Retainers that quietly lose money
A retainer priced on 40 hours that consumes 62 is invisible until someone builds the spreadsheet. Most agencies find it annually, during a renewal that then goes badly.
ERP by industry
Marketing, creative, digital, and media agencies. The financial shape is distinctive — pass-through media that distorts every ratio, retainers that erode quietly, freelance cost that hides in a single account, and a holding structure that grew by accident.
Your size, your ledger, and your project tool. We will rank your clients by true net margin.
The problems
A retainer priced on 40 hours that consumes 62 is invisible until someone builds the spreadsheet. Most agencies find it annually, during a renewal that then goes badly.
Media, print, and production billed at cost inflate revenue and crush apparent margin. Without separating gross and net billings, every metric you report is wrong in the same direction.
Agency groups accumulate entities — an acquisition, a spun-out studio, a production arm — and consolidation ends up in a workbook nobody else can run.
Contractor spend is coded to a generic account, so blended delivery cost per client is unknown and the freelance-versus-hire decision gets made on instinct.
Net 60 that behaves like net 95, while you pay media vendors on 30. That gap is the working-capital problem behind most agency cash crises.
You know which clients bill the most. Whether the biggest one is the most profitable is a different question, and the answer is regularly no.
Gross vs net
Pass-through media is the single most distorting line in agency accounting. Until it is separated, revenue per head, margin, and growth are all measuring the wrong number.
Gross billings matter for scale and for some vendor relationships. Net revenue is what you run the business on. The failure mode is a leadership team using them interchangeably in the same meeting — and it is one line of configuration to fix permanently.
Your stack
Benchmarks
From our engagements with agencies between $5M and $60M gross billings. The bar is a typical customer after two quarters; the marker is the segment median.
Project overruns get noticed because someone has to explain them. Retainer erosion does not, because there is no moment of reckoning — the client is happy, the work gets done, and the hours quietly exceed what the fee assumed. Twelve months later the account is unprofitable and the renewal conversation is about a price increase nobody prepared for.
The fix is unglamorous: burn against retainer, visible weekly, per client, with rollover and expiry rules that match the contract rather than the convention. Once that exists, the conversation moves from an annual argument to a monthly adjustment, and the client relationship survives it because nobody is surprised.
Most agencies code contractor spend to one or two accounts and cannot say what blended delivery cost per client actually is. That makes the hire-versus-freelance decision a matter of opinion, and it makes client margin unreliable in exactly the accounts that use the most external help.
Attributing freelance cost to client and project — which is an AP coding problem, not a reporting one — usually moves apparent margin on two or three accounts by several points in the first month. It is the fastest visible win in this industry.
Agencies accumulate entities: an acquisition kept separate for earn-out reasons, a production arm set up for insurance, a holding company for the partners. Intercompany recharges between them are usually informal, which makes consolidated reporting a monthly reconstruction and makes any transaction diligence painful.
Multi-entity with proper intercompany elimination removes the workbook. For groups planning a sale or an acquisition, it is also the difference between diligence taking two weeks and taking two months.
Agencies whose primary need is media buying, planning, and reconciliation at scale should look at a specialist media system. We handle media as pass-through cost with proper gross-to-net separation; we are not a media buying platform and do not pretend to be.
Questions
Net margin per client with pass-through media separated and freelance cost attributed, from your own data.