.
• Optimize resources without affecting creativity.

In a sector where innovation is key, Smart financial management is the engine that sustains sustainable growth.

Come to us for a advice.