How to get the best deal from an ad agency

Biting the bullet and hiring an advertising agency can be a big decision for an SME. Often, the toughest decision of all is knowing whether or not your business can sustain the added expense.

The experts suggest that the time can be right when you feel overwhelmed by the process of marketing, bearing in mind that a poorly executed ad can in fact damage your brand.

Joel Norton, chief strategy officer of Sydney’s Boost Marketing, says most SMEs start to look at external marketing support after they’ve been in business beyond the five year mark.

“They’ve typically had strong growth for the first few years through the business owner’s own efforts, but they get to a stage where the business starts to plateau because they’re unable to give sales the attention it deserves.”

“They’ve often tried a few marketing campaigns in isolation, usually with poor results, and are ready to take the plunge and hire an expert.”

Melbourne advertising veteran John O’Keefe, of O’Keefe Communications, has been helping SMEs solve their marketing needs for more than two decades. He says SMEs should think twice before tackling their own advertising.

“SMEs are rarely experienced enough to understand how to put an ad campaign together. Often, it’s done in a rush and therefore isn’t as effective as it should be,” he says.

Tracking down the right agency for your business is a time consuming process. There is no central database of advertising agencies that lists their specialties, meaning it’s simply a matter of research.

Daniel Leesong, CEO, peak industry body The Communications Council says a great client-agency partnership can be achieved by finding the right cultural fit.

“There are generalists and specialist agencies out there, so you’ll need to determine what fits best with your communication objectives,” Leesong says.

He suggests that SMEs look around for campaigns they’ve noticed and liked with the view of pursuing the agency behind the work. Also, ask other business owners for recommendations.

And be aware that The Communications Council runs an accreditation program, with accredited agencies guaranteeing best practice in advertising, he says.

Narrowing it down

Agencies are always interested in talking to potential new clients; particularly those who could become long-term clients.

“A client that has the promise of good growth on the cards that is committed, open-minded and trusting that their ad agency has the experience to handle their marketing is worth their weight in gold,” O’Keefe says.

Once you’ve narrowed down a list of agencies that you’d like to learn more about, it’s time to pick up the phone.

Ask to speak to either the business development manager or an account director and explain you’re on the hunt for an advertising agency. During the conversation:

• Take the time to explain a bit about your business and your current business objectives. Give them your website address.
• Tell them your expectations of an agency.
• Detail your marketing budget and ask them how they suggest you spend it.
• Ask them who their current clients are and where their expertise lies.
• Ask about their pricing strategy, including account management fees.
• Ask to be sent the agency’s credentials document, which should give you lots of information about their experience, clients, staff numbers, etc.

Based on your conversations with each agency, cull the list down to two or three and make a time to meet with each. It can be worth visiting the agency headquarters, which can give you the chance to see how they work and meet members of the team who could potentially be working on your account.

Make sure you talk about remuneration. Agencies are remunerated in many ways, including project fees, variable fees based on actual hours, retainers, or their fee is calculated based on a percentage of the media spent as a commission.

While large agencies charge a fortune, smaller, independent agencies can be a good option for SMEs, with hourly rates around $100 to $150, while retainer fees will set you back about $2,000 a month. But remember, there is always room for negotiation on costs.

The pitch

If you like the agency, being face-to-face can be a good opportunity to invite the agency to prepare a pitch for your business. This means the agency will outline how they recommend you proceed with your marketing.

David Hayes, managing director of Melbourne ad agency HBT says most agencies are prepared to spend the time and effort to prepare a pitch for a new client without charging.

“If our business is a good match to the client’s then we’re happy to take the time to get to know their business and what their marketing goals are.”

Leigh Heywood, account director of Melbourne advertising and media buying agency Precious Media says she would prepare and present a 12 month marketing strategy for a new client – a process which normally takes around 20 hours. If the client seemed serious about a partnership, this would be entirely free.

She says that SMEs should look for the expertise of the agency and whether you get on well.

“Don’t be afraid to ask lots of questions.”

Leesong says before you enter a pitch, SMEs should be sure they can effectively communicate what they want to achieve. He advises SMEs not to invite ad agencies to pitch lightly.

“Agencies often invest a lot of time, energy and resources in a pitch. If you are not seriously considering giving your business to an agency, don’t invite them to pitch. Also, consider covering the pitch expenses.”

Writing a brief

The strength of your briefing document will determine the quality of each pitch, according to The Communications Council. It recommends providing a clear guide of what you expect to see in the pitch, such as strategy, creative, tactics, budgets, timelines and media placement.

It recommends a written brief, which it says should contain:

• Business issues
• Market/category overview
• Brand marketing objective
• Brand positioning and key messages
• Marketing activities to date
• Market research
• Competitive overview
• Advertising budget
• Terms of business, including proposed contract terms and remuneration models.

Picking a winner

Those in your business helping to select an agency should agree to a list of evaluation criteria to score each agency against.

These can include weighted questions around if the agency understands the market, if their strategic thinking made sense, whether their ideas are innovative and to brief, whether the agency demonstrated that it understood your business and whether you believe their costs and timelines are reasonable.

Hayes says an SME needs to make sure the agency is strategically grounded, enthusiastic and that you have good chemistry.

“If you as the client can’t call at 8pm on a Thursday night because you’ve got a problem; or the agency can’t call you because they have a question, then perhaps you’re not a good fit for each other,” he says.

Once you appoint an agency, give them the freedom to do their job. O’Keefe says this isn’t always easy for a business owner.

“There’s nothing worse than a client telling me they already know where they want to advertise. SMEs are far better off leaving that to the agency, who can advise on the best place to advertise based on the client brief,” O’Keefe says.

Also, make sure you write a letter of appointment. While most agencies don’t expect SMEs to lock into a contract period, a two to three month notice period is expected if either party wishes to bail out.

Lastly, remember that long agency-client relationships often result in the best marketing, so once you make the decision, be prepared to stick around.

Hayes says: “The work will only get better if you can build trust; and that takes time.”