An advertising agency buys a lot on behalf of its clients: media space, print, production, photography and freelancers. According to CBS, on average 47.0% of advertising agencies' sales went on purchases in 2024. Your own work is in the other 53%.
That is why sales say little about what a project earns. A campaign with a lot of media can bring high sales and a low margin. So work out the margin on gross agency income: sales minus the purchases you pass on.
In short
- CBS average for advertising agencies in 2024 (table 81156ned): purchases 47.0%, staff 24.9% and operating result 14.9% of sales. It is an average, not a standard.
- Gross agency income is sales minus passed-on purchases. From it you pay your people, your costs and your profit. At advertising agencies, on average 47% of it went on staff.
- Compare projects on gross agency income per hour of your own work. Then you see which work really makes money, regardless of how much media or print was in it.
In this article
- What share of an advertising agency's sales is purchases?
- Why do an advertising agency's sales say little about the work?
- What is gross agency income?
- What is left of gross agency income?
- How do you work out the margin of a single project?
- How do you hold on to the margin during a project?
- What do passed-on purchases do to your risk and your figures?
What share of an advertising agency's sales is purchases?
Almost half, on average. CBS measures the costs of businesses by branch. At advertising agencies, the cost of sales was € 4,154 million on € 8,847 million of net sales in 2024. That is 47.0% (CBS, table 81156ned, 2024).
The cost of sales is what you buy and pass straight on or put into the work for the client. At an advertising agency that is mainly media space, print, production and work you outsource to others. Net sales are revenue excluding VAT.
By comparison, at design, photography and translation agencies purchases were 36.9% of sales and the operating result 27.1%. At advertising agencies the operating result was 14.9% (CBS, table 81156ned, 2024). The operating result is what is left after all business costs, before interest and tax.
These figures are averages for a whole branch, from one-person business to large agency. They do not say how your agency should perform. An agency that mainly delivers strategy and design has far fewer purchases than an agency that also buys media.
Why do an advertising agency's sales say little about the work?
Because a large part of sales is money that passes through to others. If you buy € 40,000 of media for a client and invoice it on, your sales rise by € 40,000. Your own work has not grown as a result.
The difference shows in the CBS figures. In 2024, sales per person employed were about € 150,000 at advertising agencies and about € 74,000 at design, photography and translation agencies. After deducting purchases it was about € 79,000 against € 47,000 (CBS, table 81156ned, own calculation). The difference in sales is much bigger than the difference in what is left.
How much media an agency passes on also differs per client. Research on American advertisers found that companies with large advertising budgets more often place media buying separately with specialised media agencies, to obtain media discounts. The full-service agency for creative and media together was still widely used (Horsky, 2006).
The share of purchases also varies over the years. At advertising agencies it was 53.5% in 2016, 43.4% in 2023 and 47.0% in 2024 (CBS, table 81156ned). A year with more sales is therefore not automatically a year with more work or more profit.
What is gross agency income?
Gross agency income is sales minus the purchases you make for the client and pass on. It is the money the agency earns itself with its own people. From it you pay wages, rent, software and your profit.
The industry uses this concept itself. VIA Nederland, the association for the marketing chain, asks new members for their annual sales or their BBI, gross agency income, to set the membership fee (VIA Nederland, membership terms). How exactly you calculate it is not stated there.
How to work out gross agency income
Sales excluding VAT, minus the purchases made directly for clients: media, print, production, licensed images and music, and freelancers you hire per project. Do not count your own salaries, rent and software as purchases. In the 2024 CBS figures, the gross agency income of advertising agencies together was 53.0% of sales.
Note the difference with VAT. Purchases you make in your own name and invoice on are simply your sales for VAT purposes. Only costs you pay in the name and on behalf of the client are a disbursement without VAT (Belastingdienst, on which you do not charge VAT). For gross agency income it makes no difference: in both cases the money is not yours.
What is left of gross agency income?
At advertising agencies, on average 47.0% of gross agency income went on staff in 2024. About 26% went on other costs and depreciation, and 28.0% was left as operating result (CBS, table 81156ned, own calculation). The same figures as a share of sales look much smaller.
Staff at 24.9% of sales looks small. As a share of gross agency income it is almost half. That is the real risk of an agency: a team that has to be paid, even in a month with few projects.
The staff costs in the CBS table are costs of employees. At advertising agencies there were 33,300 employee jobs out of 59,100 jobs of persons employed in 2024 (CBS, table 81156ned). An owner without an employment contract receives no wage. Their reward sits in the operating result. If you work in the agency yourself as owner, count your own hours separately.
How do you work out the margin of a single project?
Start with the project's gross agency income and deduct the cost of your own hours from it. What is left is the project margin. That says much more than the project's sales.
- Set aside all purchases for the project: media, print, production, licences and freelancers.
- Deduct them from what you invoice the client for the project. That is the project's gross agency income.
- Book the hours of your own people to the project and cost them at a cost price per hour. That cost price includes wages, social charges and a share of fixed costs.
- Gross agency income minus hours at cost price is the project margin.
An example. A campaign and a brand identity each bring in € 60,000 of sales. The campaign contains € 42,000 of media and production, the brand identity € 6,000 for a photographer. The campaign takes 150 hours of your own work, the brand identity 520. At a cost price of € 85 per hour you keep € 5,250 on the campaign and € 9,800 on the brand identity.
Per hour of your own work it looks different. The campaign yields € 120 of gross agency income per hour, the brand identity about € 104. On sales the projects look the same. Per hour the campaign earns more, in euros the brand identity brings in more. That is the conversation about price and planning you can have with these figures.
How do you hold on to the margin during a project?
By tracking purchases and hours during the project, not only at the final invoice. A project with a lot of purchases has little room. A few extra hours or a forgotten print proof can cost the whole margin.
- Give each project its own number and book every purchase invoice and every hour to it.
- Budget purchases and hours separately, and compare them every week or every phase with what has already been used.
- Record extra work before you do it, with hours and price.
- Invoice large purchases, such as media, in advance or right after ordering, so that you do not have to pre-finance them.
The way of paying also plays a part. An American study described advertisers putting pressure on agencies to reduce commissions and to link pay to the results of campaigns (Spake et al., 1999). A later survey of advertisers in North America found that pay based on results and formal evaluation are more common when switching to another agency is costly for the client (Davies & Prince, 2010).
For your margin this means: if you agree pay based on results, also agree a fixed part that covers your own hours. Then you do not carry the risk of a campaign that performs less well on your own.
What do passed-on purchases do to your risk and your figures?
Purchases in your own name are also your debt. If you as an agency order media space or print, you have to pay the supplier. That applies even if the client later pays late or not at all. A project with a lot of purchases therefore carries a bigger bad debt risk than its gross agency income suggests.
An example. On a campaign with € 42,000 of purchases and € 18,000 of gross agency income, you are exposed for the full € 60,000 if the client defaults. Your own work is then lost, and you still have to pay the € 42,000 to suppliers.
If a project runs over the turn of the year, the tax authority counts the profit in proportion to the work done. Work in progress is valued at the part of the agreed fee that relates to the work done, including for an assignment in progress (Income Tax Act 2001, article 3.29b). So keep track per project of how much of the purchases and hours had been done by 31 December.
Sources
- CBS, Bedrijfsleven, arbeids- en financiële gegevens, per branche, SBI 2008 (Business sector, labour and financial data by branch, table 81156ned), branches 731 Advertising, 732 Market research and 74 Design, photography, translation agencies, 2009 to 2024, updated 24 April 2026, accessed 31 October 2026. cbs.nl
- VIA Nederland, Algemene VIA-lidmaatschapsvoorwaarden (General VIA membership terms), accessed 31 October 2026. vianederland.nl
- Belastingdienst, Waarover geen btw berekenen? (On what do you not charge VAT?), accessed 31 October 2026. belastingdienst.nl
- Income Tax Act 2001 (Wet inkomstenbelasting 2001), article 3.29b. wetten.overheid.nl
- Horsky, S. (2006). The changing architecture of advertising agencies. Marketing Science, 25(4), 367-383. doi.org
- Spake, D. F., D'Souza, G., Crutchfield, T. N. & Morgan, R. M. (1999). Advertising agency compensation: an agency theory explanation. Journal of Advertising, 28(3), 53-72. doi.org
- Davies, M. & Prince, M. (2010). Advertising agency compensation, client evaluation and switching costs: an extension of agency theory. Journal of Current Issues & Research in Advertising, 32(1), 13-31. doi.org